2017 (10) TMI 841 - HC - Central Excise

Jurisdiction - power to remand - Whether after passing an order of remand to the Adjudicating Authority for deciding afresh the refund claim of the Appellant, CESTAT could have concluded the issue of entitlement of interest on the refund claim? - Held that - Once it is an admitted position that it is only the Adjudicating Authority which has jurisdiction to decide whether interest on refund claim should be granted, there was no reason for the CESTAT to have decided the issue of entitlement of the Appellant to claim interest on the refund claim. In fact, the adjudication on the question, whether the Appellant is entitled to refund is not yet made. In the event, the Adjudicating Authority is inclined to grant refund, the fact that at the relevant time necessary documents were not produced by the Appellant, is only a factor to be considered for consideration of the question of grant of interest. However, this factor may not be conclusive. The part of the impugned order by which final adjudication was made by the CESTAT on the issue of entitlement of the Appellant to interest on the refund claim was completely erroneous and therefore, deserves to be set aside - the issue whether the Appellant is entitled to interest on the refund claim is kept open to be decided by the Adjudicating Authority - appeal allowed in part.

Summary

Issues Involved:
1. Whether CESTAT could conclude the issue of entitlement of interest on the refund claim after remanding the claim for fresh consideration by the Adjudicating Authority?

Analysis:
1. The refund claim of the Appellant was initially rejected by the Adjudicating Authority, leading to an appeal before the Commissioner (Appeals), who remanded the claim for fresh consideration. The Commissioner emphasized the need for additional documentary evidence, especially considering the Appellant's status as a Government of Goa Undertaking.

2. The Revenue then appealed to CESTAT, which found that the Commissioner (Appeals) did not have the power to remand the claim and that the refund was rejected due to the Appellant's failure to produce relevant records. Consequently, CESTAT remanded the matter back to the Adjudicating Authority for a fresh decision on the refund claim.

3. However, CESTAT, in its judgment, also made a determination regarding the Appellant's entitlement to interest on the refund claim, stating that no interest was due as the claim was rejected due to the Appellant's failure to produce necessary records.

4. The Appellant argued that CESTAT overstepped its jurisdiction by deciding on the interest issue, contending that only the Adjudicating Authority could determine this aspect. The Respondent, on the other hand, defended CESTAT's observations as being based on factual circumstances.

5. The High Court noted that the Adjudicating Authority had the sole jurisdiction to decide on the grant of interest on the refund claim. As the question of entitlement to refund was yet to be conclusively decided, the absence of documents at the time of rejection was just one factor to consider for interest, not a conclusive one.

6. Consequently, the High Court set aside the portion of CESTAT's order that decided on the Appellant's entitlement to interest. The Court clarified that this issue should be left open for the Adjudicating Authority to decide if the Appellant is found entitled to a refund. All contentions regarding interest entitlement were to be considered by the Adjudicating Authority, and the appeal was partly allowed based on these findings.