2002 (7) TMI 200 - AT - Central Excise

Issues Involved:
1. Reversal of Modvat credit.
2. Compliance with Customs Notification No. 203/92.
3. Refund claim for excess reversed credit.
4. Applicability of Board's Circulars.
5. Estoppel in taxation matters.
6. Voluntary payment under protest.
7. Reopening of settled matters.

Detailed Analysis:

1. Reversal of Modvat Credit:
The appellants, engaged in manufacturing inlet and exhaust valves, availed Modvat credit on inputs used for export under the DEEC scheme. The Custom House issued a show cause notice demanding duty for violating Notification No. 203/92 by availing Modvat credit. The appellants reversed credit under protest and complied with the amnesty scheme, reversing Rs. 14.24 lakhs and paying Rs. 8.36 lakhs in interest. The Commissioner of Customs dropped the proceedings based on this compliance.

2. Compliance with Customs Notification No. 203/92:
Notification No. 203/92 barred availing Modvat credit on inputs used for export products. The appellants initially reversed Rs. 1.81 lakhs but were later directed to reverse Rs. 14.24 lakhs based on a formula. They complied under protest and sought a refund for the excess amount reversed, arguing the reversal should be based on actual input credit used.

3. Refund Claim for Excess Reversed Credit:
The appellants claimed a refund of Rs. 15.22 lakhs, arguing they reversed more credit than required. The Assistant Commissioner and Commissioner (Appeals) rejected the refund claim, stating the reversal was voluntary and based on the amnesty scheme. The appellants cited various judgments and Board's Circulars supporting their claim for a refund of excess reversed credit.

4. Applicability of Board's Circulars:
The appellants relied on several Board's Circulars, including Circular No. 285/1/97-CX, Circular No. 318/34/97-CX, and Trade Notices, which allowed reversal of credit on an actual basis. They argued that these circulars supported their claim for a refund of the excess amount reversed.

5. Estoppel in Taxation Matters:
The appellants argued that there is no estoppel in taxation matters, citing Supreme Court decisions. They contended that even if they complied with the amnesty scheme, they should be entitled to a refund of the excess amount reversed. The Commissioner (Appeals) disagreed, stating that the appellants' compliance with the amnesty scheme precluded them from claiming a refund.

6. Voluntary Payment Under Protest:
The appellants reversed the credit under protest and paid the interest amount under protest. They argued that this was not a voluntary payment and that they should be entitled to a refund of the excess amount reversed. The Commissioner (Appeals) rejected this argument, stating that the appellants voluntarily complied with the amnesty scheme.

7. Reopening of Settled Matters:
The Commissioner (Appeals) and the Tribunal noted that the appellants chose to comply with the amnesty scheme and obtained a certificate from the Assistant Commissioner, which led to the dropping of the show cause notice proceedings. They argued that reopening the matter for a refund would be unjustified and discriminatory against other exporters who complied with the scheme.

Separate Judgments:
- Majority Judgment: The majority opinion, led by Member (T) and Member (J), held that the matter should be remanded to the original authority for de novo consideration. The original authority should determine the actual credit required to be reversed and restore any excess credit reversed by the appellants.
- Dissenting Judgment: Member (T) disagreed, stating that the appellants' compliance with the amnesty scheme and the finality of the Commissioner's order precluded them from claiming a refund. He argued that reopening the matter would be unjustified and against the principles of natural justice.

Conclusion:
The Tribunal, by majority, set aside the impugned order and remanded the matter to the original authority for de novo determination of the credit required to be restored to the appellants. The original authority was directed to permit the appellants to produce evidence and pass a detailed considered order.

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