2000 (8) TMI 810 - AT - Central Excise

Appellate Tribunal allows refund for Modvat credit under Rule 57F(3)

The Appellate Tribunal allowed the appeal concerning refund claims for Modvat credit under Rule 57F(3), totaling Rs. 17,94,684. The Tribunal disagreed ... Refund - Modvat - Removal of input Issues:Refund claims rejection under Rule 57F(3) - Applicability of Rule 57F(2) - Misinterpretation of Modvat rules by Commissioner (Appeals) - Job working necessitated due to increase in Export orders - Eligibility for refund under Rule 57F(3).Analysis:The judgment pertains to twenty-two refund claims for Modvat credit refund totaling Rs. 17,94,684, rejected by the Assistant Collector under Rule 57F(3) of the Central Excise Rules, 1944. The rejection was based on the grounds that the inputs (packing materials cartons and Fevicol) were not utilized by the appellant in their factory for manufacturing package tea exported under Bond. The Commissioner (Appeals) upheld the rejection, stating that the third parties were the actual manufacturers of packed tea, and the goods emerged in their premises could not be further used in the manufacturing of final products. Consequently, the Assistant Collector's decision was not interfered with based on these findings.The Appellate Tribunal, upon hearing both parties, found that the Commissioner (Appeals) failed to appreciate the Modvat rules correctly, especially Rule 57F(2). Rule 57F(2) allowed for the removal of inputs outside the factory for carrying on operations and bringing back partially processed inputs or final products to the factory. The Tribunal noted that there was no finding of irregularities in compliance with Rule 57F(2) procedures and that the job working was necessitated due to an increase in export orders. The Tribunal concluded that the inputs removed were finally exported, and there was no misuse of the cartons. Therefore, the Tribunal found no grounds to deny the coverage of Rule 57F(2) to the removals in this case.Additionally, the Tribunal disagreed with the lower authorities' finding that removals were permissible only under Rule 57F(1) and emphasized that the assessee could opt for either Rule 57F(1) or Rule 57F(2) when both routes were available. The Tribunal also highlighted that the refund of credit in the appellants' books would be eligible under Rule 57F(3) if the prescribed conditions and notifications were satisfied. Since there was no finding on this aspect in the lower authorities' orders, the Tribunal set aside the order and directed the clearance of the subject inputs under Rule 57(2) for the refund claims to be examined and dealt with reference to Rule 57F(3. Consequently, the appeal was allowed for consideration of the refund claim under the mentioned terms.