2018 (1) TMI 912 - AT - Central Excise

Tribunal grants interest on delayed Modvat credit transfer under Rule 57H

M/s. Reliance Industries Ltd. Versus CCE & ST, Lucknow

The Tribunal allowed the appeal and granted interest to the appellant for the delay in transferring credit under the Modvat scheme. The Tribunal held that ... Interest on delayed refund of unutilized credit - transfer of credit under Rule 57H(3) - scope of section 11B of CEA - whether the provisions of section 11B and 11BB OF Central Excise Act, 1944 are applicable to the proceedings of claim of refund by way of transfer under Rule 57H(3) of Central Excise Rules, 1944 or not? - Held that: - similar issue came up before Hon’ble High Court of Madhya Pradesh in the case of Midland Plastics Ltd. [2006 (4) TMI 157 - HIGH COURT OF JUDICATURE OF MADHYA PRADESH], where it was held that the provisions of Rule 57H and the notification issued thereunder enable refund under the Modvat credit scheme but even in such cases the procedure and limitation for claiming such refund would be governed by the provisions of Section 11B of the Central Excise Act - provisions of section 11B of the Central Excise Act are applicable to the facts of this case. The appellant is entitled to claim interest from the date of filing of refund of set off by way of credit to the Modvat scheme after three years from the date of filing claim of refund of set off by way of transfer to Modvat Credit Scheme under RG-23A till its realisation. Appeal allowed - decided in favor of appellant. Issues:Claim of interest on delayed refund by way of transfer of credit under Rule 57H(3) of Central Excise Rules, 1994.Analysis:The appellant, engaged in the manufacture of Polyester Staple Fibre (PSF), appealed against the rejection of interest claim by the authorities below. The appellant operated under the set-off scheme until 25.07.1991, seeking refund of unutilized set-off duty through credit transfer to its Modvat Account. Despite permission to transfer the balance in tranches, interest for the delay was not granted. The rejection was based on the argument that transfer of credit was not a refund under section 11B of the Central Excise Act, hence no interest under section 11BB could be granted. The appellant contended, citing precedents, that interest should be allowed. The Revenue argued that since the credit transfer was permitted, no interest was payable to the appellant.The key issue revolved around whether the provisions of section 11B and 11BB of the Central Excise Act applied to the claim of refund by way of credit transfer under Rule 57H(3) of the Central Excise Rules. Citing the case law, the Tribunal noted that the provisions of section 11B were applicable to such cases. The High Court held that the provisions of Rule 57H enabled refund under the Modvat credit scheme, subject to the limitations of section 11B. Referring to another case, it was emphasized that interest could be claimed for the delay caused by the Revenue in allowing the transfer of credit. The Tribunal, following the precedents, concluded that the appellant was entitled to interest for the delay from the date of filing the refund claim to the realization of the credit transfer.In conclusion, the Tribunal set aside the impugned order and allowed the appeal with consequential relief. The appellant was granted interest for the delay in transferring the credit under the Modvat scheme, following the legal provisions and precedents cited in the judgment.