2003 (2) TMI 105 - AT - Central Excise

Summary

Issues:
Dispute regarding exports of Caprolactum under Customs Notification No. 203/92 - Reversal of Modvat credit - Appellant's claim for re-estimation of the amount of credit and interest.

Analysis:

1. The appellant, a Central Public Sector Undertaking, imported raw materials without paying customs duty under Notification No. 203/92, which obligated them to export Caprolactum without availing Modvat credit on inputs. The appellant reversed an amount of about Rs. 80 lakhs in 1994-95 due to this condition. Subsequently, they were directed to reverse more credit and pay interest by the Central Excise authorities. The appellant's claim for refund was rejected, and the Commissioner (Appeals) held that the reversal must be made under the amnesty scheme, not based on estimated Modvat credit.

2. The appellant argued that their request for reversal based on actuals was in line with Circular No. 318/34/97, which allowed for credit reversal on an actual basis. They cited a previous Tribunal decision supporting their stance. The Departmental Representative contended that parties must strictly adhere to amnesty scheme terms without modifications, citing a Supreme Court decision.

3. The Tribunal acknowledged that parties must comply entirely with an amnesty scheme without modifications, as established by legal precedent. However, the appellant wasn't seeking a scheme alteration but a correct computation of the reversed credit amount. The circular dated 26-6-97 permitted credit reversal on an actual basis after verification by a Cost Accountant. The appellant's request for re-estimation was deemed justified and in line with the circular, contrary to the lower authorities' rejection.

4. The Tribunal allowed the appeal, setting aside the previous orders. The Department was instructed to reconsider the appellant's claim for re-estimation of credit and interest after verifying their records with a Cost Accountant nominated by the Chief Commissioner. This decision was based on the appellant's adherence to the circular's provisions for credit reversal on an actual basis, aligning with the amnesty scheme.

This comprehensive analysis covers the issues surrounding the dispute over Caprolactum exports, Modvat credit reversal, and the appellant's successful claim for re-estimation of credit and interest based on the relevant legal provisions and precedents cited in the judgment.