2017 (3) TMI 169 - AT - Central Excise

Refund claim - N/N. 32/99-CE dated 8th July 1999 - units situated in specified industrial zones of North-East India - refund restricted by splitting of the claim on the basis of the two rates applicable to the two products and assuming that the duty paid on the last date from account current should be attributed to crates that are deemed to have value added of 26% against 36% available for furniture - Held that - once the eligibility is restricted to the actual payment through account current, being less than that entitled by application of the lower rate on the entire duty paid, artificially determined segregation without any evidence to support the assumption made by the first appellate authority is beyond the authority of law - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim under notification no 32/99-CE dated 8th July 1999 (as amended) for amount of ?21,451/-
2. Dispute regarding refund amount for plastic crates and furniture manufactured by M/s Supreme Industries Ltd
3. Interpretation of exemption notification for units in specified industrial zones of North-East India
4. Application of prescribed rates for value addition and refund computation
5. Authority of Central Excise officer in processing refund claims
6. Segregation of duty paid on different products without evidence

Analysis:
1. The dispute in this case revolves around a refund claim of ?21,451/- under notification no 32/99-CE dated 8th July 1999 (as amended). M/s Supreme Industries Ltd, a Large Tax Payer Unit (LTU) assessee, manufactures plastic crates falling under chapter 39 and furniture under chapter 94 of the Central Excise Tariff Act, 1985 at the Amingaon Export Promotion Industrial Park, Assam. The claim for refund was initially allowed in full by the competent authority but was later restricted to ?1,11,319 by the first appellate authority, based on the rates applicable to the two products and an assumption regarding the duty paid on the last date.

2. The exemption notification in question operates through a post-clearance monthly refund mechanism for units in specified industrial zones of North-East India. It exempts value addition in manufactured products and prescribes standard rates for duty computation, which are 26% for crates and 36% for furniture in the case of the appellant. The notification further restricts entitlement to the actual amount paid after debit of CENVAT credit. In this case, the appellant discharged dues by debit of ?4,14,010/- in CENVAT credit and claimed a refund of the balance amount.

3. The appellant argued that the first proviso to paragraph 2A of the notification deems the value addition to be the duty paid other than by CENVAT credit if it results in a higher refund amount than that arrived at by applying the prescribed rates. The Tribunal's decision in a previous case involving the appellant was cited in support of this argument.

4. The first appellate authority's decision was criticized for making assumptions about the duty paid on clearances without proper evidence. The officer erred in attributing duty payments to specific products without proper authentication from records, which is not within their authority. The claim that the account current was used for the discharge of duty on furniture clearances was not accepted.

5. The eligibility for refund should be based on the actual payment through account current, even if it is less than the entitlement calculated using the lower rate on the entire duty paid. The artificial segregation of duty paid without evidence to support the assumptions made by the first appellate authority was deemed beyond the authority of the law.

6. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.