2004 (10) TMI 499 - AT - Central Excise

Summary

Issues:
- Appeal against rejection of interest claim on refund under Section 11BB of the Customs Act.
- Interpretation of conditions of Notification No. 203/92-Cus.
- Application of amnesty scheme for reversal of Modvat credit with interest.
- Entitlement to interest on refund under Section 11BB of the Customs Act.

Analysis:
The appellant filed an appeal challenging the rejection of their interest claim on a refund under Section 11BB of the Customs Act by the Commissioner (Appeals). The case involved the import of inputs under the Value Based Advance Licence Scheme governed by Notification No. 203/92-Cus., dated 19-5-1992, where the appellant availed Modvat credit for inputs used in exported goods. The Central Government issued an amnesty scheme through Circular No. 285/1/1997-CX, dated 10-1-1997, allowing exporters to reverse wrongly taken credit along with interest. The appellant reversed the credit under the scheme and subsequently filed a refund claim for excess reversal of Modvat credit. The Commissioner (Appeals) allowed the refund claim but denied the interest claimed by the appellant.

Upon review, the Tribunal noted that the appellant's case did not involve a refund of duty paid in excess but rather the reversal of wrongly taken credit in violation of Notification No. 203/92-Cus. The Government's amnesty scheme required manufacturers to reverse credit with interest to resolve disputes arising from such violations. The appellant complied with the scheme by reversing the credit along with interest. In light of these circumstances, where the excess Modvat credit was being recredited to the appellant's account, the Tribunal found no fault in the Commissioner (Appeals)'s decision to deny the interest claim. Consequently, the Tribunal dismissed the appeal, upholding the decision of the Commissioner (Appeals) regarding the interest on the refund under Section 11BB of the Customs Act.