2014 (8) TMI 610 - HC - Central Excise

Refund / Rebate claim - Export of goods - Rule 18 - denial of rebate on the ground no set in the Show Cause Notice - claim rejected on the ground that final product is not excisable goods - authorities rejected on the ground that procedure for rebate of duty paid on materials required to be followed under Rule 18 of the Central Excise Rules, 2002 r/w Notification No. 21/2004-CE(NT) dated 6.9.2004 has not been followed by the petitioners - Held that - on that ground, show cause notice was not issued and the rebate claim was not sought to be denied. Under the circumstances, to the aforesaid extent, the impugned orders are beyond the show cause notice. Under the circumstances, we are of the opinion that impugned orders deserve to be quashed and set aside and the matter is required to be remanded to the First Authority to consider the same in accordance with law and on merits - It will be open for the adjudicating authority to issue fresh show cause notice contending aforesaid ground also and same may be considered in accordance with law and on merits and after giving an opportunity to the petitioners on the aforesaid - Decided in favour of assessee.

Summary

Issues:
1. Rejection of refund claim by authorities under Central Excise Rules, 2002.
2. Misinterpretation of Section 11(B)(2)(a) r/w Rule 18.
3. Denial of refund claim due to final product not being excisable goods.
4. Rejection based on failure to follow procedure under Notification No. 21/2004-CE(NT) dated 6.9.2004.

Analysis:

1. The petitioner challenged the impugned order rejecting their refund claim under the Central Excise Rules, 2002. The petitioner contended that the authorities misinterpreted Section 11(B)(2)(a) r/w Rule 18. They claimed a rebate on duty paid for inputs used in manufacturing the final product. The authorities rejected the claim citing that the final product was not excisable goods. The Assistant Commissioner's Order in Original was also challenged for going beyond the scope of the show cause notice. The petitioner sought to quash the impugned orders and remand the matter for fresh consideration.

2. The respondent argued that the final product was not excisable under the Central Excise Act, making the petitioner ineligible for the refund claim. However, the respondent acknowledged that the rejection based on failure to follow the procedure under Notification No. 21/2004-CE(NT) dated 6.9.2004 was not mentioned in the show cause notice. Thus, the denial of the claim on this ground was beyond the scope of the notice.

3. The Court noted that the show cause notice did not mention the ground of failure to follow the procedure under the said notification. Therefore, the rejection of the refund claim on this basis was beyond the scope of the notice. Consequently, the impugned orders were deemed to be beyond the show cause notice and were quashed. The matter was remanded to the original authority for fresh consideration in accordance with the law and on merits. The adjudicating authority was directed to issue a fresh show cause notice, considering the mentioned ground, and make a decision within six months.

4. The Court clarified that no opinion was expressed on the merits in favor of either party. The adjudicating authority was instructed to pass an appropriate order in accordance with the law and after giving an opportunity to the petitioners. The decision should not be influenced by any previous orders. The rule was made absolute to the specified extent, allowing for a fresh adjudication of the refund claim.