2004 (6) TMI 561 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 29/96-C.E. (N.T.) under Rule 57A of Central Excise Rules, 1944 for refund claim rejection.
Validity of deemed Modvat credit claim for duty paid on Grey Cotton Fabrics.
Time-bar on filing refund claim.
Classification of clearance against CT2 Certificate under Chapter X procedure.
Applicability of Rule 57C barring credit in respect of inputs for exempted goods.
Correctness of Commissioner (Appeals) judgment.

Interpretation of Notification No. 29/96-C.E. (N.T.) under Rule 57A:
The issue involved the interpretation of Notification No. 29/96-C.E. (N.T.) dated 3-9-1996 under Rule 57A of the Central Excise Rules, 1944. The appellant filed a refund claim for deemed Modvat credit of duty paid on Grey Cotton Fabrics used in manufacturing processed fabrics. The notification allowed the fabrics manufacturer to claim deemed Modvat credit without producing duty paying documents at the time of clearance of processed fabrics. However, the respondents did not claim credit at the point of clearance to the garment manufacturer. The adjudicating authority found the claim incorrect due to the fabrics being cleared under Chapter X procedure without excise duty payment, invoking Rule 57C barring credit for inputs used in exempted goods.

Validity of Deemed Modvat Credit Claim:
The appellant's claim for deemed Modvat credit was challenged as the processed fabrics were not directly exported but cleared under Chapter X procedure to a garment manufacturer without excise duty payment. The rejection was based on the application of Rule 57C, which prohibits credit for inputs used in manufacturing exempted goods. The Commissioner (Appeals) supported this position citing the judgment of the tribunal in a similar case, emphasizing that clearance against a CT2 Certificate did not qualify as duty-free clearance.

Time-bar on Filing Refund Claim:
The refund claim was also contested on the grounds of being time-barred as it pertained to a period from 1-10-98 to 15-12-1998 but was filed on 2-6-1999. The Commissioner (Appeals) determined the relevant date for claiming the refund based on the introduction of the compounded levy scheme on 16-12-98, stating that prior to this date, there was no obligation to claim cash refund of accumulated deemed Modvat credit.

Classification of Clearance Against CT2 Certificate:
The Commissioner (Appeals) clarified that clearance against a CT2 Certificate did not fall under the category of clearance without payment of duty, aligning with the tribunal's judgment in a previous case. This classification was crucial in determining the eligibility for claiming deemed Modvat credit under the notification.

Applicability of Rule 57C and Correctness of Commissioner (Appeals) Judgment:
After considering the arguments from both sides, the tribunal upheld the Commissioner (Appeals) order, affirming that the correct position of law was presented in the judgment. Consequently, the revenue appeal seeking restoration of the rejection order was dismissed, indicating that the impugned order did not warrant any interference based on the legal analysis provided.