2016 (12) TMI 837 - AT - Central Excise

Refund claim u/r 173L of the Central Excise Rules, 1944 - bringing back of defective goods sent to distributor, for reprocesssing u/r 173H - the goods cleared again on payment of duty - refund claim sought for duty paid originally - Held that - The defective goods brought back into the factory cannot be categorized under either of the two categories; consequently, the claim of modvat credit has to be disallowed as has been rightly done by the authority below. A lot of arguments have been raised by the appellant regarding the 2nd proviso to Rule 57G which allows modvat credit to be taken only within a period of six months from the date of the gate pass. However, we find that the modvat credit itself is not admissible for the basic reason that these goods do not satisfy the criteria of input or capital goods. Time bar - Held that - to obviate the difficulty of payment of duty twice, Rule 173L provides for refund of the duty paid on the goods at the time of original clearance. Such refunds are subject to the condition prescribed in Rule 173L. The refund claim under such circumstances is required to be filed within the period prescribed under Section 11B. The relevant date as per Section 11B in this case is the date of entry of the goods into the factory for the purposes of remaking, refinishing, reconditioning etc - It is on record that the last consignment was brought back to the factory on 29.03.1998. Consequently, the refund claim is required to be filed within a period of six months from this date i.e. 29.09.1998. It is on record that the refund claim stands filed on 04.01.1999 which is clearly time barred. The time limit prescribed under Section 11B of the Central Excise Act is mandatory and cannot be diluted for a reason that certificates cannot be procured. While we are able to appreciate the claim of the appellant that such delays might have occurred in procuring the certificates, we are unable to give any relief on the question of time bar. Appeal dismissed - decided against Assessee.

Summary

Issues:
1. Modvat credit denial on bulk goods brought back to the factory.
2. Time bar on the refund claim.
3. Unjust enrichment proof submission requirement.

Issue 1: Modvat Credit Denial
The appellant sought modvat credit on duty paid for reprocessed goods brought back to the factory. The tribunal found that the goods did not qualify as inputs or capital goods, making modvat credit inapplicable. Despite arguments citing Rule 57G's proviso and court precedents, the tribunal upheld the denial due to the goods' nature not meeting input or capital goods criteria.

Issue 2: Time Bar on Refund Claim
The appellant filed a refund claim for duty paid on reprocessed goods, which was rejected as time-barred. The tribunal noted that the claim should have been filed within six months of the goods' return to the factory, i.e., by 29.09.1998. However, the claim was submitted on 04.01.1999, exceeding the statutory time limit. Even if considering an earlier submission date of 30.12.1998, the claim remained time-barred, leading to dismissal based on Section 11B's mandatory time constraints.

Issue 3: Unjust Enrichment Proof Requirement
The appellant argued that delays in submitting the refund claim were due to awaiting certificates confirming no modvat credit availed on the returned goods. While acknowledging the delay's cause, the tribunal emphasized Section 11B's strict time limit, precluding exceptions for reasons beyond those specified. Despite understanding the appellant's situation, the tribunal upheld the time bar, emphasizing the claim's mandatory filing within the prescribed period.

In conclusion, the tribunal dismissed the appeal on 07.12.2016, affirming the denial of modvat credit, citing the lack of goods meeting input or capital goods criteria. The time-barred refund claim was upheld, emphasizing the statutory filing deadline under Section 11B, despite delays in certificate procurement. The ruling underscored the strict adherence to legal time limits, leading to the dismissal of the appellant's claims.