2004 (7) TMI 131 - AT - Central Excise

Tribunal Upholds Partial Refund, Highlights Modvat Rules' Limitations on Cash Refunds, Except for Exports.

The Tribunal dismissed the appeal, affirming the Commissioner (Appeals) decision to grant a partial refund in cash and credit. It concluded that Modvat ... Refund - Cenvat/Modvat credit - whether M/s. Purvi Fabrics & Texturise (P) Ltd. is eligible to receive a refund of Modvat credit in cash - HELD THAT:- The learned SDR is justified in making the submissions that Modvat Credit Rules do not contain any provision for the refund of the Modvat Credit in cash or by cheque except in cases where the inputs are used in the manufacture of goods which are exported out of India and manufacturer is not in a position to utilise the credit. The refund in cash is granted as an incentive measure to the exporter. We also find force in the submissions of the learned SDR that Section 11B of the Central Excise Act provides for payment of amount of refund to the Applicants only in situations specified in proviso to sub-section (2) of Section 11B of the Central Excise Act. Clause (c) of the said proviso refers to refund of credit of duty paid on excisable goods used as inputs in accordance with the Rules made, or any notification issued, under the Central Excise Act. The provisions of Central Excise Rules in this regard has already been discussed by us wherein except in the case of export of goods, in no other case refund of credit is permissible under the rules in cash or by cheque. Accordingly we do not find any reason to interfere with the impugned Order. The appeal is thus rejected. Issues involved: The issue involved in this appeal is whether M/s. Purvi Fabrics & Texturise (P) Ltd. is eligible to receive a refund of Modvat credit in cash.Comprehensive Details:Issue 1: Refund of Modvat Credit in CashThe Appellants, textile processors, filed a refund claim for excess duty paid, which was partially sanctioned by the Asstt. Commissioner. The Commissioner (Appeals) further allowed a refund in cash and credit for different amounts. The Appellants argued that once duty is paid using credit, it should be refunded entirely, regardless of the mode of payment. They cited legal precedents supporting cash refunds in such cases. They also highlighted their inability to utilize the credit due to factory closure. Interest under Section 11BB was also claimed. The Revenue contended that Modvat Rules do not allow cash refunds except for exported goods. Section 11B of the Central Excise Act was cited to support this position.Issue 2: Legal Precedents and InterpretationThe Appellants referenced various legal decisions supporting their claim for cash refunds, emphasizing the inability to utilize credit due to factory closure. The Revenue distinguished these cases, asserting that the circumstances were different. The Tribunal's decision in the case of Rajashree Cements was cited, stating that refunds in cash are only permitted for exported goods. The Tribunal upheld the Commissioner (Appeals) decision, emphasizing the lack of provisions for cash refunds in Modvat Rules except for specific export scenarios.Conclusion:The Tribunal rejected the appeal, affirming the decision to grant a partial refund in cash and credit. It upheld the position that Modvat Rules do not generally allow cash refunds, except for specific export situations. The legal precedents cited by both parties were considered, with the Tribunal emphasizing the restrictions on cash refunds under the existing rules and regulations.