V.K. Agrawal, Member (T)

1. The issue involved in this Appeal filed by the Revenue is whether refund of the duty paid through Modvat credit account i.e. RG 23A Part II is payable in cash to the customer of the excisable goods.

2. Shri S.K. Menon, learned SDR, submitted that the Respondents, M/s. Rajashree Cement purchased one electrostatic precipitator from M/s. BHEL who paid duty of Rs. 7,25,952 @ 15% instead of @ 5% under Notification No. 78/90-C.E., dated 20-3-1990 for want of requisite certificate from Ministry of Environment and Forest; that the Assistant Commissioner sanctioned the refund amounting to Rs. 5,33,287/- which was paid by M/s. BHEL through PLA and rejected the refund claim for remaining amount of Rs. 1,58,095 since it was paid through RG 23A Part II; that Commissioner (Appeals), under the impugned order No. 86/96 (M), dated 29-3-1996 allowed the refund of the remaining amount also, if otherwise in order, holding that the purchaser may not be an assessee under Central Excise law coming under the scope of Modvat Credit Scheme and it is not practicable to ask the purchaser to take credit in RG 23A. The learned SDR, further submitted that Modvat Rules do not provide for refund in cash of the duty paid through RG 23A Part II except under the provisions of Rule 57F(4); that allowing cash refund of the duty adjusted in Modvat account is not proper.

3. Opposing the appeal Shri R.G. Utagikar, learned Consultant, submitted that payment of duty through RG 23A Part II is also payment of duty of which refund should be available to them if the duty has been paid in excess; that under Section 11B of the Central Excise Act, a Customer is eligible for the refund of duty, the incidence of which has been passed on to him; that as payment through RG 23A Part II is also a payment of duty, they are eligible to get the same in cash. He relied upon the decision of the Andhra Pradesh High Court in the case of Coromandal Fertilizers Ltd. v. U.O.I., 1990 (48) E.L.T. 333 (A.P.) wherein it was held that the petitioner was eligible to refund in cash or by Cheque. He also relied upon the decision in MRF Ltd. v. CCE, 1990 (50) E.L.T. 546 (T), CCE v. Kothari General Foods Corpn Ltd. 1992 (59) E.L.T. 196 (T) and Sandoz (India) Ltd. v. CCE, 1990 (50) E.L.T. 403 (T).

4. We have considered the submissions of both the sides. We agree with the learned Consultant for the respondents that the payment of duty through RG 23-A Part II is also payment of duty. The respondents are eligible to the refund of duty that has been paid through RG 23A Part II, if otherwise eligible. To this extent the Adjudicating Authority was not justified in rejecting the refund claim and the findings of the Commissioner (Appeals) is correct and legal that duty paid through RG 23A has to be refunded, if it has been paid in excess. However, we do not agree that the amount of duty paid through RG 23A Part II (Modvat Credit Account) can be paid in cash. The RG 23A Part II does not amount to payment in "Cash"; this is a Credit Account in which duty paid by the supplier of goods is credited so that the cascading effect of duty is wiped out. The Central Excise Rules permit the refund in cash of such duty only when the final goods are exported out of the country and the manufacturer is not in a position to utilise the credit towards payment of duty. The refund is admissible to the customer as the incidence of duty has been passed on to him by the manufacturer of the goods. Had the incidence not been passed on, the manufacturer was eligible to get the refund and this would have been given to him by re-crediting of the amount in RG 23A Part II only. In Kothari General Foods case, supra, the issue involved was whether refund of duty is to be restricted to the duty paid by debit in PLA. Further the Respondents in the said case had exported the final products. In Sandoz (India) case, supra, the issue involved was not the refund of duty paid through RG 23A Part II Account. In MRF case, supra, the Appellate Tribunal held that refund in cash would be paid only if the Appellants therein were not entitled to adjustment under Rule 57H of the Central Excise Rules consequent to the termination of Proforma credit under Rule 56A. Such is not the situation here. The Respondents herein are manufacturer of excisable goods and maintain RG 23A Register. They are certainly in a position to utilize the sum credited to their RG 23A Part II account. Even in Coromandal Fertilizers Ltd. case, supra, the Andhra Pradesh High Court directed the payment by cash or by Cheque as there was no RG 23 account in respect of finished goods because no duty was leviable since 1980, either on raw material or on finished product and, therefore, the question of maintaining RG 23 Account did not arise much less adjustment in respect of the amount that was refundable.

5. Accordingly, we hold that payment of duty through RG 23A Part II account is a payment of duty and the refund of the same has to be given, if otherwise admissible and principle of unjust enrichment does not apply. However, the refund amount is to be given in RG 23A Part II account if the same is in operation. The appeal is, thus, disposed of in these terms.