2002 (5) TMI 139 - AT - Central Excise

Summary

Issues:
Refund of Modvat credit for duty paid on inputs used in goods exported under bond under Rule 57F(13) of the Central Excise Rules, 1944.

Detailed Analysis:

Issue 1: Refund of Modvat Credit
The case involved appeals by a company regarding the availability of refund for Modvat credit on duty paid inputs used in the manufacture of goods exported out of India under Rule 57F(13) of the Central Excise Rules, 1944. The company exported Fullers' Earth under bond and cleared Activated Bleaching Earth for home consumption, availing Modvat credit on inputs like Sulphuric Acid and furnace oil. They filed refund claims for duty paid on inputs used in the manufacture of Fullers' Earth. The Deputy Commissioner initially granted the refund but later demanded it back, alleging non-compliance with Modvat Rules. The Commissioner (Appeals) rejected the appeals, stating the company was not under the Modvat Scheme and thus not entitled to benefits like Rule 57F(13).

Issue 2: Compliance with Modvat Scheme
The company argued they were indeed working under the Modvat Scheme, maintaining records in RG 23A register and submitting modvatable invoices for defacement. They highlighted a precedent where a fresh declaration was not required each financial year for Modvat benefits. The company provided necessary information for refund claims, and the Assistant Commissioner acknowledged their compliance by sanctioning the refund. The company contended that the denial of Modvat credit due to non-filing of a declaration was a technical lapse.

Issue 3: Adjudication and Departmental Arguments
The Departmental Representative supported the Adjudication Orders and the Commissioner's decision, emphasizing the company's exemption from duty payment for Activated Bleaching Earth under the Small Scale Industries Notification as proof they were not under the Modvat Scheme. The company's compliance with Modvat Rules and eligibility for the refund were contested by the Department.

Judgment
The Tribunal analyzed Rule 57F(13) and the conditions for refund specified in Notification No. 85/87-C.E. It noted the company's submission of RG 23A register before refund sanction as evidence of compliance. The absence of proof showing the company opted out of the Modvat Scheme for Fullers' Earth supported their eligibility for the refund. The Tribunal set aside the Commissioner's decision, allowing both appeals and granting the company the refund of duty paid on inputs used in goods exported under bond.