ORDER
Shri G.A. Brahma Deva
1. This appeal arises out of and is directed against the Order in appeal dated 09.04.1997 passed by the Commissioner of Customs and Central Excise (Appeals), Bangalore.
2. Issue relates to refund claim. Shri Raghuraman, learned Counsel appearing for the appellants submitted that the appellants were under a honest belief that modvat credit could be taken on the goods which had been returned to them by Rallis India. The material which they sent and was rejected was dried for about 6 hours after which they were ground an sieved. This was essential process which were undertaken during the manufacture of the goods without which the goods cannot be marketed and they were under honest belief that modvat credit was available. Accordingly, modvat credit was taken. however, under the advice of the Department, the credit was reversed. Subsequent to that they have filed a refund claim in respect of modvat credit on the rejected goods. He submitted that modvat credit on the rejected goods which has been used in the finished product as input is admissible as it was held by the larger bench in the case of CCE, Meerut V/s Tin Manufacturing Company reported in 2000 (119) ELT 290 and same was followed in the subsequent decision in the case of Montari Industries Ltd V/s CCE, Chandigarh reported in 2001 (42) RLT 774.
3. Shri Thomas appearing for the Revenue justified the action of the Department in rejecting the refund claim on the ground that the said claim do not relate to modvat credit on the rejected material. On the other hand, the party has claimed the duty paid twice in respect of the finished product. he also drew my attention to the finding portion of the Commissioner (Appeals) wherein it was observed that this is an appeal filed against rejection of refund claim by the Assistant Collector and the said order is not a case of disallowance of modvat credit. Shri Thomas submitted that the Assistant Collector’s order is not the order of disallowing the modvat credit. On the other hand, Shri Raghuraman submitted that what the party has claimed an amount of Rs. 30,528.36 is nothing but modvat credit on the rejected material. The said rejected material has been used in the process of finished product and since the reversal was not correct the party has chosen to file a refund claim.
4. I have carefully considered the matter and as can be seen from the application for refund of excise duty it is not clear whether party intends to claim refund of duty in respect of modvat credit on the defective material or duty paid on the finished product. However, it was emphatically argued by the Counsel that the party house taken a plea before the Commissioner (Appeals) that what he has claimed before the Assistant Commissioner was only refund claim in respect of modvat credit on the defective materials. In view of the factual discrepancy whether application for refund relates to modvat credit on the defective material or not is required to be examined by the authorities below. Accordingly, I am remanding the matter to the concerned Assistant Commissioner to examine the issue afresh and to pass an order accordingly on providing an opportunity to the party. The appellants may make use of this opportunity and substantiate their claim during the re-adjudication proceedings.
Thus, this matter is allowed by way of remand.
(Pronounced and dictated in open Court)