2003 (9) TMI 174 - AT - Central Excise

Refund - Limitation - Availment of Modvat credit without receiving inputs - Penalty - HELD THAT -Applying the ratio of the decision in the case of Jayant Glass Industries Pvt. Ltd. v. CCE 2003 (5) TMI 81 - CEGAT, NEW DELHI to the facts of the instant case I find that the appellant had reversed the Modvat credit during the course of investigations. On completion of investigations the Revenue never issued any show cause notice to the appellant proposing confirmation of the said reversal by the appellant. The notice issued to the appellant was only for the purposes of imposition of personal penalty, which in any case was also set aside by the Tribunal. As such it cannot be said that the amount was deposited by the appellant by reversing the Modvat credit is the 'duty' amount deposited in pursuance to any adjudication order or demand order. The same has to be treated as a mere deposit made by the appellant during the course of investigation, which has not culminated into any adjudication proceedings confirming the said deposit. As such I am of the view that the provisions of Section 11B laying down the limitation of six months for refund of duty would not apply to the said deposit made by the appellant. I accordingly set aside the impugned orders, direct the Revenue to refund the said amount to the appellant along with the interest in terms of the provisions of Section 11BB of the Central Excise Act, 1944 and at the rate specified therein. The appeal is allowed in above terms.

Summary

Issues involved: Availment of Modvat credit without receiving inputs, imposition of penalty, rejection of refund claim based on time-bar.

Availment of Modvat credit without receiving inputs: The appellant availed Modvat credit based on invoices from dealers, but investigations revealed that inputs were not actually received. The Commissioner imposed a penalty, which was later set aside by the Tribunal due to lack of basis for penalty.

Imposition of penalty: The Commissioner imposed a personal penalty on the appellant for irregular availment of Modvat credit. However, the Tribunal set aside the penalty as the basis for imposition did not stand after the case against the dealers was allowed.

Rejection of refund claim based on time-bar: The appellant filed a refund claim, but it was rejected by the Asstt. Commissioner and Commissioner (Appeals) citing it was beyond the six-month period from the relevant date. The appellant argued that the deposit made during investigations should not be considered as duty amount subject to time limitations.

Court's Decision: Referring to precedents, the Tribunal held that the amount deposited during investigations by reversing Modvat credit should not be treated as duty subject to time limitations. As no show cause notice was issued for confirmation of the reversal, and the penalty proceedings were set aside, the amount was deemed a deposit and not duty. The Tribunal directed the Revenue to refund the amount to the appellant along with interest, as per Section 11BB of the Central Excise Act, 1944.