2017 (1) TMI 288 - AT - Central Excise

Reversal of MODVAT credit - input lying in stock, and contained in WIP and finished stock lying on the date of exemption notification i.e. 29-2-2000 - Held that - The Cenvat credit was availed by the appellant during the period when the final, product i.e. Tooth powder was dutiable therefore the availment of credit was legally permissible. No provision in the Cenvat credit rules existed which provides for reversal of credit which was legally availed in case of final product gets exempted after availing the credit. As regard the Commissioner(Appeals) rejection of refund on limitation, I find that appellant his admittedly paid the duty under protest and it is not appellant who delayed the filing the refund but it is department who delayed in deciding the issue raised by the appellant - In my considered view, even the appellant was not required to file any refund claim, they could have taken the credit after issue on merit was settled in various judgments including case of Ashok Iron And Steel Ltd 2002 (1) TMI 91 - CEGAT, NEW DELHI . Therefore there is absolutely no case that refund being time bar. The appellant is legally entitle for the refund alongwith consequential interest - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Reversal of Modvat credit on input stock after exemption notification.
2. Applicability of Tribunal decisions in refund claim rejection.
3. Time-barred refund claim and procedural aspects.

Issue 1: Reversal of Modvat credit on input stock after exemption notification:
The appellant, engaged in Tooth Powder manufacturing, availed Modvat credit on inputs until 29-2-2000 when Tooth Powder became duty exempt. The Range Superintendent asked the appellant to reverse the credit on input stock as of 1-3-2000. The appellant paid under protest but claimed no further credit was availed post-29-2-2000. The adjudicating authority rejected the refund claim citing the Tribunal's decision in M/s. Albert David Ltd case. The Commissioner(Appeals) remanded the matter, but the refund was again rejected. The appellant argued that the Albert David case did not apply, citing the Ashok Iron & Steel Fabrication case upheld by the Supreme Court. The Tribunal held that the appellant was not required to reverse the credit post-exemption, relying on the Ashok Iron and Steel case, thereby allowing the refund.

Issue 2: Applicability of Tribunal decisions in refund claim rejection:
The appellant contended that the rejection of the refund claim was based on the Albert David case, which was distinguished in subsequent judgments. The Revenue argued that the refund was time-barred and cited other judgments to support their stance. The Tribunal noted that the dismissal of the appeal in the Albert David case was summary, and subsequent cases departed from or disapproved of it. The Tribunal relied on the Ashok Iron and Steel case as the settled legal position, disregarding the Albert David case. The appellant's payment under protest and pursuit of the matter with the department were considered, leading to the allowance of the refund claim.

Issue 3: Time-barred refund claim and procedural aspects:
The Revenue claimed the refund was time-barred as it was filed after five years. The appellant argued that the payment was made under protest, followed by correspondence, making the refund claim timely. The Tribunal found that the appellant acted promptly, and any delay was due to the department's inaction in responding to the appellant's letters. The Tribunal held that the appellant was entitled to the refund with interest, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the appellant was not required to reverse the Modvat credit post-exemption and that the refund claim was not time-barred. The Tribunal emphasized the importance of legal precedents and procedural fairness in reaching its decision, ultimately allowing the appeal and granting the appellant the refund along with consequential relief.