2005 (12) TMI 142 - AT - Central Excise

Summary

Issues involved: Eligibility of Modvat credit of Custom duties, refund claim due to closure of unit, method of refund.

Eligibility of Modvat credit of Custom duties: The dispute arose regarding the appellant's eligibility for Modvat credit of Custom duties paid on inputs during a specific period. Two show-cause notices were issued, leading to an order by the Commissioner confirming the duty demand. However, the Tribunal, upon appeal, set aside the Commissioner's order.

Refund claim due to closure of unit: The appellant had debited an amount from their RG-23A Part-II register and sought a refund after the Tribunal's order. Due to their unit being closed per orders from the Supreme Court, they requested a cash or cheque refund as they couldn't utilize the credit. The Deputy Commissioner granted the refund as a credit entry in the Modvat account, which was upheld by the Commissioner (Appeals), leading to the present appeal.

Method of refund: The appellant argued that they had to pay duty out of the PLA due to actions by the Revenue, exceeding the refund amount claimed. They contended that settled law dictates that when an assessee is unable to utilize Modvat credit and pays duty from PLA, they should be granted a cash refund upon appeal success if unable to use the credit subsequently. Citing various decisions, the appellant emphasized that a credit entry in the Modvat account would not assist them as their factory was closed. The Tribunal, relying on precedent, held that if an assessee cannot use the credit for any reason, success in the appeal would be futile. Referring to established law, the Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant.