2016 (8) TMI 289 - AT - Central Excise

Refund of modvat credit - admissibility - period of limitation - accumulation of credit due to export of goods - Held that - u/s 11B, the relevant date for such type of refund, is not specified. - in the absence of any relevant date, limitation period could not have been calculated by the original authority. Therefore, the quantum of modvat credit rejected to be refundable on the ground of limitation, is not sustainable in law. Refund of modvat credit - admissibility - non-availability of shipping bills - Held that - when the first show-cause notice was issued, such ground was not taken. Further, the purpose of shipping bill, is to establish export and the proof of export was accepted. Also the bond was released after proof of export was accepted, the importance of filing of shipping bill, does not remain valid. Therefore, the modvat credit rejected is not sustainable in law. Refund of modvat credit - admissibility - more than one refund claim filed in one quarter - Held that - by following the precedents decision of this Tribunal in the case of Hotline Teletube & Components Ltd. Vs. Commr. of Central Excise, Indore 1998 (5) TMI 72 - CEGAT, NEW DELHI , more than one refund claim can be filed in a quarter. - Matter remanded back

Issues Involved:
1. Lapse of un-utilized Modvat credit.
2. Deficiency in refund applications.
3. Partial refund and quantification of refund.
4. Limitation under Section 11B of the Central Excise Act, 1944.
5. Non-availability of documents to establish exports.
6. Filing more than one refund claim in a quarter.
7. Change in formula for quantification of Modvat credit.

Detailed Analysis:

1. Lapse of Un-utilized Modvat Credit:
The appellants, M/s J. K. Drugs & Pharmaceuticals Ltd., availed Modvat credit on inputs used in the manufacture of their final product, which were exported under bond. They filed refund claims for accumulated Modvat credit. The Assistant Commissioner issued a show-cause notice (SCN) stating that un-utilized Modvat credit as of 1st March 1997 would lapse as per Notification No.6/97 (NT) dated 01.03.1997. Consequently, the refund claims were proposed to be rejected. The appellants argued that the provision was not applicable since their refund applications were submitted before the said date. The original authority rejected the refund claims, stating that the Modvat credit lapsed on 1st March 1997.

2. Deficiency in Refund Applications:
The Commissioner (Appeals) upheld the rejection, citing deficiencies in the applications before the credit lapsed. However, the Tribunal, in its Final Order dated 14.05.2003, held that since the refund applications were filed before 01.03.1997, the refund was admissible. This order was upheld by the Supreme Court, which dismissed the Revenue's Special Leave Petition (SLP).

3. Partial Refund and Quantification of Refund:
The Assistant Commissioner granted partial refunds through orders dated 03.09.2004. The appellants appealed against these partial refunds. The Supreme Court remanded the case back to the Tribunal to either await the decision of the Commissioner (Appeals) on the quantification of the refund or to examine the correctness of the quantification itself. The Tribunal dismissed a Misc. Application by the appellants, stating that the adjudicating authority had already passed an appealable order. The Commissioner (Appeals) subsequently remanded the matter for re-adjudication, following principles of natural justice and for re-quantification of the refund amount.

4. Limitation under Section 11B of the Central Excise Act, 1944:
The Deputy Commissioner, in compliance with the remand order, considered limitation as one of the factors for quantification. The Tribunal found that under Notification No.85/87 (NT) dated 01.03.1987, the limitation under Section 11B is provided. However, since the relevant date for such type of refund is not specified, the limitation period could not have been calculated by the original authority. Therefore, the rejection of Modvat credit on the ground of limitation was held unsustainable in law.

5. Non-availability of Documents to Establish Exports:
The Deputy Commissioner also rejected some refund claims due to the non-availability of shipping bills. The Tribunal noted that the purpose of shipping bills is to establish export, and since the proof of export was accepted and the bond was released, the importance of filing shipping bills was not valid. Thus, the rejection on this ground was also held unsustainable in law.

6. Filing More Than One Refund Claim in a Quarter:
One of the refund claims was rejected because more than one refund claim was filed in the same quarter. The Tribunal, following its precedent decision in the case of Hotline Teletube & Components Ltd., held that filing more than one refund claim in a quarter is permissible. Therefore, the rejection on this ground was not sustainable in law.

7. Change in Formula for Quantification of Modvat Credit:
The Deputy Commissioner changed the formula for quantifying the Modvat credit admissible for refund, considering the total turnover and turnover related to export. The Tribunal did not find any specific legal issue with this change but remanded the matter back to the original authority to quantify the Modvat credit refundable following the Tribunal's observations.

Conclusion:
The Tribunal remanded the matter back to the original authority to re-quantify the Modvat credit refundable and to refund the same within three months from the date of receipt of the order. Additionally, interest at the rate notified under Section 11BB of the Central Excise Act, 1944, was to be paid within three months from the date of receipt of the order.

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