2008 (10) TMI 364 - AT - Central Excise

Respondent availed Modvat credit on the basis of endorsed invoices - SCN issued for recovery of credit on the ground that such invoices were not valid duty paying documents for the purpose of credit availment - demands confirmed - set aside by the Commissioner (Appeals) - respondents filed claims for refund which were sanctioned - Revenue s appeals against setting aside of the demands were allowed by the Tribunal - Held that - demands were upheld by the Tribunal the assessees were required to make restitution of the amounts refunded - assessees were obliged to make restitution of the refund made pursuant to the Tribunal s order which was subsequently reversed by the Apex Court - assessees are required to return the refund amounts set aside the impugned order and allow the appeals

Summary

Issues:
1. Availment of Modvat credit based on endorsed invoices
2. Validity of duty paying documents for credit availment
3. Sanction of refunds by the adjudicating authority
4. Requirement of restitution of refunded amounts
5. Interpretation of Apex Court decision in Commissioner of Central Excise v. Woodcraft Products Ltd.
6. Necessity of show cause notice for recovery of erroneous refund

Analysis:
Issue 1: The respondents availed Modvat credit using endorsed invoices, leading to show cause notices for credit recovery due to the alleged invalidity of the invoices as duty paying documents. The demands were initially confirmed but later set aside by the Commissioner (Appeals), prompting the respondents to file refund claims, which were approved by the adjudicating authority and upheld by the Commissioner (Appeals).

Issue 2: The Revenue's appeals against the setting aside of the demands were successful at the Tribunal, resulting in the present appeals challenging the refund sanction on the basis of the demands being reinstated by the Tribunal. The key contention revolved around the validity of the duty paying documents used by the respondents for credit availment.

Issue 3: The presiding officer considered the Apex Court decision in Commissioner of Central Excise v. Woodcraft Products Ltd., emphasizing the obligation of the assessees to make restitution of refunded amounts once the demands were upheld by the Tribunal. The argument that a notice under Section 11A was necessary for recovery of erroneous refunds was dismissed in light of the aforementioned Apex Court decision.

Issue 4: The Tribunal's decision in Mukund Ltd. v. Commissioner of Central Excise was referenced, highlighting the necessity of a show cause notice for the recovery of an erroneous refund. However, the presiding officer distinguished this judgment, emphasizing the obligation of the assessees to return the refunded amounts as per the Apex Court's ruling in Woodcraft Products Ltd.

Issue 5: Ultimately, the presiding officer held that the assessees were indeed required to return the refund amounts, leading to the setting aside of the impugned order and the allowance of the appeals. The decision was pronounced in court on 23-10-2008.