2003 (10) TMI 164 - AT - Central Excise

Summary

Issues:
Claim of refund under Rule 57AC(7) of the Central Excise Rules.
Accumulated credit utilization for payment of duty.
Claim of drawback or rebate under Customs and Central Excise Duties Drawback Rules, 1995.

Analysis:
The appellants sought a refund of Rs. 5,36,02,238 under Rule 57AC(7) of the Central Excise Rules, which was rejected by the authorities citing the capability of utilizing the accumulated credit. The authorities contended that the appellants did not fulfill the condition for refund as the accumulated credit could be used for payment of duty on final products cleared for home consumption or export. The appellants explained that due to a domestic market slump and increased export activities, most of their production was exported under bond, leading to the accumulation of Cenvat credit. The Tribunal found this explanation acceptable, especially considering the significant difference between clearances for home consumption and exports. They concluded that the accumulated credit was not capable of utilization for goods cleared for home consumption or exports on payment of duty during the relevant quarter, thus entitling the appellants to a cash refund. The Tribunal emphasized that the future utilization of credit was irrelevant, focusing on the capacity for payment of duty in the specific quarter, as per Board Circular No. 220/54/96/CX., dated 4-6-96.

Regarding the claim of drawback or rebate, the Tribunal found the material on record insufficient to determine whether the appellants had claimed such benefits. Therefore, they remanded this aspect to the Jurisdictional Assistant Commissioner/Deputy Commissioner for verification with reference to shipping bills/AR-4s for the disputed period. The Tribunal disposed of the appeal by holding the refund admissible on merits but requiring further verification on the claim of drawback or rebate.