2009 (7) TMI 936 - AT - Central Excise

Stay of order - Refund claim - Non-challenge of assessment - Held that - The lower appellate authority has erred in holding that, in the absence of appeal against assessment, the assessee was not entitled to refund

Summary

Issues: Claim for refund of duty; Rejection by lower appellate authority; Applicability of certain judgments; Arithmetical error in assessment; Entitlement to refund without appeal against assessment; Interpretation of appeal provisions under Section 35 of Central Excise Act.

Analysis:
1. Claim for Refund of Duty and Rejection by Lower Appellate Authority:
The appellant filed a claim for refund of duty amounting to Rs. 41,457, which was rejected by the lower appellate authority. The rejection was based on the ground that the assessment on which the duty was paid was not challenged by the assessee. The authority also referred to supplementary instructions in the CBEC's excise manual and relied on judgments such as CCE v. Flock (India) P. Ltd. and Priya Blue Industries Ltd. The appellant's counsel argued that the duty was paid due to an arithmetical error in the Cenvat account, citing support from the High Court's decision in Central Office Mewar Palace Org. The ld. SDR defended the order by referring to the Tribunal's Larger Bench decision in CCE v. Eurotex Indus. and Exports Ltd.

2. Arithmetical Error in Assessment and Refund Claim:
Upon examination, it was found that there was an arithmetical mistake in totaling the assessable value for a specific month, resulting in duty being paid on an erroneous total assessable value of Rs. 72,82,301. Subsequent reconciliation revealed that the actual total assessable value was Rs. 70,30,727. The refund claim was based on this corrected value, indicating an overpayment due to the error in assessment.

3. Entitlement to Refund Without Appeal Against Assessment:
The lower appellate authority contended that without an appeal against the assessment, the assessee was not entitled to a refund. However, it was argued that the concept of "assessment" includes "self-assessment" as per certain supplementary instructions, but this interpretation may not apply to appeals under Section 35 of the Central Excise Act. The provision for appeal under Section 35 is specifically against orders passed by Central Excise officers, and the authority's view on the need for an appeal against self-assessment was considered flawed. Consequently, a stay of recovery was granted in this case.

This detailed analysis of the judgment highlights the key issues surrounding the claim for refund, the error in assessment leading to overpayment, and the interpretation of appeal provisions under the Central Excise Act, providing a comprehensive understanding of the legal reasoning and decisions involved in the case.