2015 (9) TMI 930 - HC - Central Excise

Denial of refund claim - amount paid in excess of duty at the above effective rate - Refund allowed by way of reversal in CENVAT Credit account - Held that - The Revisional Authority referred to such sum being lying with the Government as a deposit. The judgments of Punjab & Haryana High Court were referred and the opinion was that the Government cannot retain the amount paid without any authority of law. The direction to allow the amount to be re-credited in the Cenvat credit account of the concerned manufacturer does not require any interference by us because even if the impugned order of the Appellate Authority and the Order-in-Original was modified by the Joint Secretary (Revisional Authority), what is the material to note is that relief has not been granted in its entirety to the first respondent. The first respondent may have come in the form of an applicant who has exported goods, either procured from other manufacturer or manufactured by it. Looked at from any angle, we do not find that any observation at all has made which can be construed as a positive direction or as a command as is now being understood. - on some apprehension and which does not have any basis in the present case, we cannot reverse the order or clarify anything in relation thereto particularly when that it is in favour of the authority - Petition disposed of.

Summary

Issues:
Challenge to Revisional order on refund claim allowed by reversing Commissioner of Central Excise (Appeals) decision.

Analysis:
The Writ Petition under Article 226 was filed by the Commissioner of Central Excise, Mumbai-III against the Revisional order passed by the Joint Secretary, Government of India. The Revisional order allowed the refund claim by reversing the Commissioner of Central Excise (Appeals) decision. The Revisional Authority directed that the Government cannot retain the excess amount paid without any legal authority and allowed the amount to be re-credited in the Cenvat credit account of the concerned manufacturer. The petitioner challenged para 10 of the order, arguing that it contains a contrary direction compared to an earlier order passed in similar circumstances. Reference was made to Section 12B of the Central Excise Act, 1944, which governs the passing on of burden to buyers. The Court observed that the Revisional Authority's direction on re-crediting the amount did not warrant interference as it did not grant full relief to the first respondent.

The first respondent, M/s. Cipla Limited, claimed to be a merchant exporter procuring Central Excise Duty paid goods for export. The Commissioner challenged the refund claim allowed by the Revisional Authority, which modified the Commissioner's order to re-credit the excess amount paid in the Cenvat credit account of the manufacturer. The Court noted that the first respondent's rebate claim under Rule 18 of the Central Excise Rules, 2002 was partially allowed by the adjudicating authority, restricting the rebate amount to 5% ad valorem. The Appellate Authority upheld the Orders-in-Original, stating that the duty was paid to encash Cenvat credit, and the unutilized credit belonged to the input manufacturers, not the finished goods manufacturer. The Revision Application against these orders was dismissed, emphasizing that the rebate was admissible only at the effective rate of duty as per the exemption Notification.

In the Revision Application, the Government observed that excess duty paid above the effective rate should be treated as a voluntary deposit and re-credited to the Cenvat Credit account of the Assessee. The Court referred to judgments of other High Courts supporting this view. The Court found that the direction to re-credit the excess amount in the manufacturer's account did not require interference, as it did not grant full relief to the first respondent. The Court held that the Writ Petition was misconceived and disposed of, as there was no positive direction or command in the Revisional order that warranted reversal or clarification.