2007 (8) TMI 154 - AT - Central Excise

Refund Appellant demand for refund clam on the exempted goods on which duty paid under protest but appellant fails to prove that he doesn t pass on the duty on the customer i.e. principal manufacture Rejected the refund claim of appellant

Summary

Issues:
Refund claim rejection based on reversal of credit on inputs under protest.

Analysis:
The appeal was against the rejection of a refund claim of Rs. 6,98,230/- by the adjudicating authority. The appellants stopped duty payment post an order from the Tribunal, and reversed credit on inputs under protest as directed by the Superintendent of Central Excise. The adjudicating authority rejected the refund claim citing the duty on products was challenged by the appellant in CESTAT and the classification was in favor of the appellant as "exempted." The appellate authority upheld the order-in-original on the same grounds.

The advocate for the appellant argued that the issue was settled by a Larger Bench of the Tribunal in the case of CCE v. Ashok Iron & Steel Fabricators, stating that the reversal of credit on inputs was not sustainable. The Departmental Representative contended that the reversal of Cenvat credit was correct as the finished products were exempted, and the duty amount was reimbursed by the principal manufacturer. The Tribunal considered both submissions and perused the records.

The main issue was whether the appellant should reverse the credit on inputs lying in stock when the finished goods became exempted. The appellant manufactured "feed supplements" using duty-paid inputs as a job worker for M/s. Pfizer India Ltd. The Tribunal had earlier classified the feed supplements as exempted from duty. The appellant reversed the Cenvat credit on inputs under protest as directed. The Tribunal noted that the appellant knew their products were exempted, and they should not have availed credit or paid duty under protest. An agreement between the appellant and the principal manufacturer indicated the liabilities were on M/s. Pfizer India Ltd. The Tribunal found no evidence that the amount reversed was not reimbursed by the principal manufacturer, leading to the rejection of the appeal due to lack of evidence of non-passing of the claimed refund amount.

Therefore, the appeal was rejected based on the factual matrix and the appellant's failure to provide evidence of non-passing of the refund amount, as pronounced in court on 27-8-2007.