2016 (11) TMI 829 - AT - Central Excise

Recovery of excess ineligible duty draw-back along with appropriate interest - reversal of credit - 100% EOU - Held that - the appellants have taken CENVAT Credit on inputs and input services and have not availed the CENVAT Credit used in respect of goods manufactured and exported during the period 01 October 2011 to 31st July 2012. This vital fact has not been addressed by the learned Commissioner (Appeals) in right perspective and accordingly, the appeal is allowed by way of remand. The learned adjudicating authority shall have a re-look into all aspects of the matter and shall pass a reasonable and speaking order after following the principles of natural justice - appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection based on availing higher drawback rate by misdeclaration in ARE-1 and lack of evidence to support non-availment of Cenvat credit for exports after 1.10.2011.

Analysis:
The case involves M/s. Annur Cotton Mills, a 100% EOU, paying service tax under GTA Service, importing capital goods and Polyester Viscose Fiber duty-free under specific notifications. An audit revealed an excess duty drawback claim of ?4,86,86,403, leading to the reversal of credit and a refund claim for unutilized Cenvat credit from May to September 2011. The adjudicating authority rejected the refund, citing lack of supporting documents and misdeclaration in ARE-1 for higher drawback on non-Cenvat availed items. The Commissioner (Appeals) upheld this decision.

The appellant's counsel argued that no Cenvat credit was availed for exports after 1.10.2011, supported by certificates from the range officer. They contended that denial of refund for unutilized Cenvat credit when no drawback was obtained is unjust, citing relevant case laws. The Revenue's representative supported the previous decisions.

Upon review, the tribunal found the Commissioner (Appeals)'s observation regarding the purpose of issuance as legally improper. The certificate showed that Cenvat credit was taken on inputs and input services but not utilized for goods exported from 01.10.2011 to 31.07.2012. The tribunal allowed the appeal by remanding the case for a comprehensive reevaluation by the adjudicating authority, emphasizing the need for a reasoned order following natural justice principles.

In conclusion, the tribunal allowed the appeal by remanding it to the adjudicating authority for a thorough reassessment, highlighting the importance of addressing all aspects of the case and issuing a well-founded decision in compliance with natural justice principles.