2008 (4) TMI 741 - AT - Central Excise

Refund - Non challenge of assessment order - Held that - as the order fixing the annual capacity of stenter was not challenged by the respondent and the duty was paid accordingly, therefore, the respondent cannot be challenged the correctness of that order in the refund claim - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Challenge of refund claim based on order fixing annual capacity of stenters
- Applicability of previous judicial decisions on similar cases
- Appealability of order fixing annual capacity of stenters
- Legal standing of refund claim challenging adjudication order

Analysis:
The case involved an appeal by the Revenue against an order allowing the refund claim of the respondents, which was based on the fixation of annual capacity of hot air stenters under Section 3A of the Central Excise Act. The Revenue contended that the respondents did not challenge the order fixing the annual capacity, which was appealable, and therefore, the correctness of that order could not be questioned through a refund claim. The respondent, on the other hand, relied on judicial decisions, including one by the Hon'ble Bombay High Court, to support their claim. The Tribunal noted that the respondent had accepted the order fixing the annual capacity and paid duties accordingly, without filing an appeal against it. The Tribunal emphasized the principle established by the Hon'ble Supreme Court that a party cannot challenge the correctness of an adjudication order in a refund claim if the party did not exercise the statutory right of filing an appeal against the order.

The Tribunal distinguished the facts of the present case from previous cases where the issue of annual capacity determination was contested during ongoing proceedings. In those cases, the courts had ruled in favor of the assessee due to settled issues or specific circumstances. However, in the present case, the respondent had not challenged the order fixing the annual capacity and subsequently filed a refund claim challenging the same. The Tribunal reiterated the Supreme Court's position that failure to appeal against an appealable order precludes the party from questioning the order's correctness later through a refund claim. The Tribunal emphasized the importance of appellate or revisional authority orders in the Act, highlighting that failure to challenge an appealable order would render the appeal and adjudication provisions redundant. Consequently, the Tribunal set aside the impugned order and allowed the Revenue's appeal, disposing of cross-objections in the same terms.

In conclusion, the Tribunal upheld the principle that a party cannot challenge the correctness of an adjudication order in a refund claim if the party did not exercise the statutory right of filing an appeal against the order. The decision underscored the significance of appealable orders and the finality of such orders in the context of refund claims, ensuring the integrity of the excise duty levy and collection process.