Full Judgment
2. Shri T. Vishwanathan, the learned advocate for the appellants fairly concedes that against the exports made by the appellants, duty benefit has been taken under the customs notification No. 203/92 CUS dated 19.5.1992. He also concedes that Clause v(a) of the said notification prescribes a condition that no input duty credit should be taken while availing customs duty exemption. It is, however, his case that this requirement is under the customs law, whereas refund is being sought under the excise law. He also cites the following case laws in his support:-CCE, Chandigarh v. Oswal Agro Mills Ltd. - 1997 (18) RLT 607 (CEGAT-NB)Dome Bell Investment (P) Ltd. v. CCE, Meerut - 1999 (34) RLT 194 (CEGAT)Libra Polymers Pvt. Ltd. v. CCE, Mumbai -II - 2000 (126) ELT 735 (Tri)CCE, Meerut v. Dome Bell Investment (P) Ltd. - Order No. 79/2000-NB-DB dt. 07.04.2000.
6. Rikvin Floors Ltd. v. CCE, Hyderabad - 2002 (146) ELT 382 (Tri.
Bang.) He further states that as far as appeal No. E/1786/97 is concerned, a demand was raised by the customs authorities, but the same has been dropped by the Commissioner, Customs under his Order No.S/16-MISC-340-40/96VII/S/10-4/2002 ADJN ACC/C.A. No. CC-15/2002 ADJN ACC dated 26.02.2002 and therefore, he is not pressing for the refund in that case. As regards the other four appeals, he states that no demands have yet been raised by the customs authorities.
3. Shri Vimlesh Kumar, learned D.R. appearing for the department opposes the appeals and states that since the appellants have availed the customs duty exemption under Notification No. 203/92, they were required to reverse the credit taken on the inputs, which they have subsequently done, and therefore, they are not entitled to refund of the inputs duty. He also states that since large number of manufacturers/exporters have availed of double benefit, they were granted a general amnesty from duty demand and penal action under customs law, subject to such exporters/manufacturers reversing the input duty credit. In the instant case, what the appellants have done is in line with the amnesty scheme and there is no question of granting any refund of the input duty credit reversed by them. He also cites the decision of the Tribunal in the following case in support of his arguments:- 4. After hearing both sides and perusal of case records including the case laws cited by both sides, we find that Notification No. 203/92-CUS dated 19.5.92 as amended provides duty exemption including exemption from additional duty of customs (which is equal to the excise duty) on materials required for manufacture of export products. The exemption is subject to the condition that export obligation should be discharged by exporting goods manufactured in India in respect of which no input duty credit is obtained. Such provision is obviously intended not to allow double benefit by granting exemption from additional duty of customs on the imported inputs as well as modvat credit of duty on inputs used in the manufacture of exported goods. In the instant case, admittedly the appellants have taken the benefit of duty exemption under the Notification No. 203/92-CUS and therefore, in terms of the said notification, they can not avail credit of duty paid on inputs used in the export products. Such duty credit has therefore been rightly reversed by them before export was allowed.
5. Through these appeals, the appellants are seeking refund of the duty credit already reversed. Such refund if granted, would amount to granting double benefit to the appellants. Consequently, such refund, if granted, it would require the customs authorities to demand not only additional duty but also basic duty of customs from the appellants as well as interest and would expose the appellants to penal action for violation of the condition under Notification No. 203/92-CUS. In fact, the appellants themselves have to brought to our notice that such a proceeding was initiated against them in one case but keeping in view the reversal of the credit, the action has been dropped. They themselves have also brought it to our notice that in the remaining four cases, the customs authorities have not initiated any such action and we presume that such non-action is on account of the fact that the appellants have already reversed the input duty credit.
6. In view of the foregoing, we are of the view that the refund applications filed by the appellants seeking refund of the modvat credit reversed in respect of goods exported under advance licence scheme are totally misconceived and the same have been rightly rejected by the lower authorities. We also note in passing that grant of double benefit in the form of credit of input duty and import of duty free inputs against the same export consignments would amount to grant of impermissible subsidy under the relevant WTO Agreement to which India is a signatory and such double benefits can not be granted by the Government.
7. The learned counsel for the appellants apprehends that the customs authorities may raise demands in respect of the remaining four cases and states that if the appellants are not granted the refunds, the customs authorities should be directed not to raise demands on this ground. In this regard, we note that in the one case, where a demands on this ground. In this regard, we note that in the one case, where a demand was raised, has already been dropped and no demands have been raised in the other four cases in view of the fact that the appellants have reversed the modvat credit taken earlier. The learned D.R. has also submitted that under the amnesty scheme, no demands were raised subject to reversal of the modvat credit in terms of the scheme. As such, we are of the view that the apprehension of the learned counsel is mis-placed.
8. For the detailed reasons stated above, we are unable to apply the ratio of the decisions cited by the learned advocate for the appellants to the case at hand. However, we are in agreement with the ratio of the decision cited by the learned J.D.R. for Revenue.
9. In view of the fact that the appellants have reversed the modvat credit taken in respect of inputs used in the exported products and that on the basis of such reversal, exports have been allowed and duty benefit under Notification No. 203/92 has been taken, we hold that they are not entitled to get any refund in respect of such reversal. At the same time, we direct the customs authorities not to raise demands for violation of Clause v(a) of the said notification in respect of these cases in view of reversal of credits already made.