2024 (4) TMI 109 - AT - Central Excise

Refund of countervailing duty - exit from the status of 100% EOU under the STPI Scheme - denial on the ground that the duty paid on de-bonded goods are IT infrastructure and are capital goods, and hence the CVD paid was not eligible to be availed as credit under the CENVAT Credit Rules, 2004 - HELD THAT - It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties. Since the matter whether IT infrastructure are capital goods and the CVD paid on it was eligible or not as CENVAT credit and thereby to a refund was not an issue before the Commissioner (Appeals), he could not have opined on the same. By doing so, he has first answered the appeal in the Appellant s favour and then gone beyond the appeal made by the appellant to deny the refund. The Hon ble Apex Court in Krishna Priya Ganguly etc. Vs. University of Lucknow Ors. etc. 1983 (10) TMI 298 - SUPREME COURT and Om Prakash Ors. Vs. Ram Kumar Ors., 1990 (11) TMI 430 - SUPREME COURT , observed that a party cannot be granted a relief which is not claimed. Hence the learned Commissioner (Appeals) could not have given Revenue the benefit, if any, of an issue of which they were not aggrieved and had not filed an appeal or cross objection. This being so, the merits of the issue, need not be gone into. The impugned order is hence modified and that part of the decision on whether IT infrastructure are capital goods and the credit of CVD taken are eligible for refund is set aside being made based on grounds outside the pleadings of the appellant - Appeal allowed.

Summary

Issues involved:
The appeal is filed against an order passed by the Commissioner of GST and Central Excise (Appeals - II), Chennai regarding a refund claim for countervailing duty paid by the appellant upon exit from the status of 100% EOU under the STPI Scheme.

Summary of Judgment:

Issue 1: Refund claim for countervailing duty (CVD) paid by the appellant
The appellant filed a refund claim for CVD paid upon exit from the status of 100% EOU under the STPI Scheme. The original authority rejected the claim stating it should have been taken when the previous law was in force. The Commissioner (Appeals) disagreed, finding that the credit was allowable under Rule 3(vii) of Cenvat Credit Rules. However, he held that the CVD paid on capital goods debonded in the GST regime was not eligible for refund under section 11B(2) of the Central Excise Act.

Issue 2: Eligibility of CVD paid on de-bonded IT infrastructure as credit under CENVAT Credit Rules
The Commissioner (Appeals) opined that duty paid on de-bonded IT infrastructure, considered as capital goods, was not eligible for credit under the CENVAT Credit Rules. However, the Appellate Tribunal found that this issue was not raised by the parties in their pleadings. The Commissioner (Appeals) went beyond the scope of the appeal by addressing this issue, leading to the modification of the impugned order.

The Tribunal set aside the decision regarding the eligibility of CVD paid on IT infrastructure as credit under the CENVAT Credit Rules, as it was based on grounds outside the pleadings of the appellant. The appeal was allowed, and the Appellant was granted consequential relief as per law.