2005 (3) TMI 532 - AT - Central Excise

Summary

Issues:
1. Whether the assessee was entitled to avail Modvat credit on Sulphuric Acid used in the manufacture of Linear Alkyl Benzene Sulphonic Acid (LABSA).
2. Whether the amount equivalent to input duty credit relatable to Spent Sulphuric Acid (SS Acid) or 8% of the price of SS Acid was payable by the assessee.
3. Whether the refund claim for 8% of the price of SS Acid, paid under protest, was hit by the bar of unjust enrichment.

Analysis:

Issue 1:
The case involved the question of whether the assessee was entitled to avail Modvat credit on the duty paid on the entire quantity of Sulphuric Acid used in the manufacture of LABSA. The assessee had paid 8% of the price of SS Acid, which was cleared without payment of duty, under Rule 57CC/Rule 57AD(2) of the Central Excise Rules, 1944. The Tribunal found that when both the main product (LABSA) and the by-product (SS Acid) were dutiable, the assessee was eligible for input duty credit on the entire quantity of 98% Sulphuric Acid used. Therefore, the department could not ask the assessee to reverse any part of the credit already taken. The Revenue's appeals on this issue were dismissed.

Issue 2:
Regarding the amount payable by the assessee, the Revenue contended that an amount equivalent to input duty credit relatable to SS Acid or 8% of the price of SS Acid was payable by the assessee. However, the Tribunal held that SS Acid was an excisable by-product and input duty credit was not deniable in relation to it. Citing relevant precedents, the Tribunal concluded that the assessee was not required to reverse any part of the credit already taken on the entire quantity of Sulphuric Acid used. Therefore, the Revenue's challenge against the lower appellate authority's decision was dismissed.

Issue 3:
The assessee had paid 8% of the price of SS Acid cleared without duty and claimed a refund under protest. The lower appellate authority rejected the refund claim, stating that the party had not proven that they did not pass on the duty incidence to others. The Tribunal noted that the fact that duty was paid under protest did not exempt the claim from the doctrine of unjust enrichment. As a result, the Tribunal found no merit in the assessee's appeals for a refund of the amount paid for SS Acid under protest. Consequently, the assessee's appeals were also dismissed.

In conclusion, all the appeals were dismissed by the Tribunal after a detailed analysis of the issues related to Modvat credit, payment obligations, and refund claims in the context of the excisable products involved in the case.