2002 (9) TMI 639 - AT - Central Excise

Summary

Issues:
Refund of duty under Modvat scheme; Availability of credit in RG 23C Part II; Lapse of Modvat credit under Compounded Levy Scheme; Interpretation of Rule 57-S(11); Entitlement to refund in cash or new Modvat Account.

Analysis:
The appeal involved a dispute regarding the refund of duty amounting to Rs. 41,128.50 under the Modvat scheme. The appellants had debited this amount from their RG 23C Part II records before the adjudication of a show cause notice issued by the Central Excise Authorities. The original adjudicating authority had initially allowed the refund, but by that time, the Modvat credit had lapsed due to the introduction of the Compounded Levy Scheme. The appellants contended that the refund was granted in their dead unutilised RG 23C Part II, leading to the appeal.

The main contention revolved around the interpretation of Rule 57-S(11) concerning the lapsing of unutilised specified duty credit. The appellants argued that since they had debited the amount before the lapse date and it was not unutilised, they were entitled to the refund either in cash or in their new Modvat Account. Conversely, the Revenue contended that the credit was debited just a day before the lapse, preventing the amount from lapsing entirely, and refunding it in cash would provide undue benefit to the appellants.

Upon evaluating the arguments, the tribunal noted that the disputed amount was debited by the appellants before the adjudication, and with the decision in their favor, they were entitled to cancel the debit entry. The authorities allowed the cancellation through a book adjustment in RG 23C Part II. The tribunal emphasized that the appellants could not have utilized the amount for duty payment on the final product regardless, as it would have lapsed on the specified date. Additionally, the appellants failed to demonstrate any urgency in debiting the amount or how it affected their duty payment process.

Consequently, the tribunal found no fault in the decisions of the lower authorities and dismissed the appeal, upholding the refund in the RG 23C Part II records.