2005 (9) TMI 161 - AT - Central Excise

Summary

Issues:
Appeal for denial of refund claim under Rule 57F of the Central Excise Rules, 1944 for accumulated deemed Modvat credit during exports under bond.

Analysis:
The appellant appealed against the denial of a refund claim under Rule 57F of the Central Excise Rules, 1944 for accumulated deemed Modvat credit during exports under bond. The Commissioner of Central Excise & Customs (Appeals) denied the refund claim citing non-fulfilment of condition 6 of Notification No. 85/87-C.E., dated 1-3-87. The condition stated that the refund would only be allowed if the manufacturer is unable to utilize the duty credit against the goods exported during the relevant quarter. The appellant argued that they were unable to utilize the credit due to the introduction of the compounded levy scheme and pressure from officers to pay duty from PLA. The appellant contended that paying duty through PLA was not advantageous and thus sought adjustment through the deemed credit. The Tribunal found the Commissioner's observation unreasonable and allowed the appeal, noting that the duty was indeed paid through PLA during the relevant quarter, supporting the appellant's claim.

The Tribunal considered the circumstances surrounding the appellant's inability to utilize the deemed credit during the quarter in question. The introduction of the compounded levy scheme and pressure from officers to pay duty from PLA were cited as reasons for the appellant's inability to utilize the credit. The Tribunal accepted the appellant's argument that paying duty through PLA was not advantageous and that adjustment through the deemed credit was warranted. The Tribunal found the Commissioner's reasoning flawed and not in line with legal principles, ultimately allowing the appeal.

In conclusion, the Tribunal allowed the appeal against the denial of the refund claim under Rule 57F of the Central Excise Rules, 1944 for accumulated deemed Modvat credit during exports under bond. The Tribunal found the Commissioner's denial based on condition 6 of Notification No. 85/87-C.E., dated 1-3-87 to be unreasonable given the circumstances faced by the appellant, including the introduction of the compounded levy scheme and pressure to pay duty from PLA. The Tribunal accepted the appellant's argument regarding the disadvantage of paying duty through PLA and allowed the adjustment through the deemed credit, ultimately ruling in favor of the appellant.