2005 (9) TMI 386 - AT - Central Excise

Summary

Issues:
Claim for refund of excise duty on generators used as parts of wind mills.

Analysis:
The appellant claimed a refund of Rs. 13,81,500 on the grounds that excise duty was paid on generators, which were exempted from duty when used as parts of wind mills under Notification No. 205/88-C.E. The appellant argued that the manufacturer of the generators had erroneously paid the duty, and as the recipient, they were entitled to claim a refund. However, the original authority rejected the claim, which was upheld by the Commissioner (Appeals), leading to this appeal.

Upon hearing the case, it was noted that the claim for refund was made by the buyer of excisable goods where duty had already been paid by the manufacturer. The appellant's argument that the manufacturer had incorrectly paid the duty was found to be unsustainable. It was revealed from the records that the manufacturer had availed credit on the inputs used in the generators' manufacturing process and then paid duty on the final product to utilize Modvat credit. The manufacturer's decision to pay duty was a deliberate choice to benefit from the credit. Therefore, the appellant's claim that the manufacturer's duty payment was incorrect and the buyer was entitled to a refund was deemed invalid. Consequently, the appeal for the refund was rejected by the Appellate Tribunal CESTAT, MUMBAI.

This judgment clarifies the principle that when a manufacturer pays duty on excisable goods to utilize credit benefits, the buyer cannot claim a refund on the grounds of the manufacturer's alleged erroneous duty payment. The decision emphasizes the importance of understanding the rationale behind duty payments and credits in excise duty matters, ensuring that claims for refunds are based on valid grounds and legal provisions.