2022 (5) TMI 563 - AT - Central Excise

Refund of Central Excise Duty - return of goods post GST era which were supplied earlier - duty deposited on excisable goods cleared in the month of June, 2017, which were rejected by the buyer and same were finally returned back in January, 2018 - Rule 16 of Central Excise Rules, 2002 - Applicability of principles of unjust enrichment - HELD THAT - Section 142(3) of CGST Act provides that Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of Section 11B(2) (unjust enrichment). Thus, various provisions and requirement for refund, it is found that the appellant has satisfied all the conditions as required under Section 142(1) read with Rule 16 of Central Excise Rules. Further, there is only some confusion with regard to the status of the buyer returning the goods, whether the registered or not registered. Under the facts and circumstances that the buyer was not a registered dealer under the provisions of Central Excise Act but was registered under the provisions of the GST Act, it is held that the Court below have erred in holding that the goods has been returned by a registered dealer, and hence there should have been proper invoice for return, and in such circumstances, there is no time limit applicable. In such circumstances, the selling dealer/ manufacturer is entitled to cenvat credit under the provisions of GST, on the strength of the invoice for return of goods. It is held that for such deemed lapse in procedure, the substantial benefit of refund of duty paid at the time of clearance cannot be denied to the appellant, as the appellant have fulfilled all the conditions precedent for being entitled to refund - Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of a copy of this order alongwith interest under Section 11BB of the Central Excise Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to refund of Central Excise duty on returned goods

Analysis:
The appellant filed a refund claim of Rs. 15,90,624/- for Central Excise duty paid on goods cleared in June 2017, which were rejected by the buyer and returned in January 2018. The appellant contended that the goods were cleared under Central Excise invoices to an unregistered buyer, M/s Technofab Engineers Ltd., and were returned within the stipulated time frame. The Commissioner (Appeals) rejected the appeal, citing non-compliance with the conditions of return of goods from an unregistered person within six months from the appointed day. The appellant argued that the buyer's rejection and subsequent return of the goods were duly recorded in the RG-1 register, fulfilling the statutory requirement.

The Tribunal examined the provisions of the CGST Act and Rule 16 of the Central Excise Rules, 2002. It noted that the appellant had met the conditions for refund under Section 142(1) and Rule 16. The Tribunal acknowledged the ambiguity regarding the buyer's registration status under Central Excise versus GST laws. As the buyer was not registered under Central Excise but under GST, the Tribunal held that the appellant was entitled to the refund of duty paid at the time of clearance. The Tribunal emphasized that the procedural lapse in issuing a proper invoice for return should not deny the appellant the legitimate refund claim. Therefore, the Tribunal allowed the appeal, directing the Adjudicating Authority to grant the refund along with interest within 45 days.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing compliance with the statutory provisions for refund of Central Excise duty on goods returned by an unregistered buyer within the specified time frame. The Tribunal highlighted the distinction between the buyer's registration status under Central Excise and GST laws, ensuring the appellant's entitlement to the refund despite procedural discrepancies.