2024 (12) TMI 1018 - AT - Central Excise

100% EOU - Refund claim - disallowance of re-credit of cenvat in respect of certain input/input services - non-production of documents in respect of credit availed through ISD - non-application of mind - violation of principles of natural justice - HELD THAT - It is seen from the impugned Orders of the Commissioner (Appeals) dated 18-11-2016 that the learned Commissioner (Appeals) has recorded a finding that the appellant has not produced any valid documents establishing their claim and that it was not evidenced that they had produced the necessary documents before the lower authority also and further that for want of these documents the aforesaid claim involving amount to the extent involved are liable for rejection. It is found from the records that the appellant has produced a letter dated 11-07-16 stating that they have enclosed three flat files as documents pertaining to their cenvat refund claim. Further, as regards the grounds of non-issuance of show cause notice, the learned appellate authority has put the onus on the appellant to seek clarity from the refund sanctioning authority and has also stated that having preferred the appeals it is not open for them to clamour for observance of principles of natural justice. These findings of the learned appellate authority are erroneous and are contrary to the established principles of natural justice, which would require that if the decision is to reject the claim for various reasons, the applicant/claimant who will be adversely affected by the decision, ought to be served a notice requiring him to show cause as to why such a rejection ought not to be made, before any such decision is taken. In any event, it is not for this Tribunal to go into the initial factual matrix of the claim, to come to any conclusion whether the evidence was correct or not, which would be better left to the adjudicating authority who are empowered and equipped to look into the documents, records, invoices and other evidences and all other relevant aspects. This factual verification of the documents and evidences submitted along with the claim has to be done by the adjudicating authority before recording a finding, and only thereafter would the stage of applying judicial precedents to the matter arise. Since, these claims need to be considered by appreciating the factual matrix, we are of the considered view that the impugned orders in appeal have to be set aside and the matter remanded back to the file of the Original Authority. Hence, without expressing any opinion on the merits of these refund claims, the orders of both the lower authorities are set aside and the matter remanded back to the adjudicating authority to re-consider the issue afresh after following the principles of natural justice bearing. Appeal allowed by way of remand.

Summary

Issues:
Rejection of refund claim without notice or opportunity to appellant, violation of principles of natural justice, denial of Input Service Credit, non-production of documents, appellate authority upholding rejection without proper reasoning, reliance on judicial precedents.

Analysis:
The judgment pertains to three appeals concerning the rejection of refund claims without providing the appellant with an opportunity to rectify any deficiencies. The appellant, a manufacturer of pharmaceutical products and a 100% EOU, had filed refund claims for specific periods. The adjudicating authority rejected the claims without notifying the appellant of any shortcomings or allowing them to present their case. The appellate authority upheld these rejections without proper reasoning, leading to the appellant filing appeals against these decisions.

The authorized representative for the appellant argued that the denial of Input Service Credit, alleged ineligibility of certain services, improper service tax credit documents, non-production of documents related to credit availed through ISD, and disallowance of re-credit of cenvat were unjust. The representative highlighted the violation of natural justice principles, emphasizing that the authorities did not specify which documents were missing despite the submission of extensive proof. The appellant cited various legal precedents to support their position.

On the other hand, the authorized representative for the respondent reiterated the findings of the appellate authority. After hearing both sides and reviewing the records and legal references presented, the Tribunal analyzed the impugned orders. The Tribunal found that the appellant had submitted documents supporting their refund claims, but the appellate authority failed to provide valid reasons for deeming them insufficient. Additionally, the Tribunal noted that the appellate authority's dismissal of the need for natural justice principles was erroneous.

The Tribunal emphasized that when a refund application shows deficiencies, the authority must notify the applicant to rectify them before outright rejection. It stated that factual verification of documents should be done by the adjudicating authority before applying legal precedents. Consequently, the Tribunal set aside the lower authorities' orders and remanded the matter to the Original Authority for reconsideration. The appellant was instructed to provide all necessary documents, and the adjudicating authority was directed to issue a comprehensive order considering the evidence and legal precedents. The judgment allowed the appeals by way of remand, leaving all contentions open for further review.