Customs, Excise and Gold Tribunal - Mumbai
Larsen And Toubro Ltd. vs Cce on 2 April, 1996
Equivalent citations: 1996(65)ECR74(TRI.-MUMBAI)
ORDER P.K. Desai, Member (J)
1. This appeal is directed against the Order in Appeal No. KPS/619/BI/91 dt. 3.3.1992 of the Collector of CE (A) Mumbai confirming the order in original No. V(83) 18-63/90/6446 dt. 24.6.1990 of the Asstt. Commissioner of CE, Division 3, Bombay-II.
2. The appellants are manufacturers of crown corks, P.P. caps and aluminium capsules and availed of Modvat facility in relation thereto. During the period February 1987 to February 1990 they cleared their products to the customers in Free Trade Zone on the strength of CT-3 certificate issued by Range Supdt. A query was however raised as to why Modvat credit availed of should not be ordered reversal in proportion to the input that had gone in the product removed without payment of duty, ultimately demand for Rs. 67,964/- was raised, the payment of which was done under protest. Simultaneously they also reversed the credit to the extent of Rs. 7,050.37 under protest, in respect of P.P. caps supplied to a customer in Kandla Free Trade Zone during Feb./March, 1987. Taking recourse to the provisions of Rule 57F(3) of the Rules, the appellants claimed refund of the amount of Rs. 7050.37 reversed in relation to the goods supplied to the customer at KFTZ. A show cause notice was however issued for rejection of the said claim on the ground that items had gone in the manufacture sir goods to be exported, could not be treated as goods exported and on adjudication the refund claim was rejected. The appellants however preferred an appeal which also stood rejected.
3. Mr. Prakash Shah the Id. Advocate for the appellant has pleaded that the goods were removed to KFTZ without payment of duty vide Notfn. No. 217/86 under CT-3 certificate and has pleaded that his case is squarely covered by the Tribunal decision in Indian Aluminium v. Collector, He also refers to Order No. 668-69/92-WRB dt 29.4.1992 of this Bench, in Collector v. Indian Aluminium where also denial of Modvat credit in similar circumstances, was set aside by referring to the decision of East Regional Bench in Orissa Synthetics v. Collector and of the Delhi High Court in Hindustan Aluminium v. Supdt . He however, pleads that the Supreme Court have also elaborately discussed the provisions of Rule 13 of the Rules, in Hindustan Petroleum Corpn. v. Collector . He pleads that the appellants are therefore eligible to get the refund
4. Mrs. Bharati Chavan the Id. DR has however referred to the Larger Bench decision in Kirloskar Oil Engines v. Collector 1994 (73) ELT 835 (Tri.) and has pleaded that when the goods are removed without payment of duty, Modvat credit is reversible and the appellants having done so, cannot now claim the refund.
5. Considering the submissions, there is no challenge on the factual position namely, the appellants having not obtained the Modvat credit on the inputs used in their final product P.P. caps supplied by them to a unit in KFTZ under CT-3 certificate and the goods manufactured there have been exported with P.P. caps duly affixed. The inputs and the final products are specified for availment of Modvat credit The removal of P.P. caps is without payment of duty vide Notfn. No. 217/86.
6. The Supreme Court have in Re: Hindustan Petroleum Corpn. (supra) held that removal of the goods under Rule 13 of the Rules, does not mean that an exemption is granted from payment of duty and it merely means that the payment of duty is deferred till the proof of export is made available.
7. This Bench had, in Collector v. Indian Aluminium Co. (supra) an identical issue, in relation lo grant of Proforma credit vide Rule 56A where, vide Order No. 668-89/92-WRP -it. 29.4.1992, it is held that proforma credit should not be denied.
8. The provisions contained in Rule 57(c) are identical to the provisions of Rule 56A(2) and ratio of the said order would stand attracted here.
9. Further in Reliance Industries v. Collector of Central Excise (Order No. 2128/94-WRB dt. 1.12.1994 in Appeal No. E/611/90-Bom.), the right avail of Modvat credit has been upheld, when the goods have been supplied to the Export Oriented Unit and are ultimately cleared.
10. The view expressed by the Tribunal in Re: Indian Aluminium Co. (supra) is also in confrmity with the same. In the said decision, they have also considered Larger Bench decision in Re: Kirloskar Oil Engines Ltd. (supra).
11. Rule 57C of the Rule has also been subsequently amended to include the words "other than those cleared either to a unit in a Free Trade Zone or to a 100% Export Oriented Unit" and as is held in Re: Indian Aluminium Co. (supra) as also in Collector v. Shaw Wallace and Co. , the said amendment is merely of a clarificatory nature. When that be the position, such provision is deemed to have impliedly existed in the Rules.
12. The view of the authority below that because the goods cleared to Free Trade Zone are exempt from payment of duty and because they themselves are not the exporters, the benefit of Rule 57F(3) is not available, does not appear to be in confirmity with the case law referred to above.
13. Under the circumstances, the approach of the Authority below cannot be sustained and therefore the order rejecting the refund claim is set aside.
14. The authority may therefore examine the otherwise eligibility of the refund claim and pass the orders according to law, sanctioning the refund claim.