2005 (9) TMI 380 - AT - Central Excise

Summary

Issues:
1. Availing SSI benefit under Notification 8/96 and clearing goods at NIL rate of duty without Modvat credit.
2. Reversal of Modvat credit under protest and subsequent refund claim rejection.
3. Dispute over the admissibility of Modvat credit and eligibility for refund.
4. Failure to issue a notice objecting to the credit availed.

Analysis:
1. The assessees were availing SSI benefit under Notification 8/96 by clearing goods at NIL rate of duty without utilizing Modvat credit. However, a discrepancy arose when they availed credit in January 1997 despite clearing goods at NIL rate in February 1997. Upon instructions, they reversed the credit under protest and filed a refund claim, which was rejected due to the timing of credit utilization and filing of declaration under Section 173B.

2. The CCE (A) acknowledged that duty was paid under protest and the refund claim was filed within the stipulated time. The appellant argued that since they reversed the Modvat credit under protest and were not issued a Show Cause Notice regarding its inadmissibility, they were entitled to a refund. The CCE (A) agreed, emphasizing that the appellant should have been issued a notice for demanding or reversing the wrongly availed Modvat credit, which was not done by the department. Therefore, the appellant was deemed eligible for the refund.

3. The Revenue contested the appeal, claiming that the assessee could not avail both the benefits of Modvat credit and clearing goods at NIL rate under Notification 8/96. They argued that exemption benefits were not available if Modvat credit was being utilized. Additionally, the manufacturer was required to maintain separate accounts for exempted and dutiable products, which the assessee allegedly failed to do, indicating an intention to evade Central Excise duty.

4. Upon review, it was noted that the objection to the credit availed should have been made through a notice if deemed ineligible, which was not done within the prescribed period. Consequently, the order of the CCE (A) was upheld, and the grounds presented by the Revenue did not warrant overturning the decision. Thus, the appeal was rejected, affirming the decision of the CCE (A).