2009 (5) TMI 789 - AT - Central Excise

Summary

Issues Involved:
- Denial of concessional rate of duty
- Refund claim and Cenvat credit utilization
- Lapsing of unutilized credit under Rule 57F(17) of Central Excise Rules

Analysis:

Issue 1: Denial of concessional rate of duty
The case involved the appellant, engaged in the manufacture of Hot Rolled Products of Iron and Steel, availing concessional rate of duty under SSI exemption Notification No. 1/93-C.E. The Original Authority confirmed the duty demand, which the Commissioner (Appeals) later overturned, stating that the appellant was not liable to pay duty. The Tribunal noted that the earlier order did not affect the present refund claim and that the appellant voluntarily debited the amount from their Cenvat account against pending dues.

Issue 2: Refund claim and Cenvat credit utilization
The respondents filed a refund claim for duty debited from their PLA and Cenvat Accounts. The Original Authority allowed the refund, but during post-audit, it was found that the Cenvat Credit taken in October 2003 was not eligible for refund. The Tribunal observed that the credit balance on 31-7-1997 would lapse under Rule 57F(17) of the Central Excise Rules if not utilized for pending dues. The Commissioner (Appeals) also noted that the respondents were not entitled to a refund as they were not liable to pay duty, and the unutilized amount would have lapsed.

Issue 3: Lapsing of unutilized credit under Rule 57F(17) of Central Excise Rules
The Tribunal emphasized that as per Rule 57F(17), any unutilized credit on 1-8-1997 would lapse for manufacturers of certain steel products under compounded levy scheme. The respondents had utilized the Cenvat credit balance on 31-7-97 for pending dues, and it was clarified that refunding the credit would indirectly refund lapsed credit, contrary to the rules. The Tribunal held that the proposal in the show cause notices for recovery of erroneously allowed Cenvat Credit in October 2003, along with interest, was justified, setting aside the impugned orders and confirming the demand of duty as proposed.

In conclusion, the Tribunal allowed the appeals filed by the Revenue, emphasizing the lapsing of unutilized credit under Rule 57F(17) and rejecting the refund claim based on the appellant's voluntary debit against pending dues and ineligibility for refund as per the rules.