1996 (1) TMI 376 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment include the utilization of Modvat Procedure for duty payment, objection to payment of duty on starch, rejection of Modvat credit, imposition of penalty, rejection of refund claim, and restoration of wrongly utilized credit.

Utilization of Modvat Procedure and Objection to Duty Payment:
The appellants, manufacturers of starch and glucose, utilized the Modvat Procedure for duty payment by crediting duty earned on inputs. An objection was raised regarding the duty payment on 23 M.T. of starch cleared by debiting their R.G.23A account of glucose.

Rejection of Modvat Credit and Imposition of Penalty:
The Assistant Collector confirmed the duty demand, rejecting the Modvat credit and imposing a penalty. The Collector of Central Excise (Appeals) upheld this decision, rejecting the appeal and upholding the penalty.

Rejection of Refund Claim and Restoration of Credit:
The appellants filed a refund claim, which was rejected as time-barred. The Collector (Appeals) considered it as a restoration of wrongly utilized credit, not a refund claim. The appeal by the department was against this order-in-appeal.

Tribunal Decision and Ruling:
The respondents argued that their application was a refund claim, citing Tribunal decisions. The Tribunal held that Modvat Credit cannot be subject to a refund claim under Section 11B of the Central Excises & Salt Act, 1944.

Judgment:
The impugned order correctly noted that the relief sought was for the restoration of wrongly utilized credit. Rule 57F does not provide for a refund of such credit, except for final products. The rejection of the refund claim on the grounds of time bar was deemed erroneous. The restoration of credit should have been allowed once the respondents rectified the error by paying duty from their PLA. The appeal was dismissed, upholding the impugned order.