Refund of cenvat credit of new unit prior to its coverage un

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Raj (Querist)
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26 December 2012 We are a 100% EOU, having 1 office in Mumbai (which was registered with the CENVAT authorities in April 1995).

We recently took a New Office on lease from Sept '11. We applied for a Centralized Registration to cover this Unit in Aug '12 ONLY.

In Sept 12, we have applied for CENVAT refund for the period Sept '11 to March '12.

We have been informed by the Refund Department that the Input CENVAT Credit pertaining to Expenses of the New Unit (for any period prior to Centralized Registration ie. August '12) is NOT ELIGIBLE for refund since this Unit has been registered only in Aug 12.

Queries:
1. Could you please let me know if such CENVAT can be claimed as refund at all?
2. Whether we will have to appeal against the Order whenever it is passed?
3. Is there any precedence / Case laws wherein the above scenario is covered and under which the amount can be claimed as a Refund by us?

Appreciate your guidance in the above matter.

Thanks in advance..
Raj

Arun Kumar Singh

Arun Kumar Singh (Expert)
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26 December 2012 You are eligible for refund because you have apply for refund before centralized registration period.

Raj

Raj (Querist)
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26 December 2012 Thanks..let me slightly tweak my question for better clarity..

We are a 100% software exporter, having 1 office in Mumbai (registered with the CENVAT authorities in April 1995).

We recently took a New Office on lease from Sept '11 and applied for Centralized Registration to cover this Unit in Aug '12 ONLY. We pay Rent for this premise.

In Sept 12, we applied for CENVAT refund for the period Sept '11 to March '12.

We received a Show Cause Notice from the Refund Dept. that the Input CENVAT Credit on Expenses of the New Unit (for any period prior to Centralized Regn. ie. Aug '12) is NOT ELIGIBLE for refund since this Unit has been registered only in Aug 12.

Queries:
1. Can we claim CENVAT refund on such Rent and other expense of the New Unit ?
2. Whether we will have to appeal against the Order whenever it is passed?
3. Is there any precedence / Case laws under which the CENVAT can be claimed as a Refund?

Thks..

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2025 Here's a detailed answer to your queries on refund of CENVAT credit for a new unit prior to its registration under centralized registration:

Background Recap:
You have a 100% EOU with existing centralized registration since 1995.
New office unit taken on lease from Sept 2011.
Centralized registration to cover new unit applied only in August 2012.
Refund claimed for CENVAT credit on inputs/expenses for new unit from Sept 2011 to March 2012.
Refund department rejected claim for pre-registration period.
1) Can CENVAT credit be claimed as refund for the new unit expenses incurred prior to centralized registration?
Legal Position:
Under CENVAT Credit Rules, 2004 and related service tax laws, CENVAT credit can be claimed only by a registered person, i.e., only from the date of registration.
Centralized Registration:
Centralized registration is meant to cover multiple premises/units under one registration number, but it does not have retrospective effect.
Hence, any inputs or input services procured or used in a unit prior to its registration (or being covered under centralized registration) are NOT eligible for CENVAT credit or refund.
This position is supported by various rulings and the principle that credit is available only to registered entities and only for tax paid after registration.
Circulars/Notifications:
The department’s stance is aligned with CBEC circulars which emphasize that credit/refund cannot be allowed for periods when the unit was unregistered.
2) Do you need to appeal against the order if refund is rejected?
Yes, if the refund claim is denied by the adjudicating authority or the commissioner (refund), you have the right to file an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
Before that, you may file a rectification/review application or respond to show cause notices as per procedure.
Appeal should be filed within the prescribed time limit (usually 3 months from order).
3) Is there any precedent or case law where such refund was allowed for pre-registration period?
Generally, no:
Most judgments and tribunal rulings confirm the department’s view that credit/refund for unregistered periods is not allowed.
Example case law:
M/s. Hindustan Motors Ltd. vs. CCE (2006) — refund claims are allowed only when the inputs or services relate to the registered premises and during the period of registration.
CCE vs. Camlin Ltd. — credit/refund not allowed for inputs used prior to registration.
However, some courts have allowed credit/refund in cases where there was a bona fide delay in registration due to administrative reasons or when registrations were sought in a timely manner, but such exceptions are rare and depend on facts.
In your case, since the new unit was operational from Sept 2011 but centralized registration was applied only in Aug 2012, the department is likely to reject refund claims for the earlier period.
Summary / Suggestion:
Query Answer
Claim refund for pre-reg period? Generally NO, credit/refund only from date of registration or coverage under centralized registration.
Need to appeal? Yes, if refund rejected, appeal to CESTAT after following departmental procedure.
Any precedent? No strong precedent for refund pre-registration. Cases mostly favor department's stand.
Possible Next Steps:
Submit detailed reply to the show cause notice with factual position.
File appeal if refund claim rejected.
Maintain proper documents to prove date of registration and usage.
Consider consulting a tax/legal expert to explore any case-specific grounds.

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