2018 (9) TMI 1496 - AT - Central Excise

Refund claim - duty paid under protest - case of the appellant is that no SCN has been issued to them for the amount paid under protest and for recovery of interest from the appellant - Held that - It is admitted in this case that no SCN has been issued for appropriation of the amount reversed by the appellant or appropriated. Admittedly, no refund claim has been filed by the appellant for refund of amount of ₹ 36,57,968/-, therefore, the amount of ₹ 36,57,968/- is not subject matter for consideration by this Tribunal at this stage - Refund not entertained. Deduction of interest of ₹ 23,33,133/- - Held that - Admittedly, in this case, no show cause notice has been issued to the appellant for appropriation of the amount paid under protest or to demand interest for delay reversal of credit, in that circumstance, the amount of interest cannot be recovered from the appellant - appropriation of amount of ₹ 23,33,133/- is against the law. Appeal disposed off.

Summary

Issues:
Refund claim rejection of ? 23,33,133/-; Appropriation of Cenvat credit; Demand of interest; Time-barred proceedings.

Analysis:
The appellant's appeal challenged the rejection of their refund claim of ? 23,33,133/- by the Commissioner (Appeals). The case involved the appellant's availing of Cenvat credit of ? 36,57,968/-, which was later deemed wrongful, leading to a series of debits and adjustments by the appellant and the department. The Deputy Commissioner demanded interest of ? 55,45,175/- for delayed credit reversal, which was contested by the appellant. The Commissioner (Appeals) remanded the matter for interest recalculation, leading to a demand of ? 23,33,133/-, which was rejected by the Commissioner (Appeals). The appellant then approached the High Court, which directed them to appeal before the Commissioner (Appeals) within 30 days. The subsequent appeal was initially dismissed as time-barred but was remanded back by the Tribunal for a decision on merits.

The appellant argued that no show cause notice was issued for the appropriation of the reversed Cenvat credit or for demanding interest, rendering the proceedings unsustainable. The appellant sought the refund of the reversed amount along with the appropriated sum. On the contrary, the department contended that the appellant had voluntarily debited amounts and never challenged the deductions, implying their finality. The department argued that no refund claim was filed for the disputed amount, making it ineligible for consideration. The department also maintained that interest recovery was justified under Section 11A (2B) of the Central Excise Act, 1944.

After hearing both parties, the Tribunal found that no show cause notice was issued for the reversed amount or interest recovery, making the proceedings unsustainable. The Tribunal held that the appellant must first file a refund claim for the disputed amount before it can be considered. Regarding the interest demand of ? 23,33,133/-, the Tribunal ruled that without a show cause notice, the provisions of the Central Excise Act did not apply, citing a Supreme Court judgment. Consequently, the Tribunal ordered the refund of the interest amount to the appellant within 30 days of the order.

In conclusion, the Tribunal disposed of the appeal in favor of the appellant, directing the refund of the interest amount and emphasizing the necessity of following due process in such matters.