2018 (11) TMI 413 - AT - Central Excise

100% EOU - refund of accumulated CENVAT Credit - case of appellant is that no show cause notice has been issued to the appellant to deny cenvat credit on inputs/input services in question, the refund claim cannot be rejected - extended period of limitation - Held that - It is admitted the position that no show cause notice has been issued to the appellant either for denial of cenvat credit on inputs and input services or for rejection of refund claim. After adjudication, the revenue cannot take law in their hand to issue the show cause notice by invoking extended period of limitation. Therefore, understanding by law by departmental officer is misconceived. Admittedly, no show cause notice has been issued to deny cenvat credit on inputs and input services in question, the denial of rejection of refund claim does not arise as held by this Tribunal in the case of Verisign Services India Pvt. Ltd. 2018 (2) TMI 927 - CESTAT, BANGALORE - the appellant is entitled for refund claim in dispute and accordingly the adjudicating authority is directed to sanction the refund claim of the appellant within 30 days of the date of receipt of this order - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Refund claim rejection without show cause notice, denial of cenvat credit on inputs/input services, remand for natural justice principle application.

Analysis:
The appellant, a 100% EOU, filed a refund claim for unutilized cenvat credit on inputs and input services under Rule 5 of CCR, 2004. The claim was partly rejected without issuing a show cause notice regarding the denial of cenvat credit on certain inputs/input services. The Ld. Commissioner (Appeals) remanded the matter for following the principle of natural justice. The appellant contended that no rejection of cenvat credit was raised before filing the refund claim and no show cause notice was issued, citing the decision in Verisign Services India Pvt. Ltd. case. The Revenue argued that a show cause notice could be issued invoking the extended period of limitation. However, the Tribunal noted that no show cause notice had been issued for denial of cenvat credit or rejection of the refund claim, emphasizing that the denial cannot occur post-adjudication. Referring to the Verisign case, the Tribunal held that denial of cenvat credit at a later stage is impermissible if not questioned during the availment of services, directing the adjudicating authority to sanction the refund claim within 30 days.

This judgment highlights the importance of issuing show cause notices before rejecting refund claims or denying cenvat credit on inputs/input services. It underscores the principle that denial of credit cannot be raised post-facto and must be addressed during the initial stages. The decision in the Verisign case serves as a precedent, emphasizing that denial of refund claims based on later objections is untenable. The Tribunal's ruling ensures that procedural fairness and natural justice are upheld in matters concerning cenvat credit and refund claims, preventing arbitrary denials without due process. The judgment sets a clear precedent for adjudicating authorities to follow established legal principles and precedents while handling similar cases in the future, promoting transparency and adherence to legal norms in tax matters.