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2023 (9) TMI 1371 - AT - Central ExciseRecovery of excess refund sanctioned to the assessee in the initial month where the Cenvat credit was not fully utilized - HELD THAT - The similar issue has been dealt with by this Tribunal in the case of M/s Singla Cables 2015 (2) TMI 381 - CESTAT NEW DELHI , wherein this Tribunal has recorded overall there was no excess availment of exemption under Notification No. 56/2002-CE, as the excess quantum of refund under Notification No. 56/2002-CE during February 2006 to April 2006, was neutralized by lesser quantum of refund under this notification during December 2006. The refund claim of the appellants for the subsequent period, could not be rejected on the ground that the appellant has taken excess refund for the period prior to 22.12.2002, therefore, no demand is sustainable against the appellant as demanded in view of the letter dated 03.06.2003 by the Deputy Commissioner and the refund for the period August, 2006 to October, 2006 were not required to be appropriated. Appeal allowed.
Issues Involved:
1. Retrospective amendment of Notification No. 32/99-CE by Notification No. 61/2002-CE. 2. Utilization of accumulated CENVAT credit. 3. Legitimacy of refund claims and subsequent recovery orders. 4. Revenue neutrality and actual loss to the revenue. 5. Procedural fairness in issuing recovery orders without notice. Issue-wise Summary: 1. Retrospective Amendment of Notification No. 32/99-CE by Notification No. 61/2002-CE: Notification No. 61/2002-CE amended Notification No. 32/99-CE, effective from 23.12.2002, requiring manufacturers to utilize the entire amount of CENVAT credit before claiming a refund of excise duty paid through PLA. The Finance Act, 2003, gave this amendment retrospective effect from 08.07.1999, implying that the restrictive condition was deemed always to have been in place. 2. Utilization of Accumulated CENVAT Credit: The appellants, M/s. Ozone Pharmaceuticals Limited and M/s. Ozone Ayurvedics, began utilizing their accumulated CENVAT credit for payment of duty starting from 23.12.2002. By June 2003, the balance in the CENVAT account was "Nil" due to continuous utilization. As a result, no refund was claimed or sanctioned during February 2003 to May 2003. 3. Legitimacy of Refund Claims and Subsequent Recovery Orders: The Deputy Commissioner of Central Excise, Guwahati, issued orders on 02.06.2023 and 03.06.2023, directing the appellants to pay the amounts refunded in excess during the period up to 22.12.2002, without giving notice. The appellants' representation for reassessment was not considered, leading to writ petitions and subsequent appeals. The Hon'ble Supreme Court directed the appellants to file an appeal before the Commissioner (Appeals), who upheld the Deputy Commissioner's orders. 4. Revenue Neutrality and Actual Loss to the Revenue: The appellants argued that the excess refund claimed up to 22.12.2002 was adjusted by lower/nil refund claims during 23.12.2002 to May 2003 due to the utilization of accumulated CENVAT credit. They cited precedents where no demand was sustainable if no actual loss to the revenue occurred, emphasizing that the situation was revenue neutral. 5. Procedural Fairness in Issuing Recovery Orders Without Notice: The appellants contended that recovery orders were issued without notice, violating procedural fairness. The Supreme Court had observed that facts and circumstances should be considered before making a recovery order. The Commissioner (Appeals) and the Tribunal's findings were deemed contrary to the Supreme Court's direction to consider the totality of facts and circumstances. Conclusion: The Tribunal found that the issue was no longer res integra, referencing similar cases where the utilization of CENVAT credit in subsequent months was deemed revenue neutral. It held that the refund claims for the subsequent period could not be rejected based on excess refund prior to 22.12.2002. Consequently, the Tribunal set aside the impugned order, allowing the appeals with consequential relief. (Pronounced in the open court on 26.09.2023)
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