2018 (11) TMI 219 - AT - Central Excise

Refund of Excise Duty paid mistakenly - appellant have paid an amount of 6% of the assessable value; that the goods were exempted from Customs Duty - rejection of refund on the ground that the excess amount paid by the appellant in terms of Rule 6(3)(i) of the CENVAT Credit Rules, 2004 was not unconstitutional - Held that - The Revenue has time and again changed its stand without being consistent in each stage, just to deny refund nor has the Revenue justified issuance of a second Show Cause Notice when what was required was to give effect to direction of Commissioner (Appeals). The appellant s refund application in Form-R filed in 2014 having not been specifically found to be wrong and the Revenue having accepted the directions of the Commissioner (Appeals) cannot be found to go beyond the directions therein and hence, the rejection of refund for any other ground is unsustainable being contrary to law. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of Excise Duty under Rule 6(3)(i) of CENVAT Credit Rules, 2004; Rejection of refund claim by adjudicating authority; Appeal before Commissioner of Central Excise (Appeals-I); Second Show Cause Notice alleging unjust enrichment; Rejection of refund claim by Commissioner of GST & Central Excise (Appeals-I); Constitutional validity of excess amount paid; Ignoring proof of duty not being passed on; Changing stand of Revenue; Issuance of second Show Cause Notice; Directions of Commissioner (Appeals) not followed.

Analysis:
The appellant, a public sector undertaking, filed a refund application for Excise Duty paid inadvertently under Rule 6(3)(i) of CENVAT Credit Rules, 2004. The initial refund claim was rejected by the adjudicating authority, but on appeal, the Commissioner of Central Excise (Appeals-I) directed to sanction the refund after verifying that the duty had not been passed on. However, the Department issued a second Show Cause Notice deviating from the earlier findings and rejected the refund claim alleging unjust enrichment without addressing the direction of the Commissioner (Appeals). The Commissioner of GST & Central Excise (Appeals-I) upheld the rejection, stating that the excess amount paid was not unconstitutional, which was contested by the appellant.

During the hearing, the appellant presented evidence that duty had not been passed on, as stated in the refund application, but this was disregarded. The Tribunal noted the inconsistency in the Revenue's stand and the failure to adhere to the Commissioner (Appeals) directions. The Tribunal found the rejection of the refund on grounds other than those specified in the directions unsustainable and set aside the impugned Order, allowing the appeal with consequential benefits.

The Tribunal emphasized that the constitutional validity of the excess amount paid could only be determined by the High Court or Supreme Court, not by other authorities. It criticized the Revenue for changing its stance and issuing a second Show Cause Notice without proper justification. The Tribunal highlighted the importance of following the directions of the Commissioner (Appeals) and ensuring consistency in decision-making processes to avoid unfair denials of refunds. Ultimately, the Tribunal ruled in favor of the appellant, emphasizing the need for adherence to legal principles and procedural fairness in such matters.