2008 (10) TMI 410 - AT - Central Excise

Summary

Issues:
1. Refund of duty paid by a 100% EOU on goods cleared to the Domestic Tariff Area (DTA).
2. Application of Section 11B of the Central Excise Act to refund claims.
3. Interpretation of rules regarding refund of duty for 100% EOUs.

Issue 1: Refund of duty paid by a 100% EOU on goods cleared to the Domestic Tariff Area (DTA)

The Appellate Tribunal, after hearing both sides, noted that a 100% EOU had cleared goods to the DTA on payment of duty, which were later returned by the buyer after reversing the credit of duty. The EOU then cleared the returned goods on payment of duty. The Tribunal acknowledged that the EOU had indeed paid duty twice on the same goods, leading to a claim for refund. The lower appellate authority allowed the refund, emphasizing that during the relevant period, EOUs did not have access to MODVAT credit, leaving refund as the only recourse for double duty payment. The Tribunal upheld this decision, stating that Section 11B of the Central Excise Act, applicable to all units, did not bar the refund claim.

Issue 2: Application of Section 11B of the Central Excise Act to refund claims

The Tribunal clarified that the Revenue did not contest the applicability of Section 11B of the Central Excise Act to the refund claim in question. Despite Rule 16 not being directly applicable to a 100% EOU at the time, the lower appellate authority correctly granted the refund based on the double payment of duty. The Tribunal emphasized that Section 11B did not differentiate between EOUs and normal DTA units, supporting the decision to refund one of the duty payments on the same goods.

Issue 3: Interpretation of rules regarding refund of duty for 100% EOUs

In a separate appeal, the Tribunal found no evidence of a second payment of duty on the same goods by the EOU. The goods were initially cleared with duty payment, returned by the buyer with credit reversal, and then recleared by the EOU with duty payment. Since MODVAT credit was unavailable to EOUs at that time, the Tribunal noted that no provision allowed duty refunds in such cases. Unlike the first scenario, where double duty payment occurred, the Tribunal allowed this appeal, highlighting the absence of a second duty payment on the same goods as the basis for the decision.

In conclusion, the Appellate Tribunal upheld the refund granted in the first appeal due to double duty payment by the 100% EOU. However, in the second appeal, where no second duty payment was evidenced, the Tribunal allowed the appeal, emphasizing the lack of legal provision for duty refunds in the absence of double payment.