2000 (2) TMI 333 - AT - Central Excise

Issues Involved:
1. Entitlement to cash refund for rebate claims.
2. Applicability of Rule 57F(17) of the Central Excise Rules, 1944.
3. Treatment of Modvat credit as cash payment for rebate purposes.
4. Validity of the appellant's request for cash refund after taking credit in RG 23A Pt. II.

Issue-wise Detailed Analysis:

1. Entitlement to Cash Refund for Rebate Claims:
The appellants, engaged in the manufacture of bulk drugs, filed 198 rebate claims under Rule 12(1)(a) of the Central Excise Rules, 1944, amounting to Rs. 4,06,52,757/- during 1995-96 and 1996-97. Out of this, Rs. 2,53,22,115/- was paid in cash, and Rs. 1,53,30,642/- was credited in RG 23A Pt. II. The appellants later requested a cash refund for the credited amount. The Asstt. Commissioner rejected this request, stating that the credit had already been taken as full and final, and no request for cash payment was made before taking the credit. The Commissioner (Appeals) upheld this decision, noting that the appellant had already availed the sanctioned rebate claim.

2. Applicability of Rule 57F(17) of the Central Excise Rules, 1944:
Rule 57F(17), introduced on 1-3-1997, provided that any credit of specified duty lying unutilised on 1-3-1997 with the manufacturer of bulk drugs would lapse. The appellants argued that this rule should not apply to the rebate credited in RG 23A Pt. II, as it was not specified duty. However, the Tribunal found that the credit taken in RG 23A Pt. II was indeed specified duty, and thus, the provisions of Rule 57F(17) applied, causing the credit to lapse.

3. Treatment of Modvat Credit as Cash Payment for Rebate Purposes:
The appellants contended that payment of duty through RG 23A Pt. II should be treated as payment in cash for rebate purposes. They relied on a Ministry circular stating that payment through a debit entry in the proforma credit account is to be treated as payment in cash for the purpose of admissibility of rebate under Rule 12. The Tribunal acknowledged this but clarified that the issue at hand was the lapsing of credit under Rule 57F(17), not the admissibility of rebate under Rule 12.

4. Validity of the Appellant's Request for Cash Refund After Taking Credit in RG 23A Pt. II:
The Tribunal noted that the appellants had been accepting the rebate partly in cash and partly as credit in RG 23A Pt. II. The request for a cash refund was made on 26-3-1997, after the introduction of Rule 57F(17). The Tribunal held that since the credit was taken and utilised for payment of duty, it had lapsed with the enactment of Rule 57F(17). The Tribunal found no legal infirmity in the orders of the Asstt. Commissioner or the Commissioner (Appeals), rejecting the appellant's contention that the rebate should have been granted entirely in cash.

Conclusion:
The Tribunal upheld the impugned order, rejecting the appeal. It concluded that the appellant's request for cash refund was not tenable after accepting the rebate as credit in RG 23A Pt. II, and the provisions of Rule 57F(17) correctly applied, causing the credit to lapse. The Tribunal found no infirmity in the decisions of the lower authorities.

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