2013 (2) TMI 114 - HC - Central Excise

Refund of Modavat credit - Modavat claim disallowed - Held that - The issue sought to be raised by the appellant-Revenue is already answered in the case of Samtel India Ltd. Vs. CCE reported in 2003 (2003 (3) TMI 121 - SUPREME COURT OF INDIA)therefore, in this appeal no question of law arises including with respect to the other two issues. The objection of the Revenue that in this very proceeding refund could not have been claimed as the assessee became barred by time, it is to be considered that when the order with respect to disallowance itself had not become the final, before that the claim of refund could not have been raised by the assessee. Therefore, during the pendency of his claim for Modvat allowance itself was under consideration wherein the authority had jurisdiction to pass appropriate order with respect to the entitlement of Modvat benefit to the assessee, then in that situation, the assessee could not have moved any application for refund of the said amount which would have been in air. The question of bar of limitation in fact cannot apply and, therefore, there arises no question of law in this appeal - appeal of Revenue is dismissed.

Summary

Issues:
- Interpretation of sub-rule 17(a) and sub-rule 17(b) in relation to refund claim.
- Validity of the claim for Modvat credit and its disallowance.
- Consideration of time bar for refund claim.

Interpretation of sub-rule 17(a) and sub-rule 17(b) in relation to refund claim:
The appellant challenged the Tribunal's order regarding the entitlement to the entire amount of credit as a refund and the calculation methodology. The Supreme Court's decision in the case of Samtel India Ltd. was cited, emphasizing that sub-rule 17 cannot be applied to vested rights, allowing a refund for goods exported before March 1997. The Tribunal considered the appellant's arguments but ultimately upheld the refund claim based on legal provisions and factual analysis.

Validity of the claim for Modvat credit and its disallowance:
The appellant filed a claim for Modvat credit amounting to Rs. 25,30,20,225, which was later audited by a Cost Accountant. The Commissioner issued a show cause notice proposing to disallow a portion of the credit under specific rules and impose penalties. After remand by the Tribunal for redetermination, the adjudicatory authority disallowed a portion of the credit, leading to the challenge before the Tribunal. The Tribunal reviewed the matter, considering the Supreme Court's precedent and the specifics of the claim, ultimately upholding the disallowance of Rs. 2,37,70,000.

Consideration of time bar for refund claim:
The Tribunal addressed the objection raised by the Revenue regarding the time bar for ordering a refund and the claim becoming barred by time. It was observed that the claim for Modvat allowance was under consideration, and the authority had the jurisdiction to pass an appropriate order regarding the entitlement of Modvat benefit. Therefore, the claim for refund could not have been raised before the final decision on the disallowance. The Tribunal dismissed the Revenue's objection, stating that the bar of limitation did not apply in this scenario, leading to the dismissal of the Revenue's appeal.

In conclusion, the High Court dismissed the Revenue's appeal, affirming the Tribunal's decision on the refund claim, disallowance of Modvat credit, and the time bar for the refund claim. The judgment extensively analyzed the legal provisions, factual circumstances, and precedents to reach a reasoned decision on the issues raised by the parties.