2021 (2) TMI 154 - HC - Central Excise

Seeking refund of unutilized input service tax credit - Section 33A of the Central Excise Act, 1944 - whether the petitioner ought to have been heard in the light of conditional waiver expressed? - HELD THAT - The entirety of the impugned order discusses the methodology of quantification put forth by the petitioner and the Officer also distinguishes the decisions of the Appellate Authority. Incidentally, he notices a lacunae in regard to the FIRCs that were submitted stating that some were ineligible since bank statements had been submitted in place of the FIRCs, drawing adverse inference from the same. However, this issue appears to have escaped the realm of discussion on account of the non-issuance of show cause notice. Conditional Waiver - HELD THAT - Section 33A of the Act sets out the procedure for adjudication and Section 33 A(1) states that the Adjudicating Authority shall give an opportunity of being heard to a party in a proceeding, if the party so desires - In this case, the desire of the party to be heard is clear and it is only if the authority were convinced with its written submissions and the decisions of the appellate authority that the personal hearing stood waived. Thus, it was incumbent upon the authority to have proceeded to issue show cause and personal hearing notice to the petitioner, frame the issues for resolution and thereafter pass an order-in-original. This has not been done in the present case and the impugned order dated 07.01.2019 is thus set aside. Petition allowed.

Summary

Issues:
Challenge to two Orders-in-Original under Central Excise Act, 1944 for refund of unutilized input service tax credit; Non-enclosure of Foreign Inward Remittance Certificates (FIRCs) due to RBI notification; Waiver of personal hearing prior to adjudication; Methodology of quantification of refund; Authority's failure to issue show cause notice; Compliance with Section 33A of the Act.

Analysis:
The petitioner contested two Orders-in-Original seeking refund of unutilized input service tax credit under the Central Excise Act, 1944. The claims required various documents, including FIRCs to evidence bank realization for services exported. However, the petitioner did not enclose FIRCs citing an RBI notification mandating electronic FIRCs or Inward Remittance Unique Number (IRM Unique number) for export remittances. The sufficiency of evidence for remittances was not considered by the Assessing Officer due to the petitioner waiving a personal hearing.

The petitioner submitted quantification methodology for refund, supported by decisions of the Appellate Authority. Despite raising concerns about FIRCs, the petitioner waived a show cause notice but requested a personal hearing if the Authority disagreed with the relied-upon decisions. The Authority's order discussed quantification methodology but overlooked the FIRCs issue due to the absence of a show cause notice.

The judgment focused on whether the petitioner should have been heard given the conditional waiver. Section 33A of the Act mandates the Adjudicating Authority to provide an opportunity for a party to be heard if desired. As the petitioner expressed a desire for a hearing based on the Authority's assessment of submissions and appellate decisions, the Authority should have issued a show cause notice, framed issues, and conducted a personal hearing before passing an Order-in-Original. Consequently, the impugned order was set aside, and the Authority was directed to issue a show cause notice within four weeks, conduct a hearing, and pass an order of adjudication within another four weeks.

In conclusion, the Writ Petitions were allowed, emphasizing the importance of complying with procedural requirements, including providing an opportunity for a party to be heard before adjudication.