2023 (12) TMI 471 - AT - Central Excise

Entitlement for refund on the valve which is not a manufactured goods and the same was received and cleared as such - malafide intent - suppression, of facts or not - extended period of limitation - HELD THAT - The Notification No. 39/2001-CE dated 31.07.2001 is undisputedly applicable for the refund of duty paid on the manufactured goods - In the present case, valve has not undergone the manufacturing process. The appellant also admitted that the valve was cleared as such and the duty was paid in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. In this fact it is clear that the valve which is cleared as such without involving manufacturing process and duty paid there on is treated as duty paid on removal of inputs in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. Therefore, the refund granted to the appellant under Notification No. 39/2001-CE dated 31.07.2001 which is not applicable to the removal of input as such, the said refund is correctly recoverable from the appellant. Notification No. 39/2001-CE dated 31.07.2001 clearly prescribes that the refund mechanism is provided only in respect of manufactured goods. The appellant knowingly paid the duty and claimed the refund of unmanufactured goods which itself is malafide intention. Secondly, the appellant have not disclosed that the valve on which the cenvat credit was availed has not undergone into the manufacturing process of the finished product. Therefore, there is clear suppression of fact on the part of the appellant. Hence, the submission of the appellant cannot be agreed upon, that the extended period was wrongly invoked. Accordingly, the recovery of the demand of erroneous refund was rightly made. Hence there are no infirmity in the impugned order. The impugned order is upheld. Appeal is dismissed.

Summary

Issues involved: Claim of refund on non-manufactured goods under Notification No. 39/2001-CE dated 31.07.2001, invocation of extended period for demand of erroneous refund.

The judgment deals with the case where the appellant, engaged in the manufacture and clearance of High Pressure Gas Cylinders, claimed refund under Notification No. 39/2001-CE dated 31.07.2001 for duty paid on valves purchased and cleared as such. The department contended that the refund is only available for manufactured goods, not for valves which are not manufactured goods. The department sought to recover the refund granted to the appellant on valves.

The appellant argued that since duty was paid on the valves while clearing them, no further demand for refund can be made. They also contended that the show cause notice invoking the extended period is not valid as there was no suppression of facts, as all details were disclosed in the ER-1 returns.

The tribunal considered the issue of whether the appellant is entitled to a refund on valves, which are not manufactured goods but cleared as such. It was found that the Notification No. 39/2001-CE dated 31.07.2001 is applicable only for the refund of duty paid on manufactured goods. As the valves did not undergo the manufacturing process and were cleared as such, the duty paid on them is treated as duty paid on removal of inputs, not eligible for the refund under the said notification.

Regarding the invocation of the extended period for demand of erroneous refund, the tribunal agreed with the Commissioner (Appeals) that the extended period was rightly invoked. The appellant knowingly claimed refund on unmanufactured goods with malafide intention, and there was a clear suppression of fact as the appellant did not disclose that the valves did not undergo the manufacturing process. Therefore, the recovery of the demand of erroneous refund was upheld, and the impugned order was deemed valid. The appeal was dismissed.