TMI Blog2017 (1) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri C J Mathew, Member (Technical) Shri Bharat Raichandani, Advocate for the appellant Shri N.N. Prabhudesai, Superintendent (AR) for the respondent Order Appeal against order-in-appeal no. AGS (140) 107/2011 dated 25 th July 2011 of Commissioner of Central Excise Customs (Appeals), Aurangabad has been filed by M/s Jai Ambe Mata Industries, manufacturers of MS CTD bars , whose claim for refund of ₹ 1,70,621/- had been rejected by competent authority and which was concurred with by first appellate authority. 2. From the facts on record, it appears that appellant had stopped production of goods in February 2007 and had a balance of ₹ 1,70,621/- as on the date of closure. With intent to re-start production, appellant procured scrap from the open market and took credit thereon. Appellant was held liable to duty of ₹ 2,04,621/- being credit taken, under section 11A(1) of Central Excise Act, 1944 and imposed with penalty of ₹ 2,00,000/- under rule 173Q of Central Excise Rules, 1944 which was confirmed by the first appellate authority. Appellant carried the matter to the Tribunal which confirmed the demand while reducing the penalty to & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )], a Larger Bench decision did not favour the claim for refund of unutilised credit, as unacceptable owing to the decision of the Hon ble High Court of Karnataka which was not placed before the Larger Bench. 6. Learned Authorized Representative drew attention to the decision of the Tribunal in M/s Scan Synthetics Ltd v. Commissioner of Central Excise, Jaipur-I [2016-TIOL-1915-CESTAT-DEL] which has considered the judgment of the Hon'ble High Court of Karnataka in re Slovak India Trading Co Pvt Ltd and that of the Larger Bench of the Tribunal in re Steel Strips. 7. A perusal of the decision in re Scan Synthetics Ltd has highlighted an aspect that erroneously, it would now appear, influenced the decision of the Tribunal in re Computer Graphics Ltd to follow the judgment of Hon ble High Court of Karnataka viz., that the Larger Bench had not considered Slovak India Trading Co Pvt Ltd. In re Scan Synthetics Ltd , it was observed that:- 7. While there can be no dispute that the decision of the Hon'ble High Court would prevail, in case of dispute with the Tribunal's decision but we find that Larger Bench decision of the Tribunal, which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in the commercial chain; there is a final purchaser who bears the entire burden of duty and without option of adjusting the duty paid thereon. Those entitled to utilise accumulated credit are also permitted to clear inputs, as such, by discharge of duty liability. In these circumstances, the continued existence of surplus of credit is questionable. It is difficult to lend credence to the supposition that inputs on which credit has been availed has been consumed in production of output that was cleared on payment of duty without resort to drawal from the accumulated pool. Inefficiency in production can lead to disproportionate use of inputs and allowing refund of the duties on such inputs, would be tantamount to the public exchequer subsidising such inefficiency. 11. The decision in re Slovak India Trading Co Pvt Ltd relies on the absence of an express prohibition in the statute for allowing such refunds thus :- 5. There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE, Indore - 2006 (202) E.L.T. 199 (T.-LB.). Judicial discipline therefore required, to refer the matter in that regard to the Larger Bench to decide the issue on the touch stone of law. The referring Bench while hearing the matter also noticed that the assessee had made allegation that it was required to make huge deposit in its PLA under coercion and required to pay duty out of such account being allowed to utilize its credit remaining in the Modvat Account. But such allegation did not get appreciation for lack of evidence. For the same reasons, there was also a similar denial by the learned first Appellate Authority. 1.2 Without citing the statutory provisions in the Act permitting re-fund of unutilized Modvat credit in cash, mere plea was raised by the assessee that Modvat credit having been remained unutilized at the time when the unit became inoperative and there was no possibility of restarting process in the factory, refund thereof was permissible relying on the decision of Hon ble High Court of Karnataka in the case of UOI v. Slovak India Trading Co. (P) Ltd. - 2006 (201) E.L.T. 559 (Kar.) = 2008 (10) S.T.R. 101 (Kar.) . According to the Assessee, Rule 5 of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means actual compliance in respect to the substance essential to every reasonable objective of the statute and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. Refunds and Exemption are Governed by Rule of Strict Compliance 5.8 Fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , correct or make up assumed deficiency, when the words are clear and unambiguous. Courts have to decide what the law is and not what it should be. The courts adopt a construction which will carry out the obvious intention of the legislature but cannot set at naught legislative judgment because such course would be subversive of constitutional harmony [See : Union of India Anr. v. Deokinandan Aggarwal]. No person has vested right in any course of procedure 5.11 No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner laid down by law. He has no right than to proceed according to the mandate of the statute governing the subject. Claim of refund is not a matter of right unless vested by law. That would depend upon the object of the statute and eligibility. The purpose for which law has been made and its nature, the intention of the legislature in making the provision, the relation of the particular provision to other provisions dealing with the subject including the language of the provision are considerable factors in arriving at the conclusion whether a particular claim is in accordance with law. No injusti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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