2005 (8) TMI 201 - AT - Central Excise

Summary

Issues:
1. Refund of Additional Excise Duty (AED TTA) paid on inputs used in the production of exported items.
2. Eligibility of AED for credit.
3. Coercive recovery methods by Revenue authorities during pendency of stay application.

Analysis:
1. The demand in the case was based on the erroneous refund of AED TTA paid on inputs for exported items. The Appellant contended that AED was eligible for credit, supported by a Board clarification. The lower authorities had made recoveries during the stay application, and the Appellant had debited the amount from their account. The Tribunal found the Appellant's claim well-founded as exported goods are relieved of excise duties on inputs, as clarified by the Board's letter. The requirement of pre-deposit was waived, and recovery stayed.

2. The Senior Departmental Representative argued that AED (TTA) was not applicable to finished products under Rule 5 of CENVAT Credit Rules, and hence, refund was not available to the Appellant. However, the Tribunal observed that relief from all taxes is granted to exported goods, including duties on inputs used in their manufacture. The Tribunal agreed with the Appellant's position, considering the clarification provided by the Board.

3. The Tribunal expressed concern over Revenue authorities resorting to coercive recovery methods during the pendency of the stay application. Citing precedent, the Tribunal emphasized that no recovery should be made during the appeal period or stay application. Any amount recovered from the Appellant was directed to be restored immediately. The stay application was allowed, and the coercive recovery methods were deemed impermissible.

This judgment highlights the importance of correctly applying excise duty rules, the eligibility of credits, and the prohibition on coercive recovery actions during the appeal process. The Tribunal's decision favored the Appellant, emphasizing the need to adhere to legal procedures and principles in tax matters.