2013 (7) TMI 710 - AT - Central Excise

Refund - Benefit of exemption Notification No.4/2006-CE dated 01.03.06 - Actual user condition - procurement at concessional rate of duty - conditions - unjust enrichment - For manufacturing of fertilisers, respondents were procuring sulphuric acid following the procedure as laid down in Central Excise (Removal of goods at concessional rate of duty for manufacturing of excisable goods) Rules, 2001 - For following the procedures of the said Rules, respondents are required to take permission from the Jurisdictional Assistant Commissioner, which they applied for - During the pendency of such permission, the respondents in order to continue their production had to prefer to procure quantity of sulphuric acid on payment of appropriate rate of duty. After consuming the same in the manufacturing of fertilisers, respondents filed a refund claim with the authorities below for the refund of the amount of central excise duty paid by them as per provisions of Section 11B of the Central Excise Act, 1944. Held that - As per the decision in the case of UOI v. Suksha International, 1989 (1) TMI 316 - SUPREME COURT , the Hon ble Supreme Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided so that it may not take away with one hand what the policy gives with the other - In the Union of India v. A.V. Narasimhalu, 1969 (9) TMI 41 - SUPREME COURT OF INDIA , the Apex Court also observed that the administrative authorities should instead of relying on restrictive interpretations and technicalities, act in a manner consistent with the broader concept of justice - Appellant has followed the procedure as laid down in Central Excise (Removal of goods at concessional rate of duty for manufacturing of excisable goods) Rules, 2001 - Only the permission from the Asst. Commissioner was received late. Since the permission was not received in time they cleared the goods on payment of duty. Had the permission been obtained in time, they would have cleared the goods without payment of duty. Since the goods are otherwise entitled for clearance without payment of duty, they are entitled for the refund Decided against the Revenue.

Summary

Issues:
- Appeal against OIA No.Commr.(A)/50/VDR-II/2012
- Claim of exemption under Notification No.4/2006-CE
- Refund claim of central excise duty
- Procedural compliance under Central Excise Rules
- Unjust enrichment and substantive benefit
- Findings of first appellate authority upheld

Analysis:

Issue 1: Appeal against OIA No.Commr.(A)/50/VDR-II/2012
The appeal is directed against Order-in-Original (OIA) No.Commr.(A)/50/VDR-II/2012 dated 31.01.12. The respondent, a manufacturer of chemical fertilizers, was claiming exemption under Notification No.4/2006-CE. They filed a refund claim for central excise duty paid during the procurement of raw materials.

Issue 2: Claim of exemption under Notification No.4/2006-CE
The respondent claimed exemption under Notification No.4/2006-CE for procuring sulphuric acid for manufacturing fertilizers. The dispute arose when the authorities issued a show cause notice questioning the eligibility of the respondent for the claimed exemption.

Issue 3: Refund claim of central excise duty
The respondent filed a refund claim for the central excise duty paid during the procurement of sulphuric acid. The lower authorities rejected the refund claim citing procedural lapses and unjust enrichment. The first appellate authority allowed the appeal, setting aside the rejection order.

Issue 4: Procedural compliance under Central Excise Rules
The Department argued that the respondent did not substantively follow the procedures laid down in the Central Excise Rules. The respondent contended that they followed the necessary procedures and obtained permission from the Assistant Commissioner for procuring raw materials at a concessional rate of duty.

Issue 5: Unjust enrichment and substantive benefit
The Department raised concerns about procedural lapses and discrepancies in compliance with the Rules. However, the first appellate authority held that substantive benefit cannot be denied for procedural lapses, citing relevant case laws. The authority found that the respondent met the substantive requirements for exemption and refund claim.

Issue 6: Findings of first appellate authority upheld
The Tribunal upheld the findings of the first appellate authority, emphasizing that the respondent had followed the prescribed procedures and met the substantive requirements for exemption and refund. The Tribunal concurred with the first appellate authority's decision, stating that the appeal lacked merit, as the findings were in line with established legal principles.

This detailed analysis highlights the procedural and substantive aspects of the case, focusing on the compliance with Central Excise Rules, eligibility for exemption, and the validity of the refund claim. The judgment underscores the importance of meeting substantive requirements for benefits and the application of relevant legal precedents in deciding such matters.