Customs, Excise and Gold Tribunal - Delhi
M/S. Sapna Polywever(P) Ltd. vs C.C.E. Indore on 2 February, 2001
ORDER Shri K.K. Bhatia, Member (T)
1. The appellants are the manufacturers of Plastic mats falling under chapter 46. They are availing modvat credit on the inputs under Rule 57A. On 14.9.95 they filed a refund claim of Rs.1,35,285/- with the Assistant Commissioner of Central Excise Division-II, Indore. The refund claim was made on the ground that they had filed an application dated 27.7.92 wherein they had sought for permission to avail transitional credit of Rs. 1,45,050/- in terms of provision off Rule 57 H of Central Excise Rules, 1944.
2. However, no action was taken by the concerned central excise authorities. It is stated that due to non consideration of the party's request for availing modvat credit under rule 57H, they had to pay duty from their PLA account on clearance of goods prior to 16.3.95. It is stated that from 16.3.95 the goods got exemption from payment of duty vide notification No. 18/95 CE dated 16.3.95. It is further contended that had their request under rule 57 H being granted in time, they could have paid duty from their RG-23 Pt-II account instead of paying it from the PLA account. It is therefore, contended that they are entitled to the refund of the aforesaid amount.
3. The party was issued a show cause notice dated 16.10.95 calling upon them to show cause why their claim for refund should not be rejected on the ground that they had collected duty from the buyers and therefore, the claim was hit by doctrine of unjust enrichment.
4. On consideration of the reply of the party the Assistant Commissioner, Central Excise, Indore vide his order dated 8.12.95 dropped the proceedings initiated against them and sanctioned the refund of Rs. 1,35,285/- to them.
5. The Deptt. filed an appeal against the above order of the Assistant Commissioner. The Commissioner(Appeals), Bhopal vide his order dated 23.8.2000 observed that under the provision of Rule 57H, only personal credit on inputs lying in stock could be allowed in RG 23A part-II account and not in cash as has been done by the adjudicating authority. Therefore, he set aside the order passed by the original authority and allowed the appeal of the Revenue.
6. The present appeal is against the above order of Commissioner(Appeals). I have heard Shri Ramesh Nair, Adv. for the appellants and Shri K.Panchat Charam, JDR for the respondents. The Ld. Advocate for the appellants submitted that since no action was taken by the Central Excise authorities on their request dated 27.7.92 for availing the modvat credit under the provision Rule 57H, they could not take credit of Rs. 1,45,050/-. Consequently, since this amount of modvat credit was not available to them, they had to pay the duty for the clearance of the goods manufactured by them from their PLA account. It is contended that had the credit of the modvat credit legitimatly due to them been allowed by the departmental authorities, they would have paid the duty from their RG 23A Part-II account on the goods cleared from their factory and correspondingly the duty amount paid through their PLA would have been saved. It is stated that w.e.f. 16.3.95, the goods manufactured by them got full exemption under notification NO.18/95-CE, as a result of this exemption, the credit even if allowed to them could be of no use and since they were deprived of the modvat credit due to them, they are entitled to the refund amount of Rs. 1,35,285/- which was paid as duty in respect of the goods cleared by them through their PLA prior to 16.3.95.
The Ld. Advocate for the appellant relied on the following decisions in support of his submission:-
i) DCM Data Products Vs CCE, New Delhi, 1994(71) ELT 631(Tribunal)
ii) Coromandal Fertilisers Ltd. Vs Union of India, 1990(48) ELT 333(AP)
iii) MRF Ltd. Vs CCE, 1990 (50) ELT 546(Tribunal)
iv) Sandoz(India) Ltd Vs CCE, 1990(50) ELT 403 (Tribunal)
7. The Ld. JDR appearing for the Revenue contended that the appellants are claiming refund of duty paid on the goods cleared from their factory prior to 16.3.95 by paying duty through their PLA. He submitted that the conclusion is inescapable that the duty paid through PLA must have been realised from the buyers and consequently the refund is not admissible to them on the principle of unjust enrichment. He further contended that the appellants have not been able to show that at the relevant time, the prior permission of the proper officer was necessary for availing the modvat credit under Rule 57H and therefore, the very basis of the claim of the appellants that they were constrained to pay duty from their PLA for want of permission from the departmental authorities to avail the modvat under Rule 57H, is knocked off. Even on merits, there are no findings by the original authority in his order that the appellants were entitled to modvat credit under rule 57H. In the absance of such findings, there is no ground to sanction them the refund, contended Learned JDR.
8. I have carefully considered the submissions made by both the sides. The basis of the refund claim of the appellants in this case is that no action was taken on their application dated 27.7.92 for availing transitional credit of Rs.1,45,050/- under Rule 57H thereby forcing them to pay the duty from their PLA on the goods cleared prior to 16.3.95. From 16.3.95, the said goods were fully exempted which put them to a loss of Rs.1,35,285/-for which they are entitled to the refund. It is observed from the Order-in-Original dated 8.12.95 passed by the Assistant Commissioner granting them the refund of this amount that he has not examined on merits whether the party was really entitled to the credit under Rule 57H as claimed by them. It is further observed that though the appellants were issued show cause notice for rejecting their refund claim on the principle of unjust enrichment, but neither the original authority nor the Commissioner(Appeals) has given any findings on this point. It is pertinent to observe that the appellants are not claiming refund of the modvat credit allegedly denied to them but they are claiming the refund of the amount paid by them through their PLA in respect of the goods cleared by them prior to 16.3.95. It is therefore, imperative that their claim for refund should be examined with reference to the invoices under which the stated goods were cleared on payment of duty from PLA whether such duty element has been realised from the buyers or not. The matter is listed today for the purpose of hearing the stay petition filed by the appellants. In view of the above discussions, the appellants are granted the stay and the matter is taken up for final disposal with the consent of both the sides. The order passed by the lower authority is set aside and the case remanded to original authority for verification and recording the findings on the following points before taking a decision on the refund claim of the party:
i) Whether the appellants are entitled to the credit under Rule 57H as claimed by them andp2
ii) Whether the claim for refund is hit by the doctrine of unjust enrichment.
9. The appellants shall be afforded reasonable opportunity of hearing before arriving at the final decision.