ORDER
V.K. Ashtana, Member (T)
1. This is a revenue appeal against the Order-in-Appeal No. 139/88(C), dated 20-6-1988 passed by the Collector of Central Excise (Appeals). Briefly, the facts of the case are that the respondents vide their intimation dated 6-5-1986 had opted out from the Modvat credit scheme and reverted to SSI exemption under Notification No. 175/86. Vide Final Order No. 260/87, dated 27-4-1987, this Tribunal had held that the respondents were entitled to opt out of the Modvat credit scheme, even in the middle of the financial year, as no such restriction was available under law. As a result, the respondents had filed two refund claims with the jurisdictional Assistant Collector. Out of which one refund claim Rs. 29,940.61 was allowed but vide the relevant order-in-original their second claim amounting to Rs. 6,690.70 was not allowed. The impugned order-in-appeal had however, allowed their appeal and directed that the said refund claim was payable to them. The revenue is in appeal against this impugned order-in-appeal.
2. When the case was called out, none appeared for the respondents. However, they have sent a letter dated 8-10-1998 asking for decision on merits on the basis of the above noted Tribunal’s Final Order as well as their appeal before the Collector (Appeals), which resulted in the impugned Order-in-Appeal.
3. Heard Shri R. Victor Thyagaraj, learned SDR, who submits that while the revenue does not dispute the decision that the respondent would opt out of the Modvat credit scheme in the middle of the financial year, however, their right to opt out was a prospective right and no benefits out of this opting out was available to them with retrospective effect. The refund claim in question was pertaining to the period from 1-4-1986 to 6-5-1986 i.e. it was prior to the date on which they had opted for opting out the Modvat credit scheme, therefore, it has been rightly rejected at the original stage. The learned SDR submitted that the order impugned urged in allowing the refund on the ground that it was not time barred etc. and he submits that there is no question of time bar involved in this case and the only question is that the benefit is not available with retrospective effect.
4. I have carefully considered these arguments and the records of the case and find that when the respondents have chosen to opt out of Modvat credit scheme vide letter dated 6-5-1986, therefore, their reversal into the SSI exemption status as under Notification No. 175/86 would commence from 6-5-1986. Therefore, it is clear that the duty paid prior to 6-5-1986 was legally collected by the department and was not available for refund to them. In view of this, I find great merit in the revenue’s appeal and set aside the impugned order-in-appeal. The revenue appeal succeeds accordingly.