2017 (8) TMI 1273 - AT - Central Excise

Refund of excess paid duty - The ld. Commissioner (Appeals) has found that the amount recovered was not adjudged through any proceedings - Section 11 of the Central Excise Act, 1944 - Held that - Section 11 of the Central Excise Act, 1944 did not authorize recovery of any sums which have not been adjudged and confirmed by the Competent Authority and that the said amount was not confirmed by any Adjudicating Authority. Therefore, the Original Authority had no power to recover the same under said Section 11 of the Central Excise Act, 1944 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against Order-in-Appeal No. 130-CE/LKO/2014 dated 02/09/2014.
2. Refund claims rejection and appeal before Commissioner (Appeals).
3. Order of appropriation of refund amount and appeal against it.
4. Grounds of appeal by Revenue.
5. Cross objections by the respondent.

Analysis:

1. The appeal was filed by Revenue against Order-in-Appeal No. 130-CE/LKO/2014 dated 02/09/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals), Lucknow. The respondent had applied for finalization of Provisional Assessments for various financial years, and the Deputy Commissioner determined that the appellant had overpaid significant amounts. Subsequently, the respondent applied for a refund, which was rejected. The Commissioner (Appeals) allowed the appeal, leading to Revenue's appeal before the Tribunal.

2. The Revenue raised various grounds of appeal, including the lack of scrutiny of documents for the refund claim, failure to examine unjust enrichment, and the treatment of interest liability as arrears without a separate Show Cause Notice. The respondent, on the other hand, contended that the recovery of interest was done without due process and that the amount was not confirmed by any Adjudicating Authority. The Tribunal, after considering the arguments, found merit in the respondent's contentions and dismissed the appeal filed by Revenue.

3. Additionally, the respondent filed cross objections related to the application of Rule 3(5B) of the Cenvat Credit Rules, 2004 for the recovery of interest. They argued that the Original Authority did not provide an opportunity to be heard before determining the interest amount. The Tribunal agreed with the respondent's arguments, stating that the Original Authority lacked the power to recover the amount under Section 11 of the Central Excise Act, 1944, as the sum had not been adjudged or confirmed by the Competent Authority.

4. The Tribunal also noted that a previous appeal by Revenue against the Order-in-Appeal dated 27/08/2012 was dismissed, affirming the decision. The issue of unjust enrichment was considered final after the issuance of the Order-in-Original dated 18/03/2013, and thus could not be raised at a later stage. Ultimately, the Tribunal dismissed the appeal filed by Revenue and disposed of the cross objections, allowing the respondent to seek consequential relief in accordance with the law.