2006 (5) TMI 226 - AT - Central Excise

Tribunal affirms credit restoration without refund application under Section 11B

The Tribunal held that restoration of credit in the case did not necessitate a refund application under Section 11B, aligning with Division Bench ... Refund - Restoration of credit - Limitation Issues:1. Admissibility of refund claim under Section 11B.2. Restoration of credit under Central Excise Act, 1944.3. Applicability of Division Bench decisions.Analysis:Issue 1: Admissibility of refund claim under Section 11BThe appellant availed Cenvat credit facility but utilized Modvat credit not available as a credit balance for duty payment. The refund claim for duty paid through Cenvat credit was sanctioned by the Deputy Commissioner and upheld by the Commissioner (Appeals). The J.D.R. argued that the refund claim was time-barred and could only be sanctioned under Section 11B, citing the Supreme Court's decision in Mafatlal Industries Ltd. v. Union of India. However, the Tribunal found the Mafatlal case irrelevant to the issue of credit restoration.Issue 2: Restoration of credit under Central Excise Act, 1944The J.D.R. referred to various decisions emphasizing that restoration of credit requires following the procedure under Section 11B of the Central Excise Act. In contrast, the Advocate for the respondent highlighted cases like Hind Spinners and Wipro Ltd., where restoration of credit was considered an accounting correction not requiring a refund application under Section 11B. The Tribunal noted that restoration of credit, as per Division Bench decisions, did not necessitate a refund application and was merely an accounting adjustment.Issue 3: Applicability of Division Bench decisionsThe Tribunal considered conflicting decisions and emphasized the relevance of Division Bench judgments over single-member decisions. It cited cases like Vishakapatnam Steel Plant and Wipro Ltd., where restoration of credit did not require a refund application under Section 11B. The Tribunal concluded that the restoration of credit in this case did not constitute a refund and upheld the Commissioner (Appeals) order, dismissing the appeal filed by the department.In summary, the Tribunal held that the restoration of credit in the present case did not require a refund application under Section 11B, following Division Bench decisions that considered such restoration as an accounting correction. The Tribunal dismissed the appeal, emphasizing the precedence of Division Bench judgments over single-member decisions in matters of credit restoration under the Central Excise Act, 1944.