1997 (2) TMI 249 - AT - Central Excise

Summary

Issues:
- Appeal against the order allowing refund claim on duty paid on inputs used in manufacturing export products.
- Interpretation of Rule 57F(3) regarding the admissibility of refund claims based on duty paid on inputs.

Analysis:
1. The appeals were filed by the Revenue against the order of the ld. Collector (Appeals) allowing refund claims totaling Rs. 3,69,780/- and Rs. 16,43,091.01. The respondents, engaged in manufacturing Fly-Back Transformers for home consumption and export, claimed refunds based on duty paid on inputs. The department contended that refunds should only be granted on the difference between duty in RG 23A Part II and duty on inputs in stock, not the entire claim. Both appeals were disposed of together due to the same issue.

2. The respondents argued that the total credit in RG 23A Part II did not accurately represent the total duty on inputs, as it was used for home consumption duty payments. They calculated the total duty on inputs used in an export product unit to determine the refund under Rule 57F(3). The Assistant Collector only allowed the refund based on the difference in duties, while the Collector (Appeals) correctly interpreted the rule and approved the claims. The appellants failed to justify the Assistant Collector's calculation, supporting the Collector's decision.

3. The Revenue argued that cash refunds on credit were only permissible when credit could not be used for duty payments on similar products. They contended that cash refunds should not exceed the duty payable on the final product if cleared for home consumption or export under rebate claims. They deemed the Collector (Appeals) order erroneous and requested its reversal.

4. The Tribunal noted that the respondents claimed refunds based on duty paid on inputs used in manufacturing final products, not the duty on the final product itself. The duty on inputs could exceed the final product duty, and the government allowed cash refunds for credit on inputs for export products. Investigations confirmed the correctness of the duty calculation on export product units by the respondents. As Rule 57F(3) linked refunds to input duty credit, the Tribunal upheld the Collector (Appeals) order, rejecting the Revenue's appeals.