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2014 (5) TMI 644 - AT - Central ExciseArea based exemption - Denial of refund claim - Chargeability of interest on the recovery of inadmissible refund - refund of Education Cess/SHE Cess under Notification No. 39/2001-CE - Held that - cash refund of duties imposed under the Central Excise Act, 1944, Additional Duties of Excise (Goods of Specified Importance) Act, 1955 and Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, is only admissible. There is no mention of refund of Education/SHE Cesses in Notification No.39/2001-CE, dt.31.07.2001. Further, as per the provision of Clause 2(a) of this notification, no cash refund is available to a manufacturer with respect to the duties paid by utilizing the CENVAT Credit under CENVAT Credit Rules, 2001. Therefore, legally not only Education/SHE Cesses are ineligible to cash refund but also it will not be correct to say that the entire Basic Excise Duty is exempted and that accordingly no Education/SHE Cess should be payable or will be refundable - refund of Education/SHE Cesses, under Notification No.39/2001-CE, dt.31.07.2001, has been correctly denied by the lower authorities. - Decided against the assessee. Once Coating Section was held to be in-eligible for exemption under Notification No.39/2001-CE, then the refund earlier sanctioned with respect to Coating Section becomes a case of erroneous refund. Such a refund pertaining to the Coating Section was a refund beyond the scope of Notification No.39/2001-CE. In such circumstances, inadmissible refund has to be considered as an erroneous refund recoverable under Section 11A of Central Excise Act, 1944 and appropriate rate of interest will be accordingly applicable on the amount retained by the appellant M/s PSL Ltd. - Decided in favor of revenue. Denial of Cenvat Credit - Held that - Appellant failed to prove that inputs/services have been used in the coating division and that invoices/bills in respect of which credit is taken were in respect of the Paper Mill Division and not Coating Division - Matter remanded back - Decided in favour of assessee.
Issues:
1. Refund of Education Cess and SHE Cess under Notification No.39/2001-CE. 2. Chargeability of interest on the inadmissible refund. 3. Denial of credit of Rs.9,93,832 to the appellant. Analysis: Issue 1: Refund of Education Cess and SHE Cess under Notification No.39/2001-CE The appellant argued that Education Cess and SHE Cess refund is admissible as these levies are not independent when the Basic Excise Duty is 'NIL'. However, the Revenue contended that the refund is only eligible for specified levies under the exemption notification. The Tribunal examined Notification No.39/2001-CE and found that it allows cash refund of duties under specific acts but does not mention Education/SHE Cesses. It was concluded that these levies are ineligible for cash refund under the notification, supported by relevant case laws cited by both parties. Issue 2: Chargeability of interest on the inadmissible refund Regarding the interest amount deducted from the refund claim, the appellant argued that interest provision is not mentioned in the exemption notification. However, the Tribunal held that once the Coating Section was ineligible for exemption, any refund related to it was erroneous and recoverable under Section 11A of the Central Excise Act. Therefore, interest was deemed applicable on the retained amount by the appellant, and the Revenue's appeal on this issue was allowed. Issue 3: Denial of credit of Rs.9,93,832 to the appellant The lower authorities denied the CENVAT Credit to the appellant, stating lack of proof that inputs/services were used in the Coating Division. The appellant requested a remand to explain their case, arguing no show cause notice was issued. The Tribunal remanded the case to the adjudicating authority for a personal hearing to allow the appellant to establish the utilization of inputs/services in the Coating Section, emphasizing the need for relevant documentation. The appeal on this issue was allowed for further examination by the adjudicating authority. In conclusion, the Tribunal rejected the appellant's appeal concerning the refund of Education Cess and SHE Cess, allowed the Revenue's appeal on interest chargeability, and remanded the issue of denied CENVAT Credit for further assessment by the adjudicating authority. The judgment was pronounced on 08.04.2014 by the Appellate Tribunal CESTAT Ahmedabad.
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