2008 (9) TMI 849 - AT - Central Excise

Summary

Issues:
1. Revenue's appeal against the rejection of demand by Commissioner (Appeals).
2. Refund of Central Excise duty paid on returned goods.
3. Interpretation of Rule 16 of the Central Excise Rules, 2002.
4. Application of Section 11-B of the Central Excise Act, 1944.
5. Granting of cash refund under Section 11B of the Central Excise Act, 1944.

Analysis:

1. The Commissioner (Appeals) rejected the Revenue's appeal against the original adjudicating authority's decision to drop the demand. The respondent had crossed the exemption limit of Rs. 100 lakhs and started paying duty as per Tariff rate. The issue arose when the respondent sold a machine, which was later returned due to a manufacturing defect, and sought a refund of the duty paid. The Assistant Commissioner sanctioned the refund, leading to the Revenue's appeal.

2. The Revenue contended that the respondent should have followed Rule 16 of the Central Excise Rules, 2002, for returned goods. They argued that duty collected under Rule 4 should not be refunded as the goods were brought back to the factory under Rule 16. The Revenue claimed that the refund was erroneously granted and should be recovered under Section 11A of the Central Excise Act, 1944. However, the Commissioner (Appeals) found no fault in the respondent availing SSI exemption and paying duty on cleared goods.

3. The Commissioner (Appeals) noted that the respondent complied with Rule 16 of the Central Excise Rules, 2002, for the returned goods. The respondent had paid duty on the cleared goods and submitted the necessary documents for the refund claim. The Range Superintendent verified the goods and the claim, leading to the adjudicator sanctioning the refund under Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) found no discrepancies in the respondent's actions.

4. The appellate authority affirmed the Commissioner (Appeals)' decision, stating that the respondent had met all requirements under Rule 16 and had paid duty on cleared goods. The respondent's compliance with the provisions and the verification of the claim by the Range Superintendent supported the sanctioning of the refund under Section 11B. The appellate authority found no errors in the lower authorities' decisions and upheld the refund granted to the respondent.

5. In conclusion, the appellate tribunal rejected the Revenue's appeal, affirming the decisions of the lower authorities regarding the refund of Central Excise duty paid on returned goods. The tribunal found no flaws in the actions of the respondent and upheld the sanctioning of the refund under Section 11B of the Central Excise Act, 1944.