1983 (6) TMI 104 - AT - Central Excise

Summary

Issues:
1. Appeal against order refusing refund and balance retention in RG 23 account.
2. Dispute over duty payable on compound fertilizers pending in Supreme Court.
3. Interpretation of Rule 56A regarding lapsing of credits in RG 23 account.
4. Applicability of credit adjustment between RG 23 and PLA accounts.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras involved a dispute regarding the treatment of balances in the RG 23 account of the appellants amounting to Rs. 28,02,965.32. The Assistant Collector of Central Excise had decided that these balances should be treated as lapsed and refused refund, citing the absence of a provision to retain such balances or issue a refund. The Collector of Central Excise (Appeals) upheld this decision, leading to the present appeal against his order. The appellants sought to retain the balance in RG 23 account to be adjusted against excise duty pending the Supreme Court's decision or for a refund under Rule 56A of the Central Excise Rules, 1944.

The representative of the appellants highlighted the pending issue of duty payable on certain compound fertilizers before the Supreme Court. Specifically, in the case of N.P.K. 14-35-14, the appellants claimed exemption from excise duty, which was disputed by the department. The outcome of this dispute would impact the credits in the RG 23 account, especially concerning countervailing duty on imported rock phosphate. The appellants faced the potential liability of over Rs. 2 crores depending on the Supreme Court's decision, emphasizing the significance of retaining the credits in the account until the final determination of their duty liability.

The Tribunal analyzed Rule 56A and clarified that it does not mandate the automatic wiping out of credits in the RG 23 account when the finished product becomes non-dutiable. The Tribunal emphasized that in situations where the appellants might face substantial payment obligations, it is justifiable to maintain the credits in the account until the Supreme Court's decision on their liability is known. Therefore, the Tribunal set aside the Collector of Central Excise (Appeals)'s order and directed that the credits in the RG 23 account should be retained until the final resolution of the pending issues related to the compound fertilizers and the appellants' duty liability is determined.

The Tribunal also addressed various points raised by the appellants regarding credit payment in cash, the validity of their license, and the adjustment of credit amounts between the RG 23 and PLA accounts. However, the Tribunal concluded that these issues were not relevant for decision in light of the main issue concerning the treatment of credits in the RG 23 account and the pending duty dispute before the Supreme Court.