M/S. M.M. Forgings Ltd vs Cce, Trichy

(Arising out of Order-in-Appeal No. 78/2004 dated 17.12.2004, passed by the Commissioner of Central Excise (Appeals), Trichy).

For approval and signature

Honble Shri R. PERIASAMI, Technical Member

M/s. M.M. Forgings Ltd. : Appellant

Vs.

CCE, Trichy : Respondent

Appearance

Ms. Sridevi, Adv., for the appellant Shri M. Rammohan Rao, DC (AR), for the respondent

CORAM

Honble Shri R. PERIASAMI, Technical Member

Date of Hearing/Decision : 21.01.2015

FINAL ORDER No. 40058 / 2015

The appellant filed this appeal against the impugned order dated 17.12.2004. The brief facts of the case are that the appellants are the manufacturers of excisable goods clearing on payment of duty as well as export without payment of duty and claim refund of unutilized input credit attributable to the exported goods under Rule 5 of CCR, 2002 read with Notification No. 11/2002-CX(NT) dated 01.03.2002. The appellants have filed the refund claim for the quarter October 03 to December03 for an amount of Rs.40,26,692/-. A Show Cause Notice dated 28.09.2004 was issued to the appellant informing the restriction on the refund claim to the extent of Rs. 39,49,239/-. The Assistant Commissioner of Central Excise sanctioned the refund of Rs. 39,49,239/- as per the workings stated at para 4 of the Order-in-Original and para 4 of the show cause notice. The Commissioner (Appeals) rejected the appeal of the appellants. Hence, the present appeal.

2. The Ld. Advocate for the appellant submits that as per the Notification No. 11/2002, the appellants have claimed the refund of unutilized credit Rs. 40,26,692/-, which was attributable to the inputs used in the export of finished goods. They are eligible for the balance amount of Rs. 77,453/-. They have already excluded the credit amount on the finished goods lying in stock and also credit on raw materials and claimed only for the input credit pertaining to the export. She further submits that they are eligible for the entire credit which relates to exports of finished goods. She relies upon the decisions in the case of CCE, Bangalore Vs. Motherson Sumi Electric Wires  2012 (278) ELT 177 (Kar.) and Navbharat Industries Vs.CCE, Thane  2006 (199) ELT 148 (Tri.-Mum.), in support of her contention.

3. On the other hand, the Ld. AR reiterates the findings of the adjudicating authority and the impugned order. He submits that the adjudicating authority has clearly brought out in the order that neither the appellants appeared before the adjudicating authority during the hearing nor they have replied to the show cause notice. Hence, the adjudicating authority has correctly sanctioned the amount as per the working of the total credit available and total debit made and closing balance of cenvat credit excluding the input credit on the physical stock available. Therefore, he submits that there is no mistake on the workings of the actual refund of credit attributable to the exported goods for the particular quarter.

4. Heard both sides and perused the records. The short issue involved in this appeal is the appellants claimed refund of Rs.40,26,692/- whereas, the adjudicating authority sanctioned an amount of Rs. 39,49,239/-. The appeal is limited to Rs. 77,453/-. The relevant portion of Para 4 of show cause notice and para 4 of Order-in-Original is reproduced below:-

4. As per the Notification No.11/2002 CX(NT) dated 01.03.2002, the credit available as on 31.12.2003 ie., at the end of the quarter to which the refund of unutilized credit involved in the exported goods is claimed, is the main criterion for allowing the refund and it should not be less han the amount claimed as refund.

Refund of unutilized credit to the tune of Rs. 40,26,692/- claimed by the assessee is more than the credit available as calculated below:-

1) Opening balance of credit as on 01.10.2003 Rs.1,50,28,581/- 2) Credit taken during 01.10.2003 to 31.12.2003 Rs.1,17,94,935/- 3) Total Cenvat Credit available Rs.2,68,23,516/- 4) Debits during the period from 01.10.2003 to 31.12.2003 (a) Debits for payment of duty Rs.1,05,32,840/- (b) Debits expunged for refund of Rs.1,29,56,911/- Rs. 24,24,071

5) Closing balance of Cenvat credit as Rs.1,38,66,605/- on 31.12.2003

6) (a) Amount of input credit involved in the Physical stock of raw materials as on Rs. 96,91,670/- 31.12.03 (27,37,760 kgs. @ 3.54 /kg.)

(b) Credit involved on inputs contained in Nil Finished goods.

(c) Credit involved on inputs contained in Rs.2,25,696/- Finished goods (63756 x Rs. 3.54)

Sub Total 6 (a+b+c) Rs.99,17,366/-

7) Credit remaining unutilized Rs.39,49,239/-

8) Refund claimed Rs.40,26,692/-

As seen from the above, the closing balance of Cenvat credit as on 31.12.2003 includes input credit on the physical stock of raw materials and finished goods. After excluding the credit on inputs lying in stock and contained in the finished goods in stock, the balance credit amount arrived to Rs. 39,49,239/-. The Rule 5 of CCR, stipulates that where the exporter can claim refund only when not able to utilize the accumulated cenvat credit for payment of domestic clearance. As seen from the above, read with Notification No. 11/2002, the input credit attributable to the goods exported has been correctly worked out to Rs. 39,49,239/-. What is excluded is the input credit involved in the physical stock of inputs and finished goods lying in stock on 31.03.2003. Therefore, the adjudicating authority has correctly sanction the refund amount of Rs.39,49,239/-. The case laws relied upon by the Ld. Advocate are not related to the facts of the present case. Accordingly, the impugned order is upheld and the appeal is dismissed.

(Order pronounced and dictated in the open Court)

(R. PERIASAMI) TECHNICAL MEMBER

BB

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