2016 (4) TMI 324 - AT - Central Excise

Tribunal grants relief, refunds Rs. 227.20 Lakhs. Appellants eligible for Modvat credit. Procedural errors noted.

M/s. Samtel India Ltd. Versus C.C.E., Jaipur-I

M/s. Samtel India Ltd. Versus C.C.E., Jaipur-I - 2016 (343) E.L.T. 917 (Tri. - Del.) Issues Involved:1. Eligibility of Modvat credit utilization.2. Validity of refund claim of Rs. 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 Rs. 4,19,33,605. The Assistant Commissioner confirmed a demand of Rs. 3,84,97,707 and imposed a penalty of Rs. 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 Rs. 227.20 Lakhs:The appellants paid Rs. 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 Rs. 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 Rs. 492.28 Lakhs which lapsed on 01.03.1997 did not include the impugned amount of Rs. 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 Rs. 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 Rs. 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.