2016 (4) TMI 324 - AT - Central Excise

Refund claim - Manufacture of black and white T.V. Picture Tubes of various sizes - Availed credit of duty paid on various inputs used in the manufacture of these picture tubes - Submission of statements showing daily balance of RG 23 A part II for the period 01.08.1995 to 01.03.1997 where the amount of modvat credit available was never below ₹ 227.20 Lacs - Held that - the appellant has made out a case for refund of the amount paid by them in cash through PLA debit and taken re-credit immediately during the pendency of first round of adjudication. It is also established that they had all along modvat credit balance much higher than ₹ 227.20 Lakhs, when both the credit registers were taken together as such it is found that they are eligible for the consequential relief of refund of this amount. The appellant also prayed for refund of the said amount with interest. It is found that provision to pay interest has been introduced in the law only from 26.05.1995 vide Section 11BB of the Central Excise Act, 1944. Therefore, interest entitlement will be due from three months after the introduction of the provisions for payment of interest in the Act. - Decided in favour of appellant with consequential relief

Issues Involved:
1. Eligibility of Modvat credit utilization.
2. Validity of refund claim of ?227.20 Lakhs.
3. Impact of Rule 57 F (17) on credit balance.
4. Procedural delays and incorrect information by Revenue.
5. Interest on refund amount.

Detailed Analysis:

1. Eligibility of Modvat Credit Utilization:
The appellants were engaged in the manufacture of black and white TV picture tubes and availed credit on various inputs under Rule 57 A of the Central Excise Rules, 1944. The Department contended that credit availed on inputs for 14-inch picture tubes could not be utilized for 17-inch and 20-inch picture tubes. This led to the issuance of four show cause notices totaling ?4,19,33,605. The Assistant Commissioner confirmed a demand of ?3,84,97,707 and imposed a penalty of ?5.00 Lakhs. However, the Tribunal in its final order dated 19.04.2002 held that the appellants were eligible to utilize the Modvat credit taken on inputs for 14-inch picture tubes for discharging duty on 17-inch and 20-inch picture tubes.

2. Validity of Refund Claim of ?227.20 Lakhs:
The appellants paid ?2,27,20,000 through their PLA during the pendency of the adjudication process and took re-credit of the same amount in their RG-23 A Part II Accounts. The Tribunal remanded the matter for recalculating the amount of credit lapsed and the quantum of refund due. The Original Authority and the Commissioner (Appeals) rejected the refund claim on the grounds that the amount taken as re-credit was utilized for payment of duty and no amount was available as on 31.12.1995. The Tribunal found that the appellants maintained two registers for RG-23 A Part II and had a modvat credit balance much higher than ?227.20 Lakhs during the relevant period, thus establishing their eligibility for the refund.

3. Impact of Rule 57 F (17) on Credit Balance:
With effect from 01.03.1997, Rule 57 F (17) stipulated that any credit on specified duty lying unutilized with the manufacturer of black and white picture tubes would lapse. The lower authorities concluded that the credit of ?492.28 Lakhs which lapsed on 01.03.1997 did not include the impugned amount of ?227.20 Lakhs. However, the Tribunal found this assertion factually incorrect and contradictory to earlier findings by the original and appellate authorities.

4. Procedural Delays and Incorrect Information by Revenue:
The appeal faced significant delays due to the pendency of a reference petition before the High Court of Rajasthan and repeated adjournments. The Tribunal noted that the Revenue provided incorrect information regarding the status of the reference petition, which was dismissed for non-prosecution on 05.02.2009. Despite multiple opportunities, the Revenue failed to file an affidavit or provide a verification report on the cenvat credit accounts, citing the unavailability of old records.

5. Interest on Refund Amount:
The Tribunal allowed the refund of ?227.20 Lakhs and noted that the provision to pay interest was introduced from 26.05.1995 under Section 11BB of the Central Excise Act, 1944. The appellants were entitled to interest from three months after the introduction of this provision.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal with consequential relief, including the refund of ?227.20 Lakhs and applicable interest. The judgment emphasized the appellants' eligibility for Modvat credit utilization, the validity of their refund claim, and the procedural lapses by the Revenue.

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