CX - benefit of partial exemption not availed - goods cleared at Tariff rate of duty under claim of rebate by debit in CENVAT account - this was not case of wrongful availment of credit - Revenue's appeal dismissed: HC
By TIOL News Service
MUMBAI, MAR 11, 2015: REVENUE is in appeal against the order passed by the CESTAT.
On the following substantial question of law the appeal has been admitted -
"Where the assessee has cleared the manufactured goods for export on payment of excise duty at 20% by debiting the Modvat Credit Account and subsequently obtained rebate of the said duty paid under Rule 12 of the Central Excise Rules, 1944 and later on if it is found that the correct duty payable was 10%, whether the excise authorities can claim cash payment of the excess duty debited to the Cenvat Credit Account?"
Facts: The respondent Assessee is engaged in manufacture of Paracetamol (bulk drug) falling under CSHNo.2907.90 of CETA, 1985. It is chargeable to duty @ 10% Adv. in terms of Notification No.6/94-CE dt. 01.03.1994.
In one particular clearance and for export, the Assessee paid duty at 20% (Tariff rate) by utilizing Modvat credit and thereafter claimed rebate of the duty so paid.
The R/S issued a SCN seeking to recover the sum of Rs.5,54,600/- under Rule 57I of the CER, 1944. The demand was confirmed by the adjudicating and the lower appellate authority but the Tribunal set aside the same and, therefore, Revenue is before the High Court.
The counsel for the Revenue justified the demand by submitting that this is a clear case of an erroneous refund within the meaning of Rule 57I of the CER.
The respondent assessee supported the Tribunal order and submitted that there is no prohibition in law for the course adopted and so long as the refund was admissible, the same could not have been denied merely because payment of duty was made from Modvat account. Inasmuch as this was not a case of wrongful availment of Modvat credit but a clear case of refund of duty in terms of applicable rules and, therefore, the Appeal raises no substantial question of law.
The High Court observed -
+ There is no dispute about the factual position. The notification dated 1st March, 1994, itself clarifies that there is a partial exemption to specified goods falling under Chapters 28, 29 and 30 of the Central Excise Tariff Act, 1985.
+ There are no conditions attached and appearing in the table. In the present case, the exemption as partially granted by this notification was available in both the cases namely clearance for home consumption and for export.
+ If the Assessee in this case has paid duty at the tariff rate namely 20% and not availed of the exemption under the subject notification, and subsequently sought refund of the duty paid over and above 10%, or has made payment from the credit accumulated in his Modvat account, the Tribunal found that he could not have been denied the relief.
+ We do not think that this was a case where any credit on the raw materials or inputs has been claimed, or availed of. This was a situation where the benefit of the partial exemption was not availed of by the Assessee.
+ In case of export, though partial payment of duty is enough, the Assessee paid 20% duty namely at tariff rate and sought refund of the sum over and above that covered by the exemption notification. That he sought refund of the 10% differential amount of duty and obtained it.
+ Merely because he made payment of duty at tariff rate, namely at 20% from Modvat account, does not mean that this was a case covered by Rule 57 I or is a case of wrongful availment of Modvat credit.
+ We do not see how Rule 57 I had any applicability to the present case. Rule 57 I itself in its title clarifies that it is recovery of credit availed of or utilized in an irregular manner, but where duty is paid on inputs that this situation or the applicability of Rule 57 I may occur. It may not be the situation and governing the present case. It may not apply to the facts and circumstances of the present case or govern the situation which was noted by the Revenue.
+ In the circumstances, the show cause cum demand notice itself was without any authority and jurisdiction. No demand could have been raised in the present circumstances and such a finding is essentially emanating from the purported factual position. The finding of fact, therefore, really raises no substantial question of law.
+ We find that the Tribunal's reasoning does not warrant our interference because the Tribunal's view is a possible and plausible one.
The appeal filed by the CCE was dismissed.
(See 2015-TIOL-575-HC-MUM-CX)
