1994 (8) TMI 115 - AT - Central Excise

Summary

Issues:
Appeal against denial of refund of duty under Modvat Rule 57F(3) for exported goods due to drawback claimed on the goods.

Detailed Analysis:

Issue 1: Denial of Refund under Modvat Rule 57F(3)
The appeal challenges the denial of the refund of duty paid on inputs used in manufacturing exported products under Modvat Rule 57F(3). The Collector of Central Excise & Customs (Appeals) denied the Modvat credit, citing that since drawback was claimed on the goods, refund equivalent to the Modvat credit on the inputs should not be granted. The appellant argued that the drawback claimed was only for Customs duty, not Central Excise duty, thus they should still be eligible for the refund under Rule 57F(3). The appellate authority noted that the drawback benefit considers various elements like C.V. duty and excise duty suffered, not just Customs duty, and the appellant failed to provide conclusive evidence to prove their claim related only to Customs duty.

Issue 2: Interpretation of Rule 57F(3) and Distinction between Customs and Excise Drawback
The appellant contended that Rule 57F(3) allows input duty credit for both Customs duty on imported goods and Central Excise duty on locally manufactured goods. They argued that since drawback rates are fixed separately for Customs duty and Central Excise duty components, the proviso to Rule 57F(3) should differentiate between these components. The appellant highlighted the drawback schedule showing separate rates for the Customs duty component. The Department's representative supported the reasoning of the appellate authority.

Issue 3: Examination of Drawback Rates and Referral to Drawback Directorate
The Tribunal observed that the finished goods were cleared for export, and drawback was allowed based on the rates in the drawback schedule, which specified only Customs Duty drawback, not Central Excise duty. However, it was unclear how the drawback rates were fixed only for Customs duty without considering the Central Excise duty component. The Tribunal noted the lack of evidence regarding the use of indigenously produced inputs and the basis for fixing the drawback rate. Consequently, the Tribunal set aside the appellate authority's order and remanded the matter for further examination, suggesting referral to the Drawback Directorate to determine the basis for fixing the drawback rate and the inclusion of the Central Excise duty component.

This detailed analysis covers the issues raised in the appeal against the denial of the refund of duty under Modvat Rule 57F(3) and the interpretation of the distinction between Customs and Excise drawback rates, leading to the remand of the matter for further consideration and examination.