2007 (5) TMI 465 - AT - Central Excise

Summary

Issues involved: Duty liability under Notification No. 32/99-C.E., refund of duty amount, utilization of input duty credit, appeal by the Department.

Summary:

Issue 1: Duty liability and refund denial
The respondents' duty liability for April 2003 under Notification No. 32/99-C.E. was Rs. 9,28,229/-. They paid part of this amount from credit and the rest through PLA. The jurisdictional range officer directed them to transfer a portion of the credit to the capital goods credit account, resulting in a shortfall in duty payment for April 2003. The respondents paid the balance by cash and later sought a refund of this amount, which was initially denied but later allowed by the lower appellate authority. The Department filed an appeal against this decision.

Issue 2: Utilization of input duty credit
Both parties agreed that duty under the said Notification could be paid from either input duty credit or capital goods duty credit. The respondents argued that the amount paid by cash was subsequently utilized for duty payment and was not available for refund.

Issue 3: Refund eligibility
The Notification required the manufacturer to exhaust the credit amount before paying the balance by cash, with refund allowed for the cash portion. Due to the Department's direction, the respondents were unable to utilize part of the credit initially, but they later used it for duty payment in the subsequent month. As a result, they paid less by cash in the subsequent month and received a reduced refund. Therefore, the amount of Rs. 95,664/- paid towards duty liability for April 2003 was deemed refundable, as decided by the lower appellate authority. The authority's criticism of the adjudicating authority was deemed unwarranted and was expunged.

Conclusion:
The Department's appeal was rejected, affirming the lower appellate authority's decision to allow the refund of Rs. 95,664/- to the respondents.