Customs, Excise and Gold Tribunal - Delhi
Samtel India Ltd. vs Commissioner Of Central Excise on 9 August, 2000
Equivalent citations: 2000(122)ELT596(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. This appeal has been filed against rejection of the refund claim of the appellant. The refund claim arose because of under-utilization of Modvat credit on account of the fact that the assessee was manufacturing goods for domestic market as well as for the export market.
2. The facts of the case in brief are that the appellants manufactured Picture Tubes which are cleared for domestic as well as export market. They are availing the benefit of input credit under the Modvat scheme on Glass Shells as input. The appellants filed a refund claim of Rs. 27,09,587/- on 11.07.1997 for the period form 01.01.1997 to 28.02.1997 with regard to unutilized Modvat credits on exports of finished goods effected during this period. The Asstt. Commissioner sanctioned the amount of Rs. 27,09,587/- with the condition that the amount shall be disbursed to the assessee by way of a cheque on the assessee's submitting a proof of the reversal of the equivalent amount in the R.G. 23A Part II accounts. The assessee pleaded that the condition of Rule 57F(17) of the Central Excise Rules, 1944 is not applicable in their case. The Asstt. Commissioner also observed that as the refund claim was filed on 11.07.1997 and the amount lying in balance lapsed on 01.03.1997 in terms of Rule 57F(17), no reversal can be made out of the credit which has already lapsed. Against this order the appellants filed an appeal before the Commissioner (Appeals) who held that the Board's clarification and his order dated 04.08.1999 related to cases where the refund claims had been filed prior to 01.03.1997 and since in the instant case, the refund claim has been filed on 11.07.1997 i.e. after the credit had lapsed, therefore, clarification is not applicable to the facts of the present case. He also rejected the appeal of the assessee.
3. Arguing the case for the appellant Shri A.R. Madhav Rao, ld. Counsel submits that Rule 57F(4) provides for the manner in which the credit of the duty paid on the inputs used in the manufacture of the final products is to be utilised. He submits that the proviso to this Rule provides that the credit of the specified duty in respect of the inputs used in the final products cleared for export under bond shall be allowed to be utilised towards payment of duty of excise on any final product cleared for home consumption and where for any such reason such adjustment is not possible, be refunded to the manufacturer, subject to such conditions as may be specified by the Central Govt. Ld. Counsel, therefore, submits that in their case since the amount of Modvat credit taken on inputs was much higher, there was accumulation of credit of Modvat duty taken and since the goods were exported before 01.03.1997, the credit taken on the inputs was legally taken and therefore since the utilisation of that credit for payment of Central Excise Duty on other specified goods was not possible, hence the claim for refund was legal and valid.
4. Ld. Counsel submits that the Govt. of India had issued Notification No. 85/87, dated 01.03.1987 under Rule 57F. He submits that in terms of the procedure set out for claiming such refund, an application for refund together with the proof of export was lodged with the Asstt. Commissioner of Central Excise before the expiry of the period specified in Section 11B. He submits that Section 11B of the Central Excise Act, 1944 provides for an application to be submitted for refund of the duty before the expiry of six months from the relevant date. Ld. Counsel submits that the relevant date in the case of goods exported out of India would be the date on which the goods shall be leaving India or the aircraft leaves India. He submits that in terms of the above Rules, the moment the goods are exported, the manufacturer becomes entitled to the credit. Ld. Counsel submits that the Apex Court in the case of Eicher Motors Ltd. v. U.O.I, reported in 1999 (106) E.L.T. 3 held that the right to the credit accrues to the assessee the day on which the tax on the raw materials was paid by the manufacturer and that right would continue until the facility available thereto gets worked out or until those goods existed. He submits that in view of the above rulings of the Apex Court in so far as the exports effected prior to 01.03.1997 are concerned the credit relating to the inputs used in the manufacture of goods so exported, gets accrued to the manufacturer prior to 01.03.1997. He submits that the Central Board of Excise and Customs in their circular letter dated 12-12-1997 has clarified that the freezing of the credit would not apply if the credits were earned prior to 01.03.1997. He submits that the purpose of lapsing provision is only to prevent utilisation of credit for payment of duty; that it does not prohibit flow of any other benefit from the scheme. He submits that the Tribunal in the case of CCE, Jaipur v. Samtel India Ltd. in their order No. A/354/2000-NB, dated 17.04.2000 observed "that Rule 57F(4)/57F(13) provides for grant of cash refund of outstanding Modvat credit on inputs used in the production of exported goods. The exports in the present case had taken place in 1996, therefore, the relevant credit for the purpose of refund would be of that period. This is the position declarified by the Board also in the clarificatory letter dated 12-12-1997. Therefore, we are of the view that there is no justification for denying the refund to the respondents or in asking them to reverse the credit earned on purchase of inputs during a subsequent period. The impugned order being in conformity with the instructions of the Board, it is not open for the Revenue to challenge it before us. In the circumstances, we are not able to find merit in the appeal. The appeal is accordingly rejected". Ld. Counsel also submitted that Sub-rule 13 of Rule 57F provides :
"13. Where any inputs are used in the final products which are cleared for export under bond or used in the intermediate products cleared for export in accordance with Sub-rule (4), the credit of specified duty, in respect of the inputs so used shall be allowed to be utilised by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Govt. by notification in the official Gazette".
He submits that Rule 57F(13) does not lay down any condition; that this rule provides that the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Govt. by notification in the official Gazette. He submits that though proviso under Sub-rule 57F(17) provides :
"17. Provided that nothing contained in this clause shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on the first day of March, 1997".
He submits that these type of conditions are not prescribed under Sub-rule 13 of Rule 57F. Ld. Counsel, therefore, submits that in view of the above submissions and the case law cited and relied upon, the appeal may be allowed.
5. Shri V.M. Udhoji, ld. DR submits that in the instant case refund of Modvat credit has been denied on the ground that Modvat credit lapsed on 01.03.1997. He submits that in the instant case the appellants had filed the refund claim on 11.07.1997. He submits that on 11.07.1997, there was no credit available in respect of goods exported on or before 01.03.1997. He submits that Sub-rule 17 of Rule 57F reads :-
"17. Notwithstanding anything contained in Sub-rule (12) or Rule 57A, any credit of specified duty lying unutilised on the first day of March, 1997 with the manufacture of bulk drugs falling under Chapter 28 or 29 and with the manufacturers of black and white picture tubes falling under sub-heading No. 8540.12 shall lapse and shall not be allowed to utilize for payment of duty on any excisable goods, whether cleared for home consumption or for export".
Ld. DR submits that this provision is very clear that any application filed subsequent to 01.03.1997 for refund of the credit shall not be admissible even in respect of goods exported prior to 01.03.1993 if the same was filed on or after 01.03.1997. He submits that though there is a proviso to this Rule but that proviso is not applicable to the facts of the present case. Ld. DR submits that Rule 57F(13) is the normal rule and not the rule under which the credit lapses. He submits that there is no denying of the fact that if the application for a refund had been filed before 01.03.1997, the applicant would have been entitled to refund of Modvat credit in respect of the goods exported prior to 01.03.1997.
6. Ld. DR submits that Board's letter dated 12-12-1997 is not a circular, it is only a clarification given in respect of a particular consignment. In that case the refund claim was filed prior to 01.03.1997. He submits that in the instant case the refund claim has been filed after 01.03.1997 and therefore, the clarification contained in that letter is not applicable to the facts of the present case. He submits that the case law cited by the appellant in their own case also is not applicable to the facts of the present case in-as-much as the refund claim in the instant case was filed after 01.03.1997. Ld. DR also submits that the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. U.O.I, relied upon by the assessee in para 6 held :
"6. Thus a right accrued to the assessee on the day when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed".
He submits that in this case the facility got worked out with the lapse of credit on 01.03.1997. He submits that the inputs were used in the manufacture of finished goods and the finished goods were exported before 01.03.1997 and therefore, the goods were not existing in the premises of the manufacturer. He submits that the facts in the present case are different and therefore, the ruling of the Apex Court shall not be applicable to the facts of the present case.
7. We have heard the rival submissions. We have also perused the evidence on records and the case law cited and relied upon by the appellant. We have also perused the relevant provisions of the rules applicable to the facts of the present case. We have also perused the clarificatory letter issued by the Central Board of Excise and Customs. We note that in the instant case exports had taken place before 01.03.1997. We note that Modvat credit accrued upto 28.02.1997 lapsed on 01.03.1997. Thus, there was no credit in respect of the inputs used in the manufacture of export goods. We note in the instant case that Board clarified by its letter dated 12-12-1997 that freezing of credit lying in balance as on 01.03.1997 will not act as a bar in this case. In that case the refund claim was filed before 01.03.1997, and since against this amount of credit, there was already a claim existing on 01.03.1997 that portion of the credit could not be termed as frozen that remained alive whereas in the instant case the refund claim was filed on 11.07.1997 when there was no credit available in respect of the goods exported prior to 01.03.1997 and hence the ratio of the clarification given by the Board as also in the case of the appellant decided by this Tribunal will not be applicable to the facts of the present case. Insofar as the applicability of the ratio of the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. is concerned, we find force in the argument of ld. DR.
8. We have also perused the provisions of Rule 57F(13). This Rule no doubt speaks of refund of duty where any inputs are used in final products which are cleared for export under bond or used in the intermediate products cleared for export in accordance with Sub-rule 4, the credit of specified duty in respect of the inputs so used shall be allowed to be utilised by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any such reason such adjustment is not possible then manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations etc. We note that there is no dispute that refund of duty taken as credit on inputs used in the manufacture of final goods exported is refundable but refund can be made only if the amount is available on the date of filing the refund claim. In the instant case, credit lapsed on 01.03.1997 whereas the refund claim was filed on 11.07.1997 and thus, the provisions of Rule 57F(13) are also not complied with in the instant case.
9. In view of the above findings, we do not find any error factual or legal in the impugned order. The impugned order is, therefore, upheld and the appeal is rejected.