2008 (1) TMI 248 - AT - Central Excise

Refund rejected by Commissioner on ground that appellants have not challenged the assessment at the initial stage - in this case there has been no assessment as credit was required to be reversed in respect of inputs lying with them as on the date of exemption - Since Commissioner (Appeals) has clearly traveled beyond the grounds given in the SCN, his order cannot be sustained on that ground as refund claim can be rejected only on the ground mentioned in the show cause notice

Summary

Issues:
Refund claim rejection based on failure to challenge assessment initially.

Analysis:
The case involved a refund claim for credit taken on inputs used in manufacturing a final product, which was reversed on the department's direction. The appellant later argued that they were not required to reverse the credit based on Tribunal judgments and sought a refund. However, a show cause notice was issued, stating that once exemption was chosen, the credit had to be reversed for inputs on hand. The Assistant Commissioner rejected the refund claim, which was upheld by the Commissioner (Appeals) citing the Supreme Court decision in Priya Blue Industries vs. CCE 2004 and Tribunal's decision in Next Generation Business Power System vs. CC 2007. The appellant's advocate contended that the rejection went beyond the show cause notice and order-in-original. The Tribunal found that the rejection was not based on grounds in the show cause notice and since there was no assessment, the Commissioner (Appeals) had overstepped. The appeal was allowed, and the Commissioner (Appeals) order was set aside.