2020 (3) TMI 735 - AT - Central Excise

Recovery of Rebate claim after two years from sanction of refund - export of goods outside India - payment of duty on exempted goods - Rule 19 of Central Excise Rules, 2002 - extended period of limitation - HELD THAT - The refund claims of the assessee/respondent had already undergone sufficient scrutiny at pre-audit as well as post audit stage of refund, before those were actually sanctioned by the Adjudicating Authority. Raising an audit objection after two years of such sanction and even disbursement, is beyond the legislative intent. Issuing of show cause notice in March, 2015 proposing the recovery of claims sanctioned and disposed way back in 2011-12 is, therefore, not sustainable. The show cause notice is rather beyond the period of limitation. There is no iota of even whisper that the assessee had any intention to evade the duty. The admitted fact remains that the respondent/assessee has exported the goods on payment of duty under claim of rebate. Admittedly goods have been exported out of India and proof of export has been duly submitted. Respondent admittedly has been regularly filing the ER-Returns which were never objected by the Range Officer at the appropriate time - Commissioner (Appeals) has committed no error while holding the show cause notice as being barred by time and holding the assessee otherwise entitled to the claim for getting the refund of duty as was paid by them on finished goods exported out of India. Appeal dismissed - decided against Revenue.

Summary

Issues:
Department's appeal based on Review Order questioning Order-in-Appeal allowing respondent's rebate claims.

Analysis:
The Department appealed based on a Review Order against the Order-in-Appeal allowing the respondent's rebate claims. The appellants, registered under Central Excise, exported goods under rebate or exemption from duty. The Department observed an erroneous refund due to the appellant being an EoU, leading to a show cause notice for recovery. The Order-in-Original proposed recovery, confirmed later, and appealed successfully by the respondent. The Department's appeal was based on the contention that the respondent was not entitled to claim rebate as a 100% EoU unit. The Department argued that the rebate claims were erroneous, and the recovery proposal was valid. The Department highlighted the exemption under Notification No. 24/2003, stating the respondent should not have claimed rebate post-export duty payment.

The respondent argued that the show cause notice was time-barred, issued beyond the limitation period. They contended that the rebate amount disbursement was not objected to timely, and the Order-in-Appeal should not have been set aside. The respondent emphasized that the Department wrongly invoked the extended limitation period. They justified the Commissioner (Appeals) decision to allow their appeal based on these grounds.

The Tribunal found that the rebate claims had attained finality as the Department did not appeal under Section 35E of the Central Excise Act. Citing legal precedents, the Tribunal ruled that once an order granting refund attains finality, a show cause notice cannot be issued. The Tribunal also noted that the refund claims underwent pre-audit and post-audit scrutiny as per CBEC's instructions. Issuing a show cause notice years after the claims were sanctioned and disbursed was deemed unsustainable and beyond the limitation period. The Tribunal acknowledged the respondent's regular filing of ER-Returns and proof of exports, indicating no intent to evade duty. Consequently, the Commissioner (Appeals) decision was upheld, dismissing the Department's appeal.

In conclusion, the Tribunal dismissed the Department's appeal, upholding the Commissioner (Appeals) decision. The Tribunal found no error in the decision, considering the time-barred show cause notice and the respondent's entitlement to the refund based on the exported goods' duty payment.