2009 (2) TMI 615 - AT - Central Excise

Summary

Issues involved:
The judgment deals with the issue of availing Customs Notification No. 203/92 benefits, breach of condition-V of the Notification, reversal of Modvat credit, Amnesty Scheme, formula for quantification of Modvat credit, rejection of Cost Accountant's report, and entitlement to benefit of Public Notice No. 3/97.

Details of the Judgment:

1. The appellants availed benefits under Customs Notification No. 203/92 but breached condition-V by taking Modvat credit on export goods. The department demanded duty on imported raw materials and asked for reversal of Modvat credit. The appellants filed a refund claim based on excess reversal and Amnesty Scheme announced by the Govt. of India. Various circulars and notices were issued regarding quantification of Modvat credit to be reversed. The appellants followed Public Notice No. 3/97 for actual basis reversal. The Assistant Commissioner demanded further reversal, leading to a premature refund claim. The Commissioner (Appeals) upheld this decision, prompting the present appeal.

2. The Cost Accountant's audit revealed a significant reversal of Modvat credit by the appellants. The original authority rejected the report as based on assumptions. The Assistant Commissioner insisted on following the Board's formula for reversal, leading to a demand for additional reversal. The Commissioner (Appeals) dismissed the appeal, subject to a pending Writ Petition before the High Court. The appellants argued for acceptance of the Cost Accountant's report based on Tribunal decisions.

3. The appellants contended that they should be allowed to avail the Amnesty Scheme based on actual basis reversal of Modvat credit. The Counsel cited Tribunal decisions supporting this plea. The appellants had withdrawn the Writ Petition for their Bhandup factory but continued the case for the Nashik factory before the High Court.

4. The Tribunal found that the appellants consistently followed Public Notice No. 3/97 and the Board's Circular dated 26-6-1997 for actual basis reversal. The appellants' conduct demonstrated their choice to follow the option provided by the Commissioner. The Tribunal noted that the lower authorities failed to consider the Public Notice in their decisions, leading to the appeal being allowed by way of remand for fresh adjudication of the refund claim.

5. The Tribunal set aside the lower authorities' orders and directed a reevaluation of the refund claim. The authorities were instructed to verify the actual basis reversal of Modvat credit and provide the claimant with a reasonable opportunity to be heard. The pendency of the Writ Petition before the High Court was deemed not to hinder the refund claim adjudication process.

Conclusion:
The appeal was allowed by way of remand for a fresh adjudication of the refund claim, emphasizing the need to consider the actual basis reversal of Modvat credit and provide a fair opportunity for the claimant to present their case.