Rajasthan HC upholds accumulated CENVAT refund upon factory closure, invokes ‘estoppel’ principle; dismisses CESTAT’s order

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HC allows assessee’s appeal, upholds refund of accumulated CENVAT credit on account of closure of the factory under Rule 5 of Cenvat Credit Rules, 2004 (CCR); Notes that, assessee was manufacturing medicine governed by direct price control order and since duty paid on inputs was higher than duty on final product, assessee was unable to utilize the CENVAT credit resulting in a gap between credit availed and duty paid on final product; Relies on Karnataka HC ruling in Slovak India Trading Co. as upheld by SC & Apex Court ratio in Daiichi Karkaria, while noting that the matter is pending before the SC against the decisions of 4 different HCs; Observes, CESTAT earlier granted refund against which SLP was not preferred, accordingly, elucidates that principle of estoppel would apply inasmuch as acceptance of view taken by CESTAT will debar the Revenue from challenging the same in the present case; Remarks, “judicial discipline is required to be maintained”, while stating that, CESTAT cannot distinguish HC judgements and are bound by them, and at most they can refer it back to distinguish on facts: Rajasthan HC

Citation: [TS-66-HC-2018(RAJ)-EXC]

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