2018 (2) TMI 3 - AT - Central Excise

Classification of goods - Ground Power Unit - whether classified under Chapter 85 or Chapter 88? - Held that - the appellant had taken a categorical stand before the Commissioner (Appeals) that they have not availed the Cenvat credit of duty paid on the inputs which stand utilized by them in the manufacture of ground power units - The appellate authority has observed that they have not produced any tangible evidence/documentary proof to substantiate their claim that the credit was not availed by them and whatever Cenvat credit was availed pertained to other final products, which were cleared on payment of duty - matter remanded to the original adjudicating authority for verification of the assessee s records - appeal allowed by way of remand.

Summary

Issues: Classification of goods, Refund claim rejection, Unjust enrichment, Cenvat credit utilization, Interest on refund, Availment of Cenvat credit

Classification of Goods:
The appellants were engaged in manufacturing 'Ground Power Unit' classified as parts of aircraft under Chapter 88, attracting a 'nil' rate of duty. The Revenue disputed this classification, proposing a duty of excise @ 10% under Chapter 85. The lower authorities upheld the Revenue's classification, leading to an order against the appellants. However, the Tribunal, in Final Order No.1173/98 dated 16.06.1998, accepted the assessee's stand, setting aside the impugned orders. Subsequently, a refund claim of &8377; 58,72,735/- was filed by the assessee, which was initially rejected by the Asst. Commissioner but later sanctioned by the Tribunal and the original adjudicating authority.

Refund Claim Rejection and Unjust Enrichment:
The refund claim was initially rejected on grounds of time bar and unjust enrichment. However, the Tribunal in its order No.107/2009 dated 20.01.2009 held that the claim was not time-barred and was not hit by unjust enrichment. The original adjudicating authority then sanctioned the refund claim of &8377; 58,72,735/-, with a portion in cash and the rest as Cenvat credit.

Cenvat Credit Utilization:
The Revenue's appeal contested the refund granted as the appellant had utilized Cenvat credit on inputs for manufacturing a final product later deemed non-excisable. The Commissioner (Appeals) upheld the Revenue's stance that the refund amount should be reduced to the extent of the utilized Cenvat credit. The appellant claimed they did not avail the credit for the ground power units but failed to provide concrete evidence to support this claim.

Interest on Refund:
The appellant's appeal for interest on the sanctioned refund was allowed by the Commissioner (Appeals), resolving that dispute. However, the Revenue's appeal regarding the reduction of refund amount due to Cenvat credit utilization was challenged in the present appeals filed by the assessee.

Availment of Cenvat Credit:
The appellant contended before the Commissioner (Appeals) that they did not avail the Cenvat credit for the inputs used in manufacturing ground power units. The appellate authority noted the lack of tangible evidence to substantiate this claim and observed that any Cenvat credit availed pertained to other final products. The Tribunal deemed it necessary to remand both appeals to the original adjudicating authority for verification of the appellant's records and consideration of the plea regarding denial of Cenvat credit in separate proceedings.

In conclusion, the Tribunal disposed of both appeals by remanding them for further examination and verification, emphasizing the need for concrete evidence regarding Cenvat credit utilization and classification of goods.