2014 (4) TMI 460 - AT - Central Excise

Rejection of the refund claim under Section 11B - Reversal of CENVAT Credit - Notification No. 108/95-CE dated 28.8.95 - Unjust enrichment - Held that - appellant was directed to supply indigenously produced goods against advance licence. So the contention of the learned counsel that the impugned goods are trading goods cannot be accepted. However, it is seen that the adjudicating authority observed that the goods supplied are not entitled for any exemption and hence payment of duty on the said clearance was correct in law. It is also observed that the concept of supply against AROs is not germane to excise. Supplies made against the ARO is considered as deemed export in para 8 of EXIM Policy 2004 - 09 and the DGFT has to be approached for any relief on that account. The learned counsel fairly submits that they have produced the Project Import Certificate which was not properly dealt by the adjudicating authority. In my considered view, if the Department is treating the impugned goods as manufactured goods, the claim of exemption should be examined by the lower authority in the light of the exemption notifications. Benefit of exemption notification should be extended if eligible irrespective of the stage at which the claim is made. Since both the authorities have held that the impugned goods are manufactured goods, it is appropriate that the matter should be remanded to the adjudicating authority to examine the eligibility of exemption notifications. Accordingly, the matter is remanded to the adjudicating authority to examine the eligibility of the refund claim in view of the exemption notifications including the unjust enrichment, if any - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection under Section 11B of the Central Excise Act, 1944.

Analysis:
The appellant appealed against the rejection of a refund claim of Rs.12,64,800/- under Section 11B of the Central Excise Act, 1944. The appellant was engaged in manufacturing 'Static Converter known as Uninterrupted Power Supply System (UPSS)' classifiable under sub-heading 85044090 of the CETA, 1985. They availed CENVAT credit on inputs and imported 1000 UPSS units, subsequently supplying them to another entity. The Range Superintendent later advised them to reverse the credit on the imported goods as they were cleared as trading items. The appellant filed a refund claim, which was rejected by both lower authorities on technical grounds. The appellant argued that the goods were not manufactured by them but were trading items, making them eligible for a refund under specific exemption notifications. The Tribunal noted that the goods were cleared under an Advance Release Order (ARO) for supplying indigenously produced goods, contrary to the appellant's claim of imported goods. The Tribunal emphasized that if the Department treats the goods as manufactured, the claim of exemption should be examined based on relevant notifications. The Tribunal cited a previous case to highlight that exemption benefits should be extended if eligible, regardless of the claim stage. Consequently, the matter was remanded to the adjudicating authority for reevaluation of the refund claim's eligibility under exemption notifications, ensuring the appellant's right to a fair hearing.

Conclusion:
The Tribunal's decision to remand the case for further examination of the eligibility of the refund claim under exemption notifications reflects a nuanced understanding of the specific circumstances and legal provisions involved. By emphasizing the need for a fair assessment based on relevant notifications and ensuring the appellant's right to a reasonable hearing, the Tribunal upholds the principles of justice and adherence to statutory regulations in resolving the dispute over the refund claim rejection.