1991 (6) TMI 168 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal No. V-2 (85) (CETA) 1664/88 dated 26-9-1988
- Claim for refund within the limitation under Section 11B of the CESA
- Provisional assessment and duty payment under protest
- Benefit of provisional assessment and refund claims
- Applicability of MODVAT credit in relation to refund claims
- Interpretation of Section 11B Explanation (B) Clause (e)
- Decision of the Supreme Court in Samrat International (P) Ltd. v. Collector of Central Excise, Hyderabad
- Approval of classification list No. 2/86-87 effective from 1-4-1986
- Observations and implications of the Supreme Court decision
- Rejection of the appeal and direction for refund sanctioning with MODVAT credit examination

Analysis:
1. The appeal before the Appellate Tribunal CEGAT, Bombay challenged the Order-in-Appeal setting aside the Order-in-Original and allowing the Respondents' claim for refund within the prescribed limitation under Section 11B of the Central Excise and Salt Act (CESA).

2. The Respondents filed a classification list claiming duty at Nil rate up to a specified value limit, later claiming MODVAT credit but paying duty at a full rate for a period. The Assistant Collector rejected the refund claims as time-barred, but the Collector (Appeals) overturned this decision citing provisional assessment approval and timely filing of refund claims.

3. The Department argued that the benefit of provisional assessment was not available to the Respondents, emphasizing the necessity of paying duty provisionally under protest for claiming refunds beyond the stipulated period under Section 11B. The Department contended that the Respondents voluntarily paid duty without seeking provisional assessment, rendering the refund claims ineligible.

4. Reference was made to the Supreme Court decision in Samrat International (P) Ltd. v. Collector of Central Excise, Hyderabad, highlighting the distinction between paying duty at a lesser rate as claimed and voluntarily paying duty at a higher rate without protest. The Department also raised concerns about potential double payment if MODVAT credit was availed in relation to the refund claimed.

5. The Tribunal, after considering arguments, found the Supreme Court decision applicable, indicating that duty payment after filing a classification list but before approval should be deemed provisional, aligning with the decision's interpretation of Section 11B. Consequently, the appeal against the refund claim allowance was rejected, directing the matter back to the Assistant Collector for refund sanctioning with a specific examination of MODVAT credit utilization by third parties.

6. The Tribunal upheld the rejection of the appeal by the Department, with the modification of directing the Assistant Collector to scrutinize MODVAT credit availed by third parties in relation to the refund claim, ensuring compliance with existing legal provisions during the refund sanctioning process.