2001 (5) TMI 121 - AT - Central Excise

Summary

Issues:
1. Denial of refund due to excess payment of duty.
2. Rejection of refund based on grounds of appropriate duty payment and Modvat credit utilization.
3. Commissioner (Appeals) exceeding the scope of appeal.
4. Validity of refund denial based on Modvat credit availed by buyers.

Analysis:
1. The appeal was filed against the denial of a refund due to excess payment of duty at a rate of 10% instead of the applicable 5% under Central Excise Notification 1/93. The Assistant Commissioner rejected the refund claim citing that appropriate duty was paid at the declared rate and Modvat credit utilization was not proven by the purchasers. The Commissioner (Appeals) upheld this decision, emphasizing that the rejection was not based on unjust enrichment. The Tribunal found that rejection based on unjust enrichment was not the grounds for denial, as the duty burden had already passed to the buyers upon clearance of goods.

2. The Commissioner (Appeals) was criticized for going beyond the scope of the appeal by upholding the rejection on grounds not determined by the Assistant Commissioner. The Tribunal highlighted previous cases where the right to refund was upheld based on approved lists and price lists, emphasizing that rejection solely on the grounds of duty payment as per declared rate was not valid.

3. Regarding the denial of refund based on Modvat credit availed by buyers, the Tribunal clarified that Section 11B does not permit such denial. It was noted that the correct route for Revenue was to follow Rule 57E for cases where refund of duty paid by the manufacturer of inputs was allowed. Denying the refund solely on the assumption of Modvat credit utilization by buyers was deemed extraneous to the claim under Section 11B.

4. In conclusion, the Tribunal set aside the previous order and directed the proper officer to grant the refund due as per the law, emphasizing that denial based on Modvat credit utilization and duty payment at the declared rate was not valid under the circumstances presented in the case.