2021 (9) TMI 451 - AT - Service Tax

Refund claim - rejection on the ground of time limitation - power of Commissioner (Appeals) to remand the case - HELD THAT - From the impugned order it is quite evident that the adjudicating authority has rejected the refund claim on ground of limitation, without consideration of the same on merits. Since Commissioner (Appeals) has in the impugned order arrived at the finding that the refund claim could not have been rejected on the ground of limitation, he had no option but to allow the opportunity to the original authority for consideration of the refund claim on merits. This finding of the Commissioner (Appeal) on the issue of limitation has not been challenged by the revenue in the appeal filed. Even if it is held that Commissioner (Appeal) could not have remanded the matter back following the decisions of Hon ble Apex Court in MIL INDIA LTD. VERSUS COMMISSIONER OF C. EX., NOIDA 2007 (3) TMI 8 - SUPREME COURT and Hon ble Punjab Haryana High Court in Commissioner of Customs Amritsar v/s Enkay (India) Rubber Co Pvt Ltd. 2007 (3) TMI 276 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH , referred to by revenue in the appeal filed, then also we remand the matter for decision by the adjudicating authority on merits as have been done by the Commissioner (Appeals). It is nobody's case that, there are no power to do so. The end of justice will be met if the appeal filed by Revenue is allowed to the extent that the Commissioner (Appeals) could not have remanded the matter back - appeal allowed by way of remand.

Summary

Issues Involved:
1. Power of Commissioner (Appeals) to remand cases.
2. Limitation period for refund claims.
3. Requirement of personal hearing before adjudication.

Issue-wise Detailed Analysis:

1. Power of Commissioner (Appeals) to Remand Cases:
The primary issue raised by the Revenue was whether the Commissioner (Appeals) has the authority to remand a case back to the adjudicating authority. The Revenue argued that according to Section 85(5) of the Finance Act, 1994, and Section 35A(3) of the Central Excise Act, 1944, the Commissioner (Appeals) does not possess the power to remand cases. The Revenue cited various judgments, including the Hon’ble High Court of Punjab & Haryana in the case of Commissioner of Customs Amritsar v/s Enkay (India) Rubber Co Pvt Ltd., and the Supreme Court in MIL India Ltd., which held that the power of remand had been expressly taken away by the Finance Act, 2001.

Conversely, the Tribunal referred to the Hon’ble Gujarat High Court's decision in Associated Hotels Ltd., which interpreted Section 85(4) of the Finance Act, 1994, to include the power to remand cases. The Tribunal noted that sub-section (4) of Section 85 is worded broadly, allowing the Commissioner (Appeals) to pass any order deemed fit, including remanding the case. The Tribunal also cited other judgments, such as Anand Color Lab and Honeywell Technology Solutions Lab P. Ltd., which supported the view that the Commissioner (Appeals) retains the power to remand cases for fresh adjudication.

2. Limitation Period for Refund Claims:
The Commissioner (Appeals) found that the refund claims could not be regarded as time-barred since the duty was paid "under protest." According to the second proviso to Section 11B(1) of the Central Excise Act, 1944, the one-year limitation period does not apply when duty is paid under protest. This finding was not challenged by the Revenue in the appeal. The Tribunal upheld this finding, noting that the adjudicating authority had rejected the refund claim on the ground of limitation without considering the merits of the case.

3. Requirement of Personal Hearing Before Adjudication:
The Commissioner (Appeals) noted that the adjudicating authority had passed the order without granting the appellant an opportunity for a personal hearing, which is mandated by Section 33A of the Central Excise Act, 1944. The Tribunal agreed that the procedures prescribed, including the requirement for a personal hearing, must be followed. The absence of a personal hearing rendered the order bad in law, necessitating a remand for de novo adjudication.

Conclusion:
The Tribunal concluded that even if the Commissioner (Appeals) did not have the power to remand the case, the Tribunal itself, as an appellate authority, has the power to remand the matter for a decision on merits. The Tribunal allowed the appeal to the extent that the Commissioner (Appeals) could not have remanded the matter back but remanded the case to the original authority for consideration on merits, without disturbing the finding on limitation. The original authority was directed to decide the matter within three months after hearing the respondent. The stay application was dismissed.