2002 (2) TMI 705 - AT - Central Excise

Summary

Issues:
1. Proper procedure for Modvat credit and duty payment.
2. Refund claim rejection based on limitation.
3. Requirement of protest for duty payment.
4. Interpretation of Supreme Court judgment on duty payment under protest.

Analysis:

Issue 1: Proper procedure for Modvat credit and duty payment
The case involved a notice issued to the respondent for recovery of Modvat credit due to alleged improper procedure and inadequate duty payment on certain inputs. The manufacturer paid the duty and appealed to the Commissioner (Appeals) who remanded the matter for fresh adjudication. The Joint Commissioner later dropped the proceedings, and the manufacturer claimed a refund, which was rejected by the Asstt. Commissioner citing limitation. The Asstt. Commissioner argued that the duty paid under protest was not exempt from limitation, as the protest was made after the payment.

Issue 2: Refund claim rejection based on limitation
The Asstt. Commissioner rejected the manufacturer's refund claim, contending it was time-barred due to the protest being made after the duty payment. However, the Commissioner (Appeals) found that the rejection lacked proper notice to the manufacturer and remanded the case for fresh adjudication by the adjudicating authority.

Issue 3: Requirement of protest for duty payment
The department appealed against the decision that the claim was not barred by limitation when duty was paid under protest. The department argued that every protested payment required a written protest as per Rule 233B unless the duty was paid by court order pending an appeal. The Court examined the necessity of a written protest and the provisions of Rule 233B in light of the Supreme Court judgment.

Issue 4: Interpretation of Supreme Court judgment on duty payment under protest
The Court analyzed the Supreme Court judgment's paragraphs 83 to 86 in Mafatlal Industries Ltd. v. UOI, emphasizing the requirement of protest when duty is paid under appeal or court orders. The Court clarified that duty paid under protest includes situations where duty is paid before filing an appeal and that such payment should be considered as paid under protest. The Court rejected the department's appeal, affirming that the duty paid by the manufacturer in this case was under protest as per the Supreme Court's interpretation.

In conclusion, the appeal was dismissed, upholding the decision that the duty payment in question was made under protest, as per the relevant legal provisions and the Supreme Court judgment.