2004 (3) TMI 180 - AT - Central Excise

Summary

Issues:

1. Appeal against rejection of refund claim of deemed Modvat credit on export of fabrics.
2. Grounds for rejection of refund claim.
3. Interpretation of provisions regarding adjustment/utilization of deemed credit.
4. Consideration of new grounds in Revenue's appeal.
5. Review of Commissioner's order-in-appeal.

Analysis:

The case involves an appeal against the rejection of a refund claim for deemed Modvat credit on fabric exports. The Commissioner (Appeals) allowed the appeal, setting aside the order-in-original that denied the refund claim. The respondents argued that due to the introduction of a compounded levy scheme for textile processors, they could not utilize the deemed credit accumulated from exports and were thus entitled to a refund.

The show cause notice raised two grounds for rejection: limitation and inability to adjust/utilize the deemed credit. The Assistant Commissioner only relied on the latter ground, leading to the rejection of the claim. However, the Commissioner (Appeals) analyzed relevant provisions and concluded that the refund was permissible as adjustment of the deemed credit was not feasible due to the new scheme.

In the Revenue's appeal, it was argued that cash refund could only be granted if the assessee could not utilize the credit until a specific date. The Revenue contended that the provisions of Notification No. 85/87-C.E. were mandatory and binding, allowing refunds only in specific circumstances. The Revenue raised new grounds not mentioned earlier, claiming the Commissioner should have appealed the original order to introduce these new arguments.

The appellate authority held that the Commissioner (Appeals) correctly decided the matter, and there was no need for interference. The Revenue's appeal was rejected as the new grounds were not raised in a timely manner and lacked sufficient reasoning to challenge the refund claim based on the introduction of the compounded levy scheme.