2014 (2) TMI 400 - HC - Central Excise

Refund of duty paid on goods re-made and cleared on payment of duty - Whether the learned CESTAT was correct in setting aside the order of Commissioner (Appeals) and allowing the appeal of the party with consequential relief, ignoring the statutory provisions of Rule 173L of the erstwhile Central Excise Rules, 1944 - Held that - what persuaded the Tribunal to allow the assessee s appeal was the fact that the assessee as a fact was able to prove that they actually received the goods from their respective purchasers and the same were then actually used in remixing in their manufacturing process. Since the appellant (Revenue) was not able to dispute this factual aspect of the matter and hence the Tribunal held that the claim made by the assessee under Rule 173L appears to be genuine and cannot be rejected on the ground that a particular form was not maintained or not filed for cross checking. In other words, since the factum of receipt of goods and its consequent use in manufacturing process was conclusively held proved by documentary evidence and hence the benefit of refund of the duty paid on such sold goods was given to the respondent. No case whatsoever was made out for contravention of Rule 173L against the assessee and instead it was rightly held that due compliance of Rule 173L of the Rules was made by the assessee thereby holding them entitled to claim the refund of the duty paid by them on the finished goods sold and which were returned to them due to certain reasons by the respective purchasers and which they actually used in manufacturing process again - After all when the facts are established with adequate evidence and authorities are otherwise satisfied with the substantial compliances made by the assessee then Rules of procedure cannot be used against the assessee to deny them the benefit of Rules - Decided against Revenue.

Summary

Issues:
Appeal by Revenue under Section 35G of the Central Excise Act, 1944 against Tribunal's order allowing assessee's appeal and setting aside Commissioner of Appeals' order. Whether Tribunal was justified in setting aside the order passed by the Commissioner of Appeals?

Analysis:
The High Court dealt with the appeal filed by the Revenue against the Tribunal's order in favor of the assessee. The Tribunal had allowed the assessee's appeal and set aside the order of the Commissioner of Appeals. The primary issue was whether the Tribunal was justified in its decision. The High Court considered substantial questions of law regarding the correctness of the Tribunal's actions. The case involved the application of Rule 173L of the Central Excise Rules, 1944 and the doctrine of "unjust enrichment" under Section 11B(2) of the Central Excise Act, 1944.

The respondent, a public sector undertaking engaged in manufacturing and sale of excisable items, claimed a refund of duty paid on goods returned by purchasers. The claim was initially rejected but allowed by the Tribunal. The High Court noted that the Tribunal's decision was based on the factual evidence presented by the assessee. The Tribunal found that the returned goods were actually used in the manufacturing process, which was supported by documentary evidence. The High Court agreed with the Tribunal's findings that the assessee had complied with Rule 173L and was entitled to claim the refund.

The High Court emphasized that when facts are established with sufficient evidence and there is compliance with relevant rules, the benefit of the rules should not be denied to the assessee. The Revenue's argument of contravention of Rule 173L was dismissed by the High Court, as the factual findings supported the assessee's claim for refund. The Court concluded that the appeal lacked merit and upheld the Tribunal's decision to allow the refund claim. The appeal was dismissed with no order as to costs.