CCE Vs. NISMA AIRCON INTERNATIONAL LTD.

JUDGEMENT

(1.) This appeal filed by the Revenue is directed against the Order -in -Appeal No. 16/03 (M -II) dated 28.2.2003 passed by the Commissioner of Central Excise (Appeals) Chennai, by which the Commissioner has directed the original authority to consider the question of sanction of rebate on its merits.

(2.) The brief facts of the case are that the assessee -respondents are engaged in the manufacture of Air -conditioners and parts thereof falling under heading 8414.00. They have availed Modvat Credit on the inputs in terms of Rule 57 -A of the CE Rules, 1944. They have also filed declaration under Rule 173B on 1.4.99 claiming exemption from payment of duty in terms of Notification No. 75/87 dated 1.3.87. During the scrutiny of the RT 12 returns filed by the assessee -respondents, it was noticed that they have carried forward the unutilized credit lying in their RG 23A part II account to the extent of Rs. 4,06,594.00 and have also taken fresh credits to the extent of Rs. 4,49,773.44 during the period from 1.4.99 to 30.9.99. The assessee -respondents were clearing their final products without payment of duty in terms of Notification No. 75/87 dated 1.3.87. Rule 57C prescribed that the credit of duty shall not be allowed if the final product is exempted from payment of duty. It was in these circumstances that show cause notice was issued to the assessee -respondents and the show cause notice culminated in the order of adjudication passed by the Deputy Commissioner whereby he has confirmed the duty demand of Rs. 8,56,368 apart from imposing penalty of Rs. 1,00,000 under Rule 173Q of the CE Rules, 1944. He has also demanded interest under Section 11AB, and also rejected their refund claim for Rs. 3,53,075.22 under Section 11B of the CE Act, 1944. Aggrieved by the said order, the party filed appeal before the Commissioner (Appeals) who by the impugned order has held that the refund claim should not have been rejected. He has also directed the original authority to consider the rebate on merits. The Revenue has come in appeal against in said finding and order of the Commissioner (Appeals). In the grounds of appeal, it is inter alia stated that:

(3.) Smt. Bhagyadevi, learned SDR appeared for the Revenue and reiterated the ground of appeal. She has further submitted that in the instant case, the assessee -respondents have opted to operate under Notification No. 75/87 dated 1.3.97 which envisaged exemption from payment of duty in respect of air conditioners and parts thereof cleared for home consumption and when they have cleared the goods which are exempted from payment of duty, in terms of Rule 57C, they are not entitled to take any credit. In terms of Rule 57H(7), the balance of credit if any lying in balance shall lapse and shall not be allowed for payment of duty on any excisable goods whether cleared for home consumption or for export. Therefore, the transfer of untilized credit of the previous financial year to the next financial year was not correct. She, therefore, prayed for setting aside the impugned order and allowing the appeal.