2015 (7) TMI 1266 - AT - Central Excise

Refund claim - CENVAT credit - Welding Electrodes - Held that - It is a settled position of law that the principle of res judicata is not applicable to the taxing statute. The appellant has complied with the requirements of Section 11B of the Central Excise Act 1944 by filing the refund application - the appellant s applications for refund cannot be denied and thus the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of refund of Cenvat credit on welding electrodes

Analysis:
The case involved the denial of refund of Cenvat credit on welding electrodes by the authorities, which was the subject of dispute in the appeal. The appellants, engaged in the manufacture of sugar and molasses, availed Cenvat credit on welding electrodes, treating them as inputs. However, the Central Excise Department disputed this claim. Previous tribunal orders had held that the appellants were not eligible for Cenvat credit on welding electrodes. Subsequently, a favorable tribunal order allowed the Cenvat credit on electrodes, leading the appellants to file a refund application for the reversed amount. The Original Authority rejected the refund application citing an interim order by the Allahabad High Court, which directed the appellants to pay the adjudged amount pending final decision. The Original Authority's decision was upheld by the Commissioner (Appeals), leading to the present appeals before the Tribunal.

The appellant argued that the interim order of the High Court only applied to pending appeals and did not preclude the refund claim for a different period. They contended that the principle of res judicata did not apply to tax statutes. Referring to judgments by the Rajasthan High Court and the Apex Court, the appellant asserted that the issue of Cenvat credit on electrodes was settled. Since no appeal was filed against the favorable tribunal order, the appellant claimed the refund application should be considered. On the other hand, the Revenue argued that welding electrodes were not eligible for Cenvat credit if used for repair and maintenance, as they did not contribute to manufacturing eligible capital goods.

The Tribunal noted that the appellant filed the refund claim based on a favorable tribunal decision for a subsequent period not under dispute before the High Court. The Tribunal held that the refund claim could not be denied based on the High Court's interim order for a different period. The principle of res judicata was deemed inapplicable to tax statutes. The appellant had complied with the statutory requirements for filing the refund application, and since no appeal was pending against the favorable tribunal order, the refund claim was upheld. The impugned order was set aside, and the appeals were allowed in favor of the appellant with consequential relief, if any, as per the law.