2015 (10) TMI 1223 - AT - Central Excise

Refund claim - unutilized accumulated balance of Cenvat Credit - DTA clearances - Rejection of claim u.s 11B - Held that - appellant is an export oriented unit not required to discharge any Excise duty on the goods exported by them. It is also undisputed that appellant had debited the Cenvat account for discharge of duty liability on the goods cleared for export. The refund claim filed by the appellant was also rejected on the same grounds; the findings are not contested by both sides. If it is so, the revenue authorities holding that the amount debited by the appellant on goods cleared for export is without any authority of law. Natural corollary would be the amount should be returned back to appellant, as revenue authorities can collect tax/duty only by authority of law. In the case in hand, from the records, it transpires that appellant though having filed refund claim, subsequently withdrew the same, with a request to lower authorities, seeking permission to recredit the amount in their Cenvat account; this legitimate request of the appellant is also dismissed by the lower authorities. In my view, the lower authorities have erred in passing the order of rejecting the request of re-credit of the amount paid by the appellant and not due to the government. To me, the impugned order is not in consonance with the law settled by the higher judicial forums, holding that duty collected without authority of law cannot be retained by the government. - Decided in favour of assessee.

Issues involved:
1. Interpretation of Notification No. 24/2003 dated 31.03.2003 under Section 5A(1A) of Central Excise Act, 1944.
2. Validity of duty payment through Cenvat Credit account.
3. Rejection of refund claim under Rule 5 of Cenvat Credit Rules, 2004.
4. Authority of law for duty collection on goods cleared for export.
5. Permission for re-credit of erroneously debited amount in Cenvat account.

Analysis:

Issue 1: Interpretation of Notification No. 24/2003:
The appellant, a 100% export-oriented unit, was exempt from paying duty under Notification No. 24/2003. However, they cleared goods under ARE-1 by paying duty through their Cenvat Credit account. This led to a refund claim, which was rejected as the duty payment was deemed unauthorized by the revenue authorities.

Issue 2: Duty payment through Cenvat Credit account:
The appellant argued that despite being exempt from duty, they debited their Cenvat account for duty payment on exported goods. The lower authorities rejected the claim for re-credit of this amount, stating it was without authority of law. The tribunal noted that duty can only be collected by legal authority, and the appellant's request for re-credit was legitimate.

Issue 3: Rejection of refund claim under Rule 5:
The lower authorities rejected the refund claim under Rule 5 of Cenvat Credit Rules, 2004, citing unauthorized duty payment. The tribunal found this rejection incorrect, emphasizing that duty collected without legal authority cannot be retained by the government.

Issue 4: Authority of law for duty collection:
The tribunal highlighted that the duty collection without legal authority was a crucial point. The appellant's request to re-credit the amount paid was dismissed by the lower authorities, contrary to established legal principles that duty collected without authority cannot be retained by the government.

Issue 5: Permission for re-credit of erroneously debited amount:
Ultimately, the tribunal set aside the impugned order, allowing the appellant to avail credit for the erroneously debited amount in their Cenvat account. The tribunal directed the appellant to avail the credit only in their Cenvat account, emphasizing the importance of legal compliance in duty collection and refund processes.

This judgment clarifies the importance of legal authority in duty collection and refund processes, ensuring that duty collected without legal backing cannot be retained by the government.

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