2019 (5) TMI 503 - AT - Central Excise

Refund of erroneously paid export duty - one of the grounds for rejection was that though the appellant contended that they had exported the same goods under the ARE-1 No. B0183/2015-16 after cancelling their earlier ARE-1 B061/2015-16, but they had not produced any substantial evidence against the allegations made against them - principles of natural justice. HELD THAT - When admittedly the goods were not cleared at the instance of the first ARE-1 which was cancelled, the question of re-entry of the goods would not arise at all, since the procedures and conditions under paragraph 2.1 of the supplementary instructions would arise only when the goods are removed out of the factory for export and brought back later to the factory on cancellation of the export order and not in a case where the export itself did not take place - The authorities below have without considering the above factual aspects rejected the appellant s plea on the ground of not following the procedure which according to me is not correct. The Revenue should have enquired/investigated about, when the appellants made refund claim or thereafter, when the reason for making refund claim was clearly cancellation of the first ARE-1 - When the SCN itself refers to the fact of intimation about the non-clearance/cancellation of ARE-1 coupled with the fact of lack of enquiry and no finding as to clearing manufactured goods in any other way than reported, the fact of non-clearance of first ARE-1 has to sustain. Impugned order not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of excise duty rejection under Section 11B of the Central Excise Act, 1944.

Analysis:
The appellant-assessee challenged the rejection of its refund claim of excise duty by the Commissioner of Central Excise (Appeals-II). The appellant had cancelled an export under ARE-1 and filed a refund claim for the erroneously paid duty. The appellant argued that the goods were subsequently exported under a different ARE-1 after payment of central excise duty. The adjudicating authority rejected the refund claim citing procedural lapses and lack of evidence. The rejection was based on the delay in informing the Range officer about the cancellation of export, discrepancies in stock accounts, and failure to provide substantial evidence. The Commissioner (Appeals-II) upheld the rejection order, noting the absence of concrete evidence supporting the appellant's contentions.

Upon appeal before the Appellate Tribunal CESTAT CHENNAI, the Tribunal analyzed the case. The Tribunal observed that the goods were intended for clearance on duty payment, not on bond, and that the duty was paid twice due to the subsequent export under a different ARE-1. The Tribunal found that the procedural requirements did not apply in this scenario as the goods were not cleared initially due to cancellation. The Tribunal criticized the lower authorities for overlooking crucial factual aspects and not considering the duty payment already made. The Tribunal highlighted the lack of evidence regarding additional raw materials procurement, clearance of goods outside books, transportation details, and unrecorded cash transactions.

The Tribunal emphasized that the Revenue should have investigated the reason behind the refund claim, which was the cancellation of the initial ARE-1. The Tribunal noted the lack of proper enquiry by the Revenue regarding the daily stock account discrepancies and the absence of evidence supporting allegations of procedural violations. Ultimately, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal with any consequential benefits as per the law. The order was pronounced in the open court on 06.05.2019 by MR P. DINESHA, JUDICIAL MEMBER of the Appellate Tribunal CESTAT CHENNAI.