2007 (8) TMI 535 - AT - Central Excise

Summary

Issues:
- Whether deemed credit not utilized for debiting the duty is admissible for refund to the appellant.

Analysis:
The issue in this appeal revolved around the admissibility of refund for deemed credit not utilized by the appellant for debiting the duty. The appellant, engaged in the manufacture of woven fabrics, filed a refund claim stating that they had paid duty at a higher rate due to not availing deemed credit by mistake. The authorities rejected the claim, citing failure to utilize the deemed credit. The appellant argued that the duty was paid through PLA due to the assistant's failure to use the deemed credit, resulting in excess payment. The contention was supported by the appellant's invoices showing the net effective duty after deducting the deemed credit. The Commissioner (Appeals) initially rejected the claim, questioning the appellant's failure to produce original documents. However, discrepancies were found in the PLA register, indicating that the duty was debited without considering the deemed credit.

The appellant's representative referred to a letter from the Superintendent of Central Excise, confirming the appellant's entitlement to deemed credit at the time of goods clearance. It was acknowledged that the appellant was able to adjust the credit later but failed to do so due to ongoing proceedings. Citing a decision by the Hon'ble High Court of Karnataka, the representative argued that the appellant should be refunded the unutilized deemed credit. The Karnataka High Court's ruling emphasized that in cases where there was no manufacture due to factory closure, refund of unutilized credit should be permitted. Based on the Superintendent's letter and the Karnataka High Court's decision, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to allow the refund claim in line with the legal principles established.

In conclusion, the Tribunal allowed the appeal by way of remand, directing the adjudicating authority to grant the refund of unutilized deemed credit to the appellant in accordance with the decision of the Hon'ble Karnataka High Court and as per the law.