CCE Vs. TRICHY WIRES (P) LTD.

JUDGEMENT

(1.) THE respondents in these appeals had filed a claim for refund of duty of Rs. 2,32,292/ - with the department on 30.4.2003. The claim was of the duty paid on wires drawn from wire rods and was based on a judgment of the apex court that drawing of wire from wire rod would not amount to manufacture. The original authority by Order -in -Original No. 120/2003 dt. 31.12.2003 sanctioned cash refund of Rs. 79,303/ - and, in respect of the balance amount of Rs. 1,52,989/ -, allowed the claimant to take Cenvat credit as the payment of such amount had been effected through debit in RG.23A -Part -II Account. Aggrieved by non -grant of cash refund of Rs. 1,52,989/ -, the assessee filed an appeal with the Commissioner (Appeals) and the latter, by Order -in -Appeal No. 23/2004 dt. 26.3.2004, allowed the appeal, sanctioning cash refund of the said amount. Aggrieved by this decision of the appellate authority, the department filed appeal No. E/875/2004, wherein the appellant's contention is that, as the respondents' product was not dutiable during the period of dispute, they were not eligible for Modvat credit on inputs at all and, therefore, there was no question of sanctioning cash refund of the amount paid by way of debit in Modvat account. Ld. SDR has reiterated this contention. No representation for the respondents despite notice, nor any request of their's for adjournment.

(2.) AFTER examining the records and considering the submissions of ld. SDR, I am inclined to accept the above contention of the appellant. It is not in dispute that the respondents had manufactured and cleared only non -dutiable wires during the material period. When their product was not excisable, there was no question of their availing input -duty credit. Even where a final product was excisable, any credit of duty on the inputs used in its manufacture was not allowed, where the final product was exempt from the whole of the duty leviable thereon or chargeable to "Nil" rate of duty (Rule 57C of the Central Excise Rules, 1944). Hence, in the facts of this case, it was not permissible for the respondents to pay any duty through, debit in Modvat account. Consequently, cash refund of any duty so paid could not be claimed. In the circumstances, the impugned order allowing cash refund of Rs. 1,52,989/ - requires to be set aside. It is ordered accordingly and appeal No. E/875/2004 is allowed.

(3.) AGAINST Order -in -Original No. 120/2003 ibid, the department had also filed an appeal with the Commissioner (Appeals) challenging the order of the original authority allowing Cenvat credit of Rs. 1,52,989/ - to the assessee. This appeal was dismissed by the Commissioner (Appeals) as per Order -in -Appeal No. 52/2004 dt. 30.8.04 in view of the earlier OIA No. 23/2004 dt. 26.3.2004. Now that OIA No. 23/2004 stands set aside, OIA No. 52/2004 must also meet the same fate. In the result, the appeal No. E/1270/2004 is also allowed.