2007 (9) TMI 329 - AT - Central Excise

Cenvat/Modvat credit - Deemed credit - Refund - Notification No. 85/87-CE, dated 1-4-1997 - Rule 57A (2) of CER, 1944.

Summary

Issues:
- Deemed credit under Notification No. 29/96
- Time limit for refund claims under Notification No. 85/87-CE
- Applicability of Section 11B on refund claims
- Interpretation of Cenvat credit scheme
- Refund of credit accumulated due to exports

Deemed Credit under Notification No. 29/96:
The appellant, engaged in manufacturing man-made fabrics, exported goods and claimed deemed credit under Notification No. 29/96. The original authority rejected the claims due to missing documents and late submission, upheld by the Commissioner (Appeals). The appellant argued that the credit was availed as per the notification, allowing refund without time limits. The Tribunal noted that the credit could be taken immediately upon receipt of inputs, with no prescribed time limit for utilization. The Tribunal found that once credit is utilized, refund claims are subject to time limits, but credited amounts due to exports are exempt from such limits.

Time Limit for Refund Claims under Notification No. 85/87-CE:
The appellant contended that the time limit under Section 11B does not apply to refunds under Notification No. 29/96, as it deals with deemed credits. The Tribunal analyzed the provisions of Notification No. 85/87-CE, which specified time limits for refund claims. The appellant argued that only refunds related to specified duty on actual duty paid are subject to time limits under Section 11B, not deemed credits. The Tribunal agreed that the time limit under Section 11B does not apply to refunds of deemed credits under Notification No. 29/96.

Applicability of Section 11B on Refund Claims:
The Tribunal emphasized that the Cenvat credit scheme aims to prevent tax cascading, treating deemed credit under Rule 57A similarly to actual credit. The appellant filed refund claims under Rule 57F, seeking refunds for duty paid on raw materials used in manufacturing. The Tribunal clarified that while there is no time limit for utilizing credits on inputs, refunds are subject to time limits after utilization. The Tribunal ruled that the Commissioner's decision to reject the claims as time-barred was legally unsustainable.

Interpretation of Cenvat Credit Scheme:
The Tribunal highlighted that the appellant availed deemed credit under Notification No. 29/96 for duty paid on raw materials, allowing immediate credit on inputs without a specified time limit for utilization. The Tribunal differentiated between utilizing credits and claiming refunds, stating that once credits are used, refunds are subject to time limits. The Tribunal concluded that the Commissioner's decision on time-barring refund claims was not legally valid.

Refund of Credit Accumulated Due to Exports:
The Tribunal noted that credits accumulated from exports, akin to credits in the PLA account, are refundable without time limits. The Tribunal set aside the Commissioner's decision and remanded the matter to the original authority for reconsideration of the claims, emphasizing the need for a fair hearing for the appellant.