2011 (1) TMI 350 - HC - Central Excise

Refund claim - Modvat credit - Re-export- The petitioner has imported certain capital goods and claimed Modvat credit of the duty paid thereon - It appears that the said capital goods were found defective and, therefore, the petitioner exported the same outside the country on payment of duty - Subsequently, the petitioner has filed refund claim on the ground that the said goods have already been suffered duty while importing the same. Held that the petitioner has not reversed the Modvat credit availed by it while returning the goods - The goods, which are claimed to have been exported, are not excisable goods - Therefore, the refund claim is not admissible under Rule 173L of the Rules and even the condition of Rule 173L has not been complied with - It is not a case of double deposit of duty inasmuch as Modvat credit availed has not been reversed - Hence, the writ petition fails and is dismissed.

Summary

Issues:
Challenge to order rejecting revision filed by petitioner regarding refund claim for defective imported capital goods.

Analysis:
The petitioner, a company engaged in manufacturing C.R. Sheets/Coils/Sheets/G.P. Sheets, imported defective process control equipments under Chapter 90 of the Central Excise Tariff Act and claimed Modvat credit. Subsequently, the petitioner exported these defective goods after paying duty. The Assistant Commissioner sanctioned the refund claim, but the department appealed, leading to the Commissioner (Appeals) setting aside the refund order. The petitioner then filed a revision before the Central Government under Section 35(E) of the Central Excise Act, which was dismissed, prompting the writ petition.

The Commissioner (Appeals) based the appeal allowance on Rule 18 of the Central Excise Rules, considering the return of defective goods as non-commercial with no FOB value. The requirement to reverse the credit availed under Rule 3(4) was not met, as the goods were cleared by paying duty and not as per export norms. The revisional authority rejected the revision, stating that the exported goods were not excisable and not liable for excise duty, making the refund inadmissible under Rule 173L of the Central Excise Rules, 1944. The court upheld this decision, emphasizing that the petitioner did not reverse the Modvat credit while returning the non-excisable goods, rendering the refund claim inadmissible under Rule 173L.

In conclusion, the court found no error in the order, stating that the petitioner failed to comply with the conditions of Rule 173L by not reversing the Modvat credit. As the exported goods were non-excisable, the refund claim was rightfully rejected. The writ petition was dismissed accordingly.