2007 (12) TMI 160 - HC - Central Excise

Whether accumulated credit (not utilized) can be refunded Not. 10/89 provides that the credit utilized on Poly Vinyl Chloride for payment of duty on textile fabrics shall not exceed Rs.3.50 per sq.mt., and the excess credit available under RG 23-A account shall not be refunded or adjusted refund not allowed appeal of assessee dismissed

Summary

Issues:
- Challenge to rejection order seeking permission to utilize excess credit in RG 23-A account
- Validity of clause (3) of 2nd Proviso to Notification No.5/94 C.E. (NT)
- Applicability of Modvat Scheme and restrictions on credit utilization

Analysis:

The appellant, engaged in manufacturing coated fabrics, sought permission to use excess credit in the RG 23-A account under the Central Excise Act. The dispute centered around the validity of clause (3) of the 2nd Proviso to Notification No.5/94 C.E. (NT) dated 1st March, 1994, which restricted the utilization of excess credit for payment of duty on excisable goods. The appellant claimed that the restriction should apply only to credits taken before 1st March, 1994, and not to existing credits. The counsel argued that the notification was violative of Article 19(1)(g) of the Constitution of India, as it impeded the legitimate expectation of the appellant.

The respondent contended that subsequent notifications, including No.5/94 C.E. (NT), superseded earlier provisions, and the appellant was not entitled to a refund of excess credit. The court examined Rule 57-A, which governs the credit of duty paid on excisable goods used as inputs for final products. It noted that manufacturers have no inherent right to such benefits until specified by Central Government notifications.

The court analyzed Notification No.10/89 CE (NT) dated 1st March, 1989, which introduced conditions for credit utilization, including restrictions on refunds for excess credit. It clarified that the appellant was not entitled to refunds since the 1989 amendment. Consequently, the court held that the appellant's claim for refund was not valid, and there was no justification to interfere with the provisions of Notification No.5/94 C.E. (NT) dated 1st March, 1994.

In conclusion, the court dismissed the writ appeals, finding no merit in the appellant's arguments. No costs were awarded in the matter.