Accumulation of cenvat credit in excess

This query is : Resolved 

24 September 2013

An engineering company, have accumulated lot of CENVAT Credit, need answer to the two problems, they have little percentage of exports & deemed exports.

1. What are the legal remedies for obtaining the refund of CENVAT Credit (quickly also).

2. How to stop further accumulation of the CENVAT Credit.

3. Are deemed exports merit physical exports, if yes under which provision / case law.

CA Mohit Bansal (Expert)
24 September 2013

It is usually preferable not to pay duty rather
than to pay it and wait for refund from the
government. However, in the following situations, it is beneficial
to pay duty and claim rebate
under Rule 18 of Central Excise Rules, 2002:
If assessee has balance of duty in Capital G
oods CENVAT Credit Account, it is advisable
to pay duty and claim refund, as balance in
Capital Goods CENVAT Credit Account is
never refundable. The said situation may take place if duty paid on capital goods is
heavy and assessee may not be able to utilize the credit.
An SSI Unit may pay excise duty and claim
rebate, as getting refund of CENVAT Credit
of inputs is not an easy preposition. Further,
he is not entitled to get refund of duty paid
on capital goods.
When duty paid goods are proposed to be exported.
Claiming rebate is comparatively easy procedure than claiming refund of duty paid on
inputs under CENVAT Credit Rules, 2004.

Ravindra B R (Querist)
25 September 2013

Mohitji, thank you for the reply, they have applied for refund of duty under CENVAT Credit Rules, but as you said it is very difficult to get a refund. We need one more clarity are deemed exports equated to physical exports for the purpose of refund of CENVAT Credit?

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