2020 (1) TMI 1348 - AT - Central Excise

Refund of the amounts deposited during investigation - appeal of assessee was rejected on the ground that the issue relating to reversal of MODVAT credit was pending with the adjudicating authority - HELD THAT - The disposal of application for refund itself has been premature. Whether such amount is available for disposition by the central excise authorities or not any confirmation of recovery under section 11A of Central Excise Act 1944 along with interest and penalty is recoverable under appropriate provisions of Central Excise Act 1944. The amount deposited is not a limiting factor nor the only source of such recovery. Even if it was considered essential to retain the amount in deposit till conclusion of adjudication proceedings it would have been appropriate for the competent authority to have withheld any decision on the application for refund till completion of the process. Under section 11B of Central Excise Act 1944 rejection of refund claim can arise only on ineligibility in accordance with the provisions wherein. There is no reference to premature claim as ground for rejection. Application restored to the original authority for disposal on merit.

Summary

Issues:
Claim for refund of deposited amount during investigations into evasion of central excise duties deemed premature.

Analysis:
The appeal challenges the rejection of a claim for refund of ?75,00,000 deposited during investigations into evasion of central excise duties, deemed premature by the original and first appellate authority due to pending proceedings before the adjudicating authority. The show cause notice led to an adjudication order confirming part of the demand while dropping the rest, resulting in appeals by both the assessee and Revenue before the Tribunal. The Revenue's appeal was dismissed, and the assessee's appeal was remanded for consideration of penalties related to MODVAT scheme violation. The assessee sought refund while Revenue appealed to the High Court. The rejection of the refund claim was based on the pending adjudication process, leading to the current challenge.

The appellant argued that the Revenue's appeal before the High Court was dismissed, and the setting aside of the original adjudication order removes the basis for retaining the deposited amount against pending dues. The Tribunal found the premature disposal of the refund application, emphasizing that recovery under the Central Excise Act is not solely dependent on the deposited amount. The competent authority should have refrained from deciding on the refund application until the adjudication process was completed. The rejection of a refund claim under section 11B of the Central Excise Act is based on ineligibility grounds, not prematurity.

Thus, the Tribunal set aside the impugned order and referred the application back to the original authority for a merit-based decision. The judgment highlights the importance of proper procedural adherence and eligibility criteria for refund claims under the Central Excise Act, emphasizing that prematurity alone cannot justify rejection.