1999 (5) TMI 119 - AT - Central Excise

Summary

Issues:
1. Denial of refund of Modvat credit by Assistant Collector
2. Decision of Collector (Appeals) allowing the refund
3. Jurisdiction of the Appellate Tribunal under Section 35B(1) of the Central Excise Act

Analysis:
1. The Assistant Collector denied the refund of Modvat credit to the Respondents, stating that the transaction with another company was not on a principal to principal basis. The Assistant Collector held that the manufacturer must export the goods themselves to claim the refund under Rule 57F(3). The Collector (Appeals) overturned this decision, emphasizing that the agreement was on a principal to principal basis, and the manufacturer was entitled to the refund under the rule. The Collector (Appeals) also clarified that the manufacturer need not export the goods themselves, as long as the goods were exported under bond. The Tribunal concurred with the Collector (Appeals), stating that the proviso to Rule 57F(3) did not mandate the manufacturer to export the goods themselves, and the benefit should not be denied based on the exporter being a merchant exporter.

2. The Revenue argued that the Tribunal lacked jurisdiction under Section 35B(1) of the Central Excise Act, contending that the Respondents availed double benefits and did not comply with Notification No. 85/87. The Revenue also claimed that the goods were sold for house consumption, citing a previous case. However, the Respondents argued that the appeal rightly lay with the Tribunal as it concerned the refund of Modvat credit. They maintained that all necessary documents were submitted and complied with the notification requirements. The Tribunal agreed with the Respondents, stating that the Revenue could not introduce new grounds not raised in the show cause notice. The Tribunal also noted that the issue did not pertain to rebate of duty on goods exported, falling within its jurisdiction. Consequently, the Tribunal rejected the Revenue's appeal.

3. The Tribunal carefully analyzed the provisions of Rule 57F(3) and the relevant notifications to determine the eligibility for the Modvat credit refund. It highlighted that the goods were indeed manufactured by the Respondents and exported under bond, meeting the requirements for the refund. The Tribunal emphasized that the manufacturer need not be the exporter themselves, as long as the goods were exported under bond. Additionally, the Tribunal noted that the Respondents complied with the time limits and maintained necessary accounts, dismissing the Revenue's procedural objections. Ultimately, the Tribunal upheld the decision of the Collector (Appeals) and rejected the Revenue's appeal, citing the clear provisions of Rule 57F(3) and relevant case law supporting the Respondents' entitlement to the refund.