Fertilisers and Chem. Travancore Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appellant is a central public sector undertaking engaged in the manufacture, inter alia, of caprolactum. the dispute that arises in the present appeal is about exports of caprolactum in terms of customs notification no. 203/92, dated 19-5-92. the appellant imported raw materials without payment of customs duty under notification no, 203/92. such imports cast an obligation on the appellant to export caprolactum. it was also a condition of the notification that the appellant should not have availed modvat credit on the inputs used in such exports. the appellant discharged the export obligation during the period 1994-95. the production for export and domestic sales of caprolactum was made from common inputs on which modvat credit had been taken. since the notification forbade modvat credit in respect of inputs used in the export goods, the appellant reversed an amount of about rs. 80 lakhs in 1994-95. on 17-1-97 the appellant received a letter from the jurisdictional superintendent of central excise informing them that in terms of trade notice no. 5/97, dated 7-1-97 and trade notice no. 10/97, dated 14-1-97 the appellant was required to reverse modvat credit of over rs. 1.29 crores and to pay interest at the rate of 20% on the amount of modvat credit retained for the period between the date of export and the date of reversal of modvat-credit.the interest was worked out at more than rs. 32 lakhs. the appellant replied this letter vide their letter dated 21-1-97 stating that the estimation of quantum of modvat credit required to be reversed by the appellant was on the higher side and that according to their calculation the quantum of modvat credit availed on goods exported would be about rs. 71 lakhs only and that the reversal of about rs. 80 lakhs already made by the appellant was in excess of the amount of credit required to be reversed. the central excise authorities, however, did not accept the appellant's contention and after some correspondence and discussion the appellant carried out the direction made under letter dated 17-1-97 of the superintendent and reversed further credit of over rs. 49 lakhs and paid interest of over rs. 30 lakhs. while making the reversal of credit etc. under their letter dated 30-1-97 the appellant stated that they were abiding by the directions under protest. subsequently, the appellant filed a refund claim seeking the restoration of the excess credit to them and the interest paid. this claim was rejected by the assistant commissioner.thereupon the appellants filed an appeal before the commissioner (appeals). the appellant failed there also. the commissioner (appeals) held that the reversal of credit must be made under amnesty scheme formulated by the central board of excise and customs and the appellants claim for dealing with the question of reversal of credit on the basis of estimated modvat credit in respect of inputs used in the exported goods cannot be accepted as the same is contrary to the formula indicated in the amnesty circular.2. the appellants maintain that their request for reversal of credit on the basis of actuals was in conformity with the circular and that the lower authorities were in error in holding to the contrary. learned counsel for the appellants has, in this connection referred to circular no. 318/34/97-cx, dated 26-6-97 of the central board of excise and customs and pointed out that the circular had clarified that the reversal of credit could be done "on actual basis" also and that the appellants demand was entirely within the amnesty scheme and not in deviation of the same. learned counsel also pointed out that this tribunal has already decided the issue in favour of the assessee vide its decision in auro electronics v. commissioner of customs, chennai - 1998 (104) e.l.t. 510.3. as against the aforesaid submissions on behalf of the appellant learned senior departmental representative for the revenue has pointed out that it is well-settled that a party seeking to avail itself of an amnesty scheme should strictly abide by the terms of that amnesty scheme and no modification is permissible. learned departmental representative also pointed out that this position remains settled by the decision of the apex court in the case of bharti telecom ltd. - 2001 (134) e.l.t. 327 (s.c.).4. there could be no dispute that a party seeking to avail of an amnesty scheme has to abide by the scheme in its totality. the amnesty scheme by its very nature is a take it or leave it arrangement. this position remains settled by the decision of the apex court in the case of bharti telecom ltd. however, the present appeal is not a case where the appellant is seeking any modification of the amnesty scheme. it had already made reversal of credit and payment of interest as demanded by the jurisdictional central excise officers. the appellants' grievance is that the amount computed by the revenue is in excess. it is only seeking the quantum of credit to be reversed be fixed in terms of the circular no. 318/34/97, dated 26-6-97, issued by the board. that circular relates to issue of certificate confirming the reversal of credit to individual exporters. para 4 of the circular states as under : "in the cases where credit is reversed on actual basis, such certificates should be issued only after verification of the records of the exporter by a cost accountant nominated by the chief commissioner under section 14a of the central excise act, 1944." it is evident from the circular that the reversal of credit may be done either under the formula prescribed in the circular dated 10-1-97 or on "actual basis". export of goods and reversal of credit had taken place in 1994-95 itself. the appellant made further reversal as advised by the jurisdictional authorities. this reversal was under protest. the above-mentioned circular dated 26-6-97 of the board permits reversal of credit on "actual basis". it is clear from these facts and circumstances that the appellants claim for re-estimation of the credit required to be reversed on actual basis is in terms of the amnesty scheme itself and not contrary to that scheme. we are therefore, of the opinion that the ratio of the decision of the apex court in bharti telecom ltd. is not attracted to the facts of the present case and the appellant's claim for re-estimation of the quantity of modvat credit required to be reversed is justified and is in terms of the circular dated 26-6-97. lower authorities were not correct in rejecting that claim. they should have carried out verification of the records of the appellant by a cost accountant nominated by the chief commissioner as envisaged in para 4 of the circular.5. for the reasons stated above, the appeal is allowed after setting aside the impugned orders. appellant's claim for re-estimation of the amount of credit and interest shall be considered by the department after due verification of the appellant's records by a cost accountant nominated by chief commissioner.

Judgment:
1. The appellant is a Central Public Sector Undertaking engaged in the manufacture, inter alia, of Caprolactum. The dispute that arises in the present appeal is about exports of Caprolactum in terms of Customs Notification No. 203/92, dated 19-5-92. The appellant imported raw materials without payment of customs duty under Notification No, 203/92. Such imports cast an obligation on the appellant to export Caprolactum. It was also a condition of the notification that the appellant should not have availed Modvat credit on the inputs used in such exports. The appellant discharged the export obligation during the period 1994-95. The production for export and domestic sales of Caprolactum was made from common inputs on which Modvat credit had been taken. Since the notification forbade Modvat credit in respect of inputs used in the export goods, the appellant reversed an amount of about Rs. 80 lakhs in 1994-95. On 17-1-97 the appellant received a letter from the jurisdictional Superintendent of Central Excise informing them that in terms of Trade Notice No. 5/97, dated 7-1-97 and Trade Notice No. 10/97, dated 14-1-97 the appellant was required to reverse Modvat credit of over Rs. 1.29 crores and to pay interest at the rate of 20% on the amount of Modvat credit retained for the period between the date of export and the date of reversal of Modvat-credit.

The interest was worked out at more than Rs. 32 lakhs. The appellant replied this letter vide their letter dated 21-1-97 stating that the estimation of quantum of Modvat credit required to be reversed by the appellant was on the higher side and that according to their calculation the quantum of Modvat credit availed on goods exported would be about Rs. 71 lakhs only and that the reversal of about Rs. 80 lakhs already made by the appellant was in excess of the amount of credit required to be reversed. The Central Excise authorities, however, did not accept the appellant's contention and after some correspondence and discussion the appellant carried out the direction made under letter dated 17-1-97 of the Superintendent and reversed further credit of over Rs. 49 lakhs and paid interest of over Rs. 30 lakhs. While making the reversal of credit etc. under their letter dated 30-1-97 the appellant stated that they were abiding by the directions under protest. Subsequently, the appellant filed a refund claim seeking the restoration of the excess credit to them and the interest paid. This claim was rejected by the Assistant Commissioner.

Thereupon the appellants filed an appeal before the Commissioner (Appeals). The appellant failed there also. The Commissioner (Appeals) held that the reversal of credit must be made under amnesty scheme formulated by the Central Board of Excise and Customs and the appellants claim for dealing with the question of reversal of credit on the basis of estimated Modvat credit in respect of inputs used in the exported goods cannot be accepted as the same is contrary to the formula indicated in the amnesty circular.

2. The appellants maintain that their request for reversal of credit on the basis of actuals was in conformity with the circular and that the lower authorities were in error in holding to the contrary. Learned Counsel for the appellants has, in this connection referred to Circular No. 318/34/97-CX, dated 26-6-97 of the Central Board of Excise and Customs and pointed out that the circular had clarified that the reversal of credit could be done "on actual basis" also and that the appellants demand was entirely within the amnesty scheme and not in deviation of the same. Learned Counsel also pointed out that this Tribunal has already decided the issue in favour of the assessee vide its decision in Auro Electronics v. Commissioner of Customs, Chennai - 1998 (104) E.L.T. 510.

3. As against the aforesaid submissions on behalf of the appellant learned Senior Departmental Representative for the Revenue has pointed out that it is well-settled that a party seeking to avail itself of an amnesty scheme should strictly abide by the terms of that amnesty scheme and no modification is permissible. Learned Departmental Representative also pointed out that this position remains settled by the decision of the Apex Court in the case of Bharti Telecom Ltd. - 2001 (134) E.L.T. 327 (S.C.).

4. There could be no dispute that a party seeking to avail of an amnesty scheme has to abide by the scheme in its totality. The amnesty scheme by its very nature is a take it or leave it arrangement. This position remains settled by the decision of the Apex Court in the case of Bharti Telecom Ltd. However, the present appeal is not a case where the appellant is seeking any modification of the amnesty scheme. It had already made reversal of credit and payment of interest as demanded by the jurisdictional Central Excise officers. The appellants' grievance is that the amount computed by the Revenue is in excess. It is only seeking the quantum of credit to be reversed be fixed in terms of the Circular No. 318/34/97, dated 26-6-97, issued by the Board. That circular relates to issue of certificate confirming the reversal of credit to individual exporters. Para 4 of the circular states as under : "In the cases where credit is reversed on actual basis, such certificates should be issued only after verification of the records of the exporter by a Cost Accountant nominated by the Chief Commissioner under Section 14A of the Central Excise Act, 1944." It is evident from the circular that the reversal of credit may be done either under the formula prescribed in the circular dated 10-1-97 or on "actual basis". Export of goods and reversal of credit had taken place in 1994-95 itself. The appellant made further reversal as advised by the jurisdictional authorities. This reversal was under protest. The above-mentioned circular dated 26-6-97 of the Board permits reversal of credit on "actual basis". It is clear from these facts and circumstances that the appellants claim for re-estimation of the credit required to be reversed on actual basis is in terms of the amnesty scheme itself and not contrary to that scheme. We are therefore, of the opinion that the ratio of the decision of the Apex Court in Bharti Telecom Ltd. is not attracted to the facts of the present case and the appellant's claim for re-estimation of the quantity of Modvat credit required to be reversed is justified and is in terms of the circular dated 26-6-97. Lower authorities were not correct in rejecting that claim. They should have carried out verification of the records of the appellant by a Cost Accountant nominated by the Chief Commissioner as envisaged in Para 4 of the circular.

5. For the reasons stated above, the appeal is allowed after setting aside the impugned orders. Appellant's claim for re-estimation of the amount of credit and interest shall be considered by the Department after due verification of the appellant's records by a Cost Accountant nominated by Chief Commissioner.