2018 (8) TMI 1273 - AT - Central Excise

Utilization of CENVAT Credit - case of appellant is that they did not utilize any Modvat/Cenvat credit relating to period from 01.04.2000 to 16.06.2001 since the entire credit has been paid by the appellant on 26.07.2001 in the PLA - Held that - The adjudicating authority had confirmed the demand of ₹ 17,20,82,858/- by denying them the same. By permitting the appellant to retrospectively opt out of modvat credit scheme on the basis of CBEC vide D.O.F. No. 267/07/2002-CX-8 dated 31.03.2002, the Ld. Commissioner (Appeals) has taken a fair and judicious view in the matter and has rightly rejected the proposal in the order-in-original to demand the full credit taken for the period from 01.04.2000 to 16.06.2001 - the Ld. Commissioner (Appeals) has correctly ordered the re-quantification after allowing the appellants to opt out with effect from 31.03.2001. The appellant have pleaded that the refund of ₹ 40 lakhs was adjusted against the re-quantified demand of ₹ 1.43 Crores - Held that - There was indeed an ongoing correspondence between the Department and the appellant in this regard and appellant had undertaken to submit a letter withdrawing their claim for refund of ₹ 4.38 Crores. Therefore, the appellant would be at liberty to approach the lower authorities in respect of the appellants claims that they have paid more duty, than the re-quantified amount. The lower authorities will examine their claim in accordance with law. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Opting out of the Cenvat scheme and denial of credit.
2. Re-quantification of demand and appropriation of refund.
3. Compliance with the opt-out procedure and legal implications.
4. Challenge to the appellate authority's order and plea for refund.
5. Applicability of previous tribunal judgments.
6. Adjustment of refund against re-quantified demand and administrative examination.

Analysis:

1. Opting out of the Cenvat scheme and denial of credit:
The appellant, a unit owned by Indian Railways, manufactured goods for captive consumption. They opted out of the Cenvat scheme, leading to a dispute regarding the denial of credit. The appellant challenged the order denying credit, emphasizing that they had paid the duty in full, and the conditions for opting out were not in line with legal principles. The Commissioner (Appeals) directed re-computation of the demand, and the appellant expressed satisfaction with this decision.

2. Re-quantification of demand and appropriation of refund:
The demand amount was re-quantified, and the appellant became eligible for a refund in a separate proceeding. The Jurisdictional Commissioner appropriated the refund against the re-quantified demand. The appellant sought the return of the appropriated amount, arguing that they had already paid more duty than demanded. The Tribunal held that the appellant could address this issue with the lower authorities for administrative examination.

3. Compliance with the opt-out procedure and legal implications:
The appellant's compliance with the opt-out procedure was scrutinized, with emphasis on reversing credits, recovering amounts, and expunging balances as per the scheme's requirements. The Tribunal upheld the Commissioner (Appeals) decision to allow the appellant to opt out retrospectively from the Cenvat scheme, following existing modvat scheme conditions.

4. Challenge to the appellate authority's order and plea for refund:
The appellant challenged the order-in-appeal, asserting they had paid the duty in full and had already deposited a significant amount. They sought the return of the appropriated refund, highlighting their compliance with the directives and expressing satisfaction with the appellate authority's decision.

5. Applicability of previous tribunal judgments:
The appellant cited a previous tribunal judgment in a related case but the Tribunal found it inapplicable to the present matter. The previous case involved different legal issues, not related to opting out of the modvat scheme, unlike the current dispute.

6. Adjustment of refund against re-quantified demand and administrative examination:
The Tribunal noted the ongoing correspondence between the Department and the appellant regarding the refund adjustment. The appellant's claim of having paid more duty than demanded required administrative examination, and the Tribunal directed the appellant to address this issue with the lower authorities for proper evaluation.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision and dismissed the appeal filed by the appellant, emphasizing the legality and propriety of the orders in question. The detailed analysis covered various aspects of the dispute, including opting out of the Cenvat scheme, re-quantification of demand, compliance with procedures, challenges to orders, and administrative examinations of refund adjustments.