2015 (2) TMI 381 - AT - Central Excise

Denial of excess claim of refund - area based exemption under Notification No. 56/2002-CE in the State of Jammu & Kashmir - Held that - Though during February 2006 to April 2006 period, the appellant for whatever reason, did not take Cenvat credit of ₹ 10,72,419/- in respect of SAD resulting in higher quantum of exemption under Notification No. 56/2002-CE and thus higher quantum of refund, in December 2006 as soon as this was pointed out, they took the Cenvat credit of this amount, as a result of this in the month of December 2006 their refund claim was lesser to that extent. Thus, overall there was no excess availment of exemption under Notification No. 56/2002-CE, as the excess quantum of refund under Notification No. 56/2002-CE during February 2006 to April 2006, was neutralized by lesser quantum of refund under this notification during December 2006. - Assessee did not take the available Cenvat credit during the period it was available and paid the excess from the PLA and took the refund thereof. Later on, they took Cenvat credit which was available and paid less duty. In that case, the excess refund availed by the assessee during the initial period was sought to be denied. In that case, this Tribunal held that it is situation of revenue neutrality, therefore denial of refund is not sustainable. Fact of non-availment of Cenvat credit was in the month of December, 2006 itself and no show cause notice has been issued by invoking extended period of limitation. The same is also required to be issued by invoking extended period of limitation. - show cause notice is barred by limitation as well as the appellant succeeds on merit as it is a revenue neutral situation as per the decision of this Tribunal in the case of New India Wire and cables. - Decided in favour of assessee.

Summary

Issues:
Claim of excess refund under Notification No. 56/2002-CE, invocation of extended period under proviso to Section 11A (1), suppression of fact leading to higher refund, revenue neutrality in availing Cenvat credit, time limitation for issuing show cause notice.

Analysis:
The case involves the appellant, a manufacturer of telephone cables availing duty exemption under Notification No. 56/2002-CE in Jammu & Kashmir. The appellant failed to utilize Cenvat credit for Special Additional Customs Duty (SAD) during February 2006 to April 2006, resulting in higher duty payment through PLA and consequently, a higher refund claim. However, upon being notified, the appellant rectified this by availing the credit in December 2006, leading to a lesser refund that month. The Department issued a show cause notice demanding the allegedly excess refund, interest, and penalty, invoking the extended period under Section 11A (1).

During the proceedings, the appellant argued that there was no intention to claim a higher refund, and the demand raised was time-barred. The Department contended that there was suppression of fact, justifying the invocation of the extended period. The Tribunal considered both sides' submissions and reviewed the records.

The Tribunal found that the appellant's actions resulted in a revenue-neutral situation, as the excess refund during the initial period was offset by a lesser refund later. Citing a similar case precedent, the Tribunal emphasized the principle of revenue neutrality in such situations. Additionally, the Tribunal noted that the non-availment of Cenvat credit occurred in December 2006 itself, and no show cause notice was issued within the extended period of limitation.

Ultimately, the Tribunal held that the show cause notice was time-barred and that the appellant succeeded both on merit and limitation grounds. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief. The judgment underscores the importance of considering revenue neutrality and time limitations in cases involving duty exemptions and Cenvat credit utilization.