2006 (1) TMI 319 - AT - Central Excise

Summary

Issues:
Refund claim rejection based on inability to utilize deemed Modvat credit accumulated.

Analysis:
The appellants, engaged in manufacturing MMF (P) fabrics, exported goods under bond, accumulating deemed credit of duty amounting to Rs. 15,45,059. However, they could only utilize Rs. 2,75,008 for duty payment on clearances for home consumption during a specific period. Their refund claim of Rs. 12,70,051 under Rule 57F(13) was rejected for lack of evidence showing inability to utilize the accumulated credit or prevention by the department.

The Rule 57F(13) allows utilization of credit for duty payment on final products or refund if adjustment is not feasible. The appellants argued that due to export under bond, they couldn't use the credit. They also mentioned being compelled to pay duty from PLA under the Compounded Levy Scheme, leading to credit accumulation. Reference was made to a case where officers insisted on payment from PLA to meet revenue targets, hindering credit utilization. The Tribunal dismissed the appeal against that order on technical grounds.

It was noted that the appellants paid duty from PLA during the relevant period. Had they not done so, the available credit could have been used, preventing accumulation intentionally. The situation was seen as revenue-neutral, as reversing duty paid from PLA and allowing debit from the credit account could resolve the issue. Rule 57F(13) permits refund if adjustment is not possible, as in this case where credit wasn't used for duty payment on clearances for home consumption, entitling the appellants to the refund.

In conclusion, the Tribunal held that the appellants should be granted the refund as per Rule 57F(13), subject to conditions specified by the Central Government. The appeal was disposed of accordingly.