T.K. Jayaraman, Member (T)

1. These appeals have been filed against Order-in-Appeal No. 180-182/2004 dated 26.8.2004 passed by Commissioner of Central Excise (Appeals) Cochin. The parties as well as the Revenue have filed appeals against the same Order-in-Appeal. The details of the appeals are given in the tabular column shown below:

Sl. No. Appeal No. Appellant Impugned Order Passed by Amount

Involved

1. E/1297/2004 M/s. OIA 180-182/ CCE (A) Rs.2,28,308/-

Alampally 2004 dated Cochin

Brothers Ltd 23.8.2004

2. E/1062/04 CCE, Cochin OIA 180/04

dated 23.8.04 CCE (A)

Cochin Rs. 8,71,049/-

3. E/1080/04 CCE, Cochin OIA 181/04

dated 23.8.04 CCE (A)

Cochin Rs. 8,22,558/-

4. E/1097/04 CCE, Cochin OIA 182/04

dated 23.8.04 CCE (A)

Cochin Rs. 3,47,634/-

2. The brief facts of the case are as follows:

(i) M/s. Alampally Brothers Ltd., Aluva manufacture LPG cylinders which are cleared to Public Sector oil companies namely, IOC, HPCL, BPCL for the period 1999-2000, 2000 - 2001 and 2001-2000. The assessment was provisional. The provisional assessments were finalised by the Deputy Commissioner vide orders dated 3.6.2003 and 24.9.2003. There was excess payment of Central Excise duty. The department issued show-cause notice for denial of refund on the ground of unjust enrichment. However, the lower authority was satisfied that there was no unjust enrichment and the party is entitled for refund. The party submitted that they were not in a position to utilize CENVAT credit as they discontinued the production of cylinder with effect from 1.7.2003. In view of this the lower authority sanctioned the refund amount by cheque relying on the case law Ashok Arc v. CCE, Jamshedpur - In that case even though the pre-deposit was made partly in PLA and partly in MODVAT account the entire amount of refund was given by cheque in the circumstances of that case. The exemption limit for SSI was raised to hundred lakhs and the party was not in a position to go beyond the clearances of Rs. 60 to 70 lakhs. Under the above circumstances the Tribunal felt that refund in MODVAT account is of no avail and ordered refund by cheque. The Revenue did not accept the decision of the Deputy Commissioner. They filed an appeal to the Commissioner (Appeals). The Commissioner (Appeals) modified the order of the lower authority and held the following:

(a) The refund in cash to the tune of Rs. 8,71,049/- sanctioned for 1999-2000 is in order.

(b) Refund of an amount of Rs. 8,22,558/- for the period 2000 - 2001 sanctioned by way of cash is in order.

(c) During 2001 - 2002 the party paid duty in PLA to the tune of Rs. 1,19,326/-. The refund sanctioned in cash is Rs. 3,47,634/-. Therefore the refund amount of Rs. 2,28,308/- (Rs. 3,47,634 = 1,19,326/-) is not in order.

In the above manner the Commissioner (Appeals) modified the order of the lower authority. In other words, the Commissioner (Appeals) has restricted the refund amount by cash to the extent of the duty paid in PLA during that particular year. He has also held that the CEGATs decision in Ashok Arc case is squarely applicable to the facts of the present case.

2. Shri Joseph Kodiandhara ld. Advocate appeared for M/s. Alampally Brothers Ltd. and Shri L. Narasimha Murthy, SDR appeared for revenue.

3. The learned Advocate urged that the grounds assigned for denial of cash refund of Rs. 2,28,308/- is absolutely unjustified and unsustainable. Having found that the appellants is eligible for the refund which was granted, no interference should have been made in the findings of the lower authority by Commissioner (Appeals).

4. The learned SDR relied on the case law Purvi Fabrics & Texturise (P) Ltd. v. CCE, Jaipur - II - wherein it is held that in respect of CENVAT credit there is no legal provision existing for refund either by cash or by cheque, only exception is where inputs used in exported goods and manufacturer is unable to use credit and refund thereof is allowed as incentive to exporter. He further relied on the case law in the case of CCE, Chennai v. Rajashree Cements - 2001 (132) ELT 724 (Tri. Chennai) wherein it is held that duty having been paid through Modvat account which being operational, refund to be given in RG 23A Part II account and not to be paid in cash.

5. We have gone through the rival contentions. The issue to be decided is whether the refund granted to the party should be given only through Modvat or by cheque when the party is not in a position to utilize the CENVAT credit. The original authority, relying on the case law in the case mentioned supra, has granted the refund by way of cash/cheque. The first appellate authority has also held that the case law squarely applies to the present appeal. In this case the appellants having stopped the production of LPG cylinders and only doing occasional repair work are definitely not in a position to utilize Modvat credit. In view of these circumstances the original authority has granted the refund by way of cheque. We do not find any infirmity in the order of the original authority. The case laws relied on by the ld. SDR are clearly distinguishable. It is to be borne in mind that the present case is not a case of refund of Modvat. It is actually a case of refund of duty paid partly through CENVAT credit and partly through PLA. There is no statutory rule which says that refund of duty should be given only through credit in CENVAT account and not through cheque. Hence the order of the original authority is legal and proper. Hence we allow the appeal of the party and reject the Revenues appeal.