2011 (3) TMI 516 - AT - Central Excise

Refund claim - Captive consumption - Assessee were purchasing the pumps and were manufacturing the Diesel Oil Engines themselves - the appellants were using the said Diesel Oil Engines captively for further manufacture of Centrifugal Pump Sets Revenue entertained a view that the same were exempted under Notification No.4/97 - As such the appellant was required to pay 8% of the amount of the final product Centrifugal Pump Sets in terms of the provisions of Rule 57CC - As such having accepted the appellant s contention it cannot be said that the entire amount of 8% debited by them has to be refunded - It is the amount extra paid by them than the duty required to be paid which only is to be refunded to them - Hence no merits in the present appeal - The same is accordingly rejected.

Summary

Issues:
Interpretation of Notification No.4/97 regarding exemption of Diesel Oil Engines under Rule 57CC and the subsequent refund claim based on Tribunal's decision.

Analysis:
The judgment revolves around the appellant, engaged in manufacturing Centrifugal Pump Sets by purchasing pumps and manufacturing Diesel Oil Engines. The appellant used these engines captively for further manufacturing and cleared them on duty payment without any dispute. The Revenue contended that the Diesel Oil Engines were exempt under Notification No.4/97, requiring the appellant to pay 8% of the final product value under Rule 57CC. The appellant argued that the engines were dutiable when used captively but paid 8% under protest.

The appellant later claimed a refund of Rs.1,91,152 based on a Tribunal decision stating no need to pay 8% under Rule 57CC. However, the claim was rejected due to non-payment of central excise duty on the engines. The appellant's advocate argued that the issue was only about the 8% reversal, not duty payment on engines, seeking a refund based on the Tribunal's decision favoring them.

The Revenue countered, stating the duty issue was linked to the engines' dutiability. Since the appellant paid 8% under Rule 57CC without duty on engines, any refund should neutralize this. The Revenue highlighted the Tribunal's stance on neutralizing duty demands against modvat credit and considered the exciseability of the engines for refund eligibility.

The Tribunal referenced a similar case where the duty demand on engines was dismissed due to exemption views. They emphasized refunding only the excess amount paid beyond the required duty. As the issue was previously addressed, the Tribunal rejected the present appeal based on the earlier decision's findings, finding no merit in the current case.

In conclusion, the judgment clarifies the interplay between duty payment, exemptions under Notification No.4/97, and refund claims under Rule 57CC. It underscores the importance of consistent legal interpretations and the need to refund only the excess amount paid beyond the actual duty requirement.