2018 (5) TMI 1461 - AT - Central Excise

100% EOU - Refund of unutilized CENVAT credit - rejected mainly on the ground that during the period from February 2005 to March 2006, the appellant did not manufacture anything as per the ER-2 return - Held that - the appellant has manufactured during the said period which he can easily establish before the lower authorities, if the case is remanded back to the original authority - the case needs to be remanded back to the Original Authority with a direction to examine whether the appellant carried out production during the relevant period, by examining the documents which may be produced by the appellant - appeal allowed by way of remand.

Summary

Issues involved:
1. Rejection of refund claim by the Commissioner(Appeals)
2. Discrepancy in quantities of exports as per ARE-1 and ER-2 returns
3. Dispute regarding manufacturing of excisable goods during a specific period

Analysis:

Issue 1: Rejection of refund claim by the Commissioner(Appeals)
The appeal was directed against the order passed by the Commissioner(Appeals) rejecting the appellant's refund claim of ?3,25,701/- for unutilized CENVAT credit on input services, including transportation charges for the export of iron ore. The Assistant Commissioner initially rejected the refund claim, leading to the appeal before the Commissioner(Appeals), who upheld the rejection. The CESTAT, in a previous decision, remanded the case to the Original Authority for a fresh decision considering all relevant aspects. Subsequently, the Assistant Commissioner allowed a refund of ?1,90,556/- but rejected ?1,35,145/- due to discrepancies in export quantities. The Commissioner(Appeals) then rejected the appeal, prompting the present appeal.

Issue 2: Discrepancy in quantities of exports as per ARE-1 and ER-2 returns
The Assistant Commissioner's rejection of a portion of the refund was based on a significant difference in export quantities as per the ARE-1 and ER-2 returns. This discrepancy led to the rejection of ?1,35,145/- of the refund claim. The appellant argued that the actual production of goods was accurately recorded in the stock ledger, verified by the jurisdictional Superintendent, and attested as authentic. The appellant contended that the manufacturing quantity was erroneously shown as 'NIL' in the ER-2 returns due to inadvertence. The appellant provided evidence such as production ledger and shipping bills to support their claim of manufacturing and exporting goods during the relevant period.

Issue 3: Dispute regarding manufacturing of excisable goods during a specific period
The core dispute revolved around the manufacturing activity of excisable goods by the appellant during a specific period from February 2005 to March 2006. The Assistant Commissioner's rejection of the refund claim was primarily based on the ER-2 returns indicating no manufacturing activity during this period. However, the appellant argued that they had indeed manufactured goods, as evidenced by production ledger and shipping bills, despite the inadvertent 'NIL' entry in the ER-2 returns. The appellant requested a remand to the Original Authority to establish the actual production through various documents and ensure a fair examination of the manufacturing activities during the disputed period.

In conclusion, the Tribunal found merit in the appellant's argument regarding the manufacturing discrepancy and remanded the case back to the Original Authority for a fresh decision. The Tribunal emphasized the need to examine the documents provided by the appellant to determine the authenticity of the manufacturing claims. The principles of natural justice were highlighted for compliance during the re-examination process, ultimately setting aside the impugned order and remanding the appeal back to the Original Authority for further proceedings.