2018 (8) TMI 1980 - AT - Central Excise

Refund claim - Area Based Exemption available under N/N. 20/2007 dt. 25/4/2007 - rejection of refund on the ground of time limitation - case of appellant is that at the time of beginning of the Financial Year the option was required to be made and accordingly they filed the exemption claim under the said Notification vide letter dt. 2/04/2014 which was granted to them vide letter dt. 30/06/2016. HELD THAT - On perusal of the impugned order, we find that the Lower Appellate Authority has rejected the appeals by relying on the decision of the Tribunal in the case of VERNERPUR TEA ESTATE, COMMISSIONER OF C. EX S. TAX, GUWAHATI AND DIBRUGARH VERSUS COMMISSIONER OF CENTRAL EXCISE S. TAX, SHILLONG AND M/S. TYROON TEA ESTATE, M/S. BOKEL TEA ESTATE, M/S. HATTIALI TEA ESTATE, M/S. MUTTUCK TEA ESTATE. 2016 (4) TMI 17 - CESTAT KOLKATA - In the above case, the assessee filed appeal before the Hon ble Guwahati High Court in VERNERPUR TEA ESTATE OWNED BY CACHAR NATIVE JOINT STOCK CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SHILLONG 2018 (2) TMI 1883 - GAUHATI HIGH COURT whereby the Hon ble High Court allowed the appeal by setting aside the order of the Tribunal. The Hon ble High Court has held that The appellant having been once found to be eligible for exemptions and refund of duty paid, denial of benefit of exemptions and refund on the ground of delay, in our considered opinion, will cause grave injustice which cannot be permitted. Even otherwise, it is well settled law that non-following of procedural requirement cannot deny the substantive benefit, otherwise available to the assessee. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Claim for exemption under Notification No.20/2007, rejection of refund claims by Refund Sanctioning Authority, appeals rejected by Ld. Commissioner (Appeals), entitlement for exemption, delay in filing refund claims, denial of refund on procedural grounds, interpretation of Notification clauses, substantial compliance with Notification requirements, denial of refund based on delay, judicial precedent on procedural compliance.

Analysis:

1. The appeals before the Appellate Tribunal involved a common issue related to the claim for exemption under Notification No.20/2007 for manufacturing units in Tripura. The appellants had undertaken substantial expansion as per the Notification, making them eligible for exemption from excise duty subject to certain conditions.

2. The Notification required the manufacturer to opt for exemption before the first clearance in a financial year and utilize the Cenvat Credit available for payment of duty on goods cleared during the period. The Refund Sanctioning Authority rejected the refund claims as time-barred, leading to appeals before the Ld. Commissioner (Appeals) and subsequently before the Tribunal.

3. The Ld. Advocate for the appellants argued that they had timely filed exemption claims and engaged in correspondence with the Department regarding entitlement for exemption. The delay in filing refund claims was attributed to the Department's delay in confirming eligibility for exemption.

4. The Ld. Advocate contended that the denial of refund based on procedural delays was unjustified, emphasizing that the substantive benefit of exemption should not be denied due to procedural infractions. The issue revolved around the refund of duty, and the delay did not confer any undue benefit to the assessee.

5. The Tribunal, upon hearing both sides, observed that the Lower Appellate Authority had relied on a previous case involving similar issues. However, the Tribunal referenced a judgment of the Hon'ble High Court that allowed the appeal in a comparable case, setting aside the Tribunal's order.

6. The Hon'ble High Court's judgment highlighted the importance of substantial compliance with Notification requirements and the need for a liberal interpretation of exemption provisions to promote industrial growth. The Court emphasized that denial of refund based on procedural delays was unjust and set aside the lower authorities' orders.

7. In light of the High Court's judgment, the Appellate Tribunal concluded that the appellants' cases were similar and allowed the appeals, setting aside the impugned orders and granting relief to the appellants.

By following the precedent set by the Hon'ble High Court and emphasizing substantial compliance with Notification requirements, the Tribunal granted relief to the appellants, overturning the lower authorities' decisions.