2018 (7) TMI 599 - AT - Central Excise

Refund claim of duty paid - Area based exemption availed - refund was restricted for the period January-March, 2003 on the basis of the amendments carried out in the N/N. 32/99-CE dated 08.07.1999 vide N/N. 65/2003-CE dated 06.08.2003 - Held that - In terms of the N/N. 32/99-CE dated 08.07.1999, as amended vide N/N. 61/2002-CE dated 23.12.2002 ibid, the refund is to be worked out by restricting the same to the amount of duty paid less the amount of cenvat credit availed in respect of the duty paid on the inputs used in or in relation to the manufacture of the goods cleared under this notification. Further restrictions were imposed by the amendment under Notification No.65/2003-CE dated 06.08.2003 which appears to have been taken into account in restricting the refund claim by Revenue for the period January March, 2003. We find no jusitification for such restriction. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Notification No. 32/99-CE dated 08.07.1999 and subsequent amendments.
2. Validity of refund claims for the period January - March, 2003.
3. Impact of amendments under Notification No.65/2003-CE dated 06.08.2003 on refund eligibility.
4. Justification for restricting refund claims by the Revenue.
5. Compliance with cenvat credit availed in relation to duty paid on inputs.

Analysis:
The appeal before the Appellate Tribunal CESTAT Kolkata involved a dispute regarding the interpretation of Notification No. 32/99-CE dated 08.07.1999 and subsequent amendments. The respondent, having a factory in Meghalaya, availed the Area Based Exemption for North Eastern States under this notification, utilizing cenvat credit for duty payment and subsequent refund claims for the period January - March, 2003. The notification was amended by Notification No.61/2002-CE dated 23.12.2002, introducing restrictions on refund eligibility. The Revenue challenged the refund order post-amendment under Notification No.65/2003-CE dated 06.08.2003, leading to the appeal (Para 1).

The Tribunal considered arguments from both sides, with the Revenue justifying the refund sanction authority's decision and the respondent's advocate supporting the impugned order. The respondent contended that refund claims should be evaluated based on the amendments in Notification No.61/2002-CE dated 23.12.2002, rather than the subsequent restrictions introduced by Notification No.65/2003-CE dated 06.08.2003. The Tribunal noted the necessity to restrict refund based on duty paid less cenvat credit availed for inputs under the notification (Para 4).

In the detailed analysis, the Tribunal referred to the Commissioner (Appeals)'s examination of the matter, emphasizing the correct method of evaluating refund claims. The Commissioner highlighted that the entire cenvat credit availed in a month should not be deducted while allowing the refund. Circulars and instructions supported this view, indicating that the proper approach was to ascertain the cenvat credit availed on inputs used in manufacturing final products cleared under the notification. Consequently, the Tribunal found no reason to interfere with the impugned order, sustaining it and dismissing the Revenue's appeal (Para 5-6).

Ultimately, the Tribunal upheld the impugned order, emphasizing the correct interpretation of the notification and the necessity to adhere to the prescribed method for calculating refund eligibility based on cenvat credit availed on inputs used in manufacturing. The decision highlighted the importance of following legal provisions and circulars in determining refund claims, ensuring compliance with the relevant notifications (Para 7).