2000 (12) TMI 321 - AT - Central Excise

Summary

Issues:
- Rejection of refund applications totaling over Rs. 27 lakhs by lower authorities.
- Classification of exported goods as P&P medicines and subsequent claim for Modvat credit refund.
- Dispute over whether the exported goods were indeed P&P medicines.
- Applicability of Modvat credit and refund claim for duty paid on inputs used in export goods.

Analysis:
The appeal in this case was filed against the rejection of three refund applications amounting to over Rs. 27 lakhs by the lower authorities. The appellants, who are manufacturers of P&P medicines, exported part of their production under bond, which were classified under Tariff item 3003.10 and assessed to duty at the time of clearance. The appellants had taken Modvat credit of the duty paid on inputs used in the export goods, which could not be utilized as the final products were exported. The appellants argued that the goods exported were the same as those cleared in the domestic market as P&P medicines, emphasizing that there was no dispute regarding the liability to pay Central Excise duty at the time of export.

During the proceedings, it was highlighted that the goods were initially classified and assessed as P&P medicines at the time of export, and a bond was executed for duty payment upon clearance for export. The Revenue contended that the goods under export were not P&P medicines and were exempted from duty, thus rejecting the refund claim for Modvat credit. However, the Tribunal noted that once goods are classified and assessed, it is not permissible to later dispute their classification. Referring to a previous case, it was established that the Modvat credit cannot be denied retrospectively if the Classification List was already approved.

Ultimately, the Tribunal found no legal or factual basis for denying the refund claim, as the goods were correctly classified as P&P medicines at the time of export. The appeal was allowed, ordering the refund to be paid to the appellant promptly, considering the delay in utilizing the Modvat credit earned rightfully on duty paid inputs. This decision reinforces the principle that once goods are classified and assessed, their classification cannot be altered retrospectively to deny legitimate claims for Modvat credit or refunds.