2004 (5) TMI 448 - AT - Central Excise

Summary

Issues:
1. Availment of input credit in violation of Notification No. 203/92-Cus.
2. Reversal of Modvat credit and subsequent claim for refund under the Amnesty Scheme.
3. Interpretation of the Amnesty Scheme in relation to the appellant's case.

Issue 1: Availment of input credit in violation of Notification No. 203/92-Cus.
The appellant, a manufacturer of Bulk Drugs, exported goods under Advance Licence Scheme covered by Notification No. 203/92-Cus., which prohibited taking input credit for the exported goods. However, the appellant availed of input credit, subsequently reversing the Modvat credit after exports. The jurisdictional Central Excise authorities demanded the reversal of an amount equivalent to interest under an Amnesty Scheme for DEEC exports not complying with the notification. The lower authorities held the appellant liable for interest payment as the credit was not reversed at the time of export.

Issue 2: Reversal of Modvat credit and subsequent claim for refund under the Amnesty Scheme.
The appellant claimed a refund of the reversed credit, arguing that they did not export under the DEEC Scheme and thus were not eligible for the Amnesty Scheme. They contended that since the credit reversal occurred before the Amnesty Scheme, it should not apply to them. The lower authorities rejected these arguments, leading to the present appeal challenging their decision.

Issue 3: Interpretation of the Amnesty Scheme in relation to the appellant's case.
The appellant relied on tribunal decisions to support their contention that they were not covered by the Amnesty Scheme. The appellant's reversal of credit was seen as an admission that their exports fell under Notification No. 203/92. The authorities enforced the Amnesty Scheme on the appellant, despite no application from the appellant. The tribunal found merit in the appeal, emphasizing that the Amnesty Scheme is for offenders to opt for, not for revenue authorities to enforce. The appeal was allowed, setting aside the lower authorities' decision.

In conclusion, the tribunal allowed the appeal, highlighting that the appellant's reversal of credit before the Amnesty Scheme was issued, and the absence of any application by the appellant for the scheme, supported their case. The tribunal emphasized that an Amnesty Scheme is voluntary for offenders to choose, not a tool for revenue authorities to impose on non-applicants.