2002 (5) TMI 160 - AT - Central Excise

Summary

Issues:
Appeal against demand under Section 11(A) of the Central Excises and Salt Act, 1944 with interest and penalty imposed under Rule 173Q(1). Refund of amounts for unutilized credits on exported final products under Rule 57F. Misstatement and misdeclaration leading to recovery under Section 11A and penalty under Rule 173Q(BB). Invocation of extended period for recovery. Applicability of Section 11A to refunds granted under Rule 57F(3) and the limitation period for recovery. Conditions for refund under Rule 57F(3) and implications for manufacturer availing Modvat credit.

Analysis:
The appeal pertains to a demand of Rs. 3.10 lakhs under Section 11(A) of the Central Excises and Salt Act, 1944, along with a penalty of Rs. 1.00 lakhs imposed under Rule 173Q(1). The appellant, a manufacturer of synthetic organic coloring materials, sought a refund of Rs. 3,85,169/- for unutilized credits on exported final products under Rule 57F of the Central Excise Rules, 1944. The recovery was proposed and confirmed by the Commissioner based on various grounds, including misstatements and misdeclarations regarding rebate claims and export details.

The Commissioner found that the appellant had given undertakings regarding rebate claims and export details, which were contradicted by statements and evidence. Despite arguments on the limitation period for the Show Cause Notice, the Commissioner ruled that the refund paid to the appellant was erroneous and therefore recoverable. The invocation of the extended period for recovery was deemed sustainable based on the declarations made by the appellant.

Upon considering the materials on record, the Tribunal referred to the Supreme Court's decision in Collector of Central Excise v. Raghuvar (India) Ltd. The Tribunal concluded that refunds granted under Rule 57F(3) were not subject to Section 11A as they were not paid into the common welfare fund. The limitation period for recovering refunds erroneously made under Rule 57F(3) was set at six months, as per established legal precedents.

The Tribunal analyzed the conditions for refund under Rule 57F(3) and emphasized that such refunds were not linked to other claims or entitlements like duty rebates or drawbacks. It was noted that manufacturers availing Modvat credit could not be held responsible for exports made by merchant exporters. Consequently, the Tribunal set aside the order, allowing the appeal with consequential relief.