SATEX MILLS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) APPEAL No. 1032/99 is against rejection of a refund claim of the assessee. The appellants were engaged in the manufacture of excisable goods (cotton yarn) specified for SSI exemption under Notification No. 1/93 -CE. But, they opted for availment of full SSI benefit only on 16.5.1996. During the period from 1.4.96 to 19.4.96, they had cleared the goods on payment of duty at concessional rate and availed Modvat credit, after filing declaration under Rule 173B of the Central Excise Rules, 1944. Realising that they were eligible for full exemption from payment of duty under the above Notification for the above period, they filed a refund claim for the amount of duty (Rs. 88, 769) paid for the said period. This claim was rejected by both the original authority and the first appellate authority. Hence the present appeal.

(2.) LD .counsel submitted that, in terms of the Tribunal's Larger Bench decision in Ankit Packaging Ltd. v. Commissioner, , the appellants were eligible for SSI benefit from the beginning of the financial year notwithstanding the belated exercise of option for such benefit and, therefore, they were eligible for the above refund of duty. Ld.SDR opposed this plea and submitted that, as the assessee had availed Modvat credit for payment of duty during the above period, they were not eligible for SSI benefit and consequently not eligible for the refund of duty paid for the said period. In any case, ld.SDR submitted, the refund claim was hit by unjust enrichment.

(3.) AFTER giving careful consideration to the submissions, we note that it is settled law that the benefit of Notification No. 1/93 -CE could be availed of even on a date later than the first day of the financial year. This position was taken by the Tribunal in the case of Shree Cables and Conductors (P) Ltd. v. Commissioner, 2001 (135) ELT 1110 (Tri -Del.) and the same was approved by the Supreme Court in Commissioner v. Shree Cables and Conductors (P) Ltd. 2002 (139) ELT A310 (SC). This view was followed by the Gujarat High Court in Dhanlaxmi Texturisers v. UOI cited by ld.counsel. In the case of Ankit Packaging Ltd. (supra), it was held by the Tribunal's Larger Bench that a few duty -paid clearances made in the beginning of the financial year prior to the date of exercise of option for availment of SSI benefit could not be construed as opting out of exemption for the entire financial year. Thus it would appear that the appellants can claim SSI benefit right from 1.4.96. But, the fact remains that, from 1.4.96 to 19.4.96, they were availing the benefit of Modvat credit, which amounted to non -fulfilment of a substantive condition for SSI benefit. There is nothing on record to show that this credit was reversed by them before filing the refund claim. In the circumstances, we hold that the assessee is not entitled to refund of the duty amount on the ground of entitlement to SSI benefit. Even if it be held that the refund claim is admissible in principle, it still remains to be ascertained as to whether the claim is hit by the bar of unjust enrichment. Ld.counsel has pointed out that credit notes were issued to the buyers after clearance of the goods to them and, therefore, it should be held that the incidence of duty was not passed on to the buyers. As rightly submitted by ld.SDR, this plea cannot be sustained, in view of the Tribunal's Larger Bench decision in S.Kumar's Ltd. v. Commissioner, , wherein, on similar facts, a refund claim of the party was held to be barred by unjust enrichment. In the result, appeal No. 1032/99 stands dismissed.