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2016 (4) TMI 769 - AT - Central ExciseAdmissibility of refund claim - MODVAT Credit once taken and paid back - Appropriate documents submitted - Revenue contended that amount paid back was voluntary payment but respondent is of the view that payment cannot be considered as an admission of improperly taken credit and has to be treated as a deposit with the Department. Held that - by relying on the judgment of Hon ble Apex Court in the case of Tractors and Farm Equipment Ltd. vs. CC, Madras 1997 (2) TMI 111 - SUPREME COURT OF INDIA , respondent did not file any Appeal before the higher forum claiming admissibility of MODVAT Credit in the first round of litigation. The observations made by the First Appellate Authority that appellant did not admit duty liability is thus not correct and is required to be set aside. - Decided in favour of revenue
Issues Involved:
Whether the Respondent can seek a refund of MODVAT Credit once taken and paid back due to an investigation by DGCEI. Detailed Analysis: 1. Issue of Refund of MODVAT Credit: The appeal was filed by the Revenue against the Order-in-Appeal setting aside the Order-in-Original rejecting a refund claim of &8377; 8,63,245.82 filed by the Appellant. The Respondent, a manufacturer of Railway Wagons, had taken MODVAT Credit on MS Waste and Scrap based on invoices from a Registered Dealer. The investigation by DGCEI in 1997 revealed that the credit was improperly taken, leading the Respondent to pay back the amount voluntarily on 07.05.1997. The Adjudicating Authority imposed a penalty in 2001, which was later set aside on appeal. The Respondent filed a refund claim in 2006, which was rejected in 2007 but allowed on appeal in 2011. The key argument was whether the payment made by the Respondent should be considered as a refund or a deposit. 2. Arguments by the Revenue: The Revenue contended that the Respondent voluntarily paid back the MODVAT Credit, indicating acceptance of the inadmissibility of the credit. They highlighted previous litigation where the Respondent had not challenged the inadmissibility of the credit, indicating a contradictory stand by the Respondent. The Revenue relied on the case law of Tractors and Farm Equipment Ltd. vs. CC, Madras to support their position. 3. Arguments by the Respondent: The Respondent argued that the payment was made under coercion by the Investigating Agency and should be treated as a deposit, not an admission of liability. They cited case laws to support their stance and claimed that the doctrine of unjust enrichment did not apply to their refund claim. 4. Judgment and Analysis: The Tribunal analyzed the facts and previous litigation records to determine the nature of the payment made by the Respondent. It was observed that the Respondent did not contest the inadmissibility of the credit in previous appeals, indicating an acceptance of the liability. The Tribunal agreed with the Revenue's argument that the payment was not a deposit but a refund of improperly taken credit. The Tribunal referred to the case law cited by the Revenue to support their decision. The Tribunal set aside the Order-in-Appeal and restored the Order-in-Original, allowing the appeal filed by the Revenue. In conclusion, the Tribunal ruled in favor of the Revenue, holding that the Respondent could not seek a refund of MODVAT Credit once voluntarily paid back, as it indicated an acceptance of the inadmissibility of the credit. The decision was based on a thorough analysis of the facts, previous litigation, and relevant case laws.
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