2009 (4) TMI 831 - AT - Central Excise

Summary

Issues involved: Refund of Cenvat credit on inputs for export, dispute over excess use of inputs beyond SION norms, recovery of erroneous refund.

Refund of Cenvat credit on inputs for export: The applicants used cold rolled steel strips as raw materials to manufacture hot rolled steel strips for export. The Original Authority allowed the entire claim of refund of Cenvat credit. However, the Department contended that the refund should be limited to the Cenvat credit attributable to inputs as per SION norms. The Commissioner (Appeals) ruled in favor of the Department, leading to the initiation of proceedings for recovery of excess refund paid erroneously. The Original Authority confirmed a demand of Rs. 12,21,097/- as erroneous refund, which was upheld by the Commissioner (Appeals).

Dispute over excess use of inputs beyond SION norms: The applicant claimed to have used 2291 M.T. of inputs, while the Department asserted that they were entitled to use only 2028 M.T. as per SION norms, resulting in a dispute over the excess use of 263 M.T. of inputs. The applicant argued that SION norms are prescribed on an average basis and actual usage can vary, with a variation of only 10%. The Tribunal noted that SION norms are guidelines and found no evidence of diversion of raw materials to contradict the applicant's claim of actual excess use of inputs beyond SION norms. It was observed that there is no provision restricting the quantum of refund as per SION norms, leading the Tribunal to hold that the applicant had made a case for waiver of pre-deposit of dues as per the impugned order.

Recovery of erroneous refund: The Tribunal, after considering submissions from both sides, waived the pre-deposit of dues and stayed the recovery thereof until the disposal of the appeals, concluding the matter related to the refund of Cenvat credit on inputs for export and the dispute over excess use of inputs beyond SION norms.