2015 (8) TMI 948 - HC - Central Excise

Refund - unjust enrichment - payment of duty initially on captive consumption of intermediate product which were exempt from duty - Held that - Tribunal having not dealt with the matter satisfactorily and while rendering the conclusions against the assessee, having failed to note the Commissioner s findings that we are of the view that the impugned order deserves to be quashed and set aside. In order to give complete opportunity to both sides and to rely on the materials before the Commissioner and assail them or support them totally, interest of justice would be served if we restore the Revenue s Appeals, on which the impugned order has been passed, to the file of the Tribunal, for being dealt with afresh on their own merits and in accordance with law.

Summary

Issues:
Challenge to order by Customs, Excise and Service Tax Appellate Tribunal (CESTAT) - Reversal of credit on inputs for exempted final products - Compliance with Section 11B of Central Excise Act, 1944 - Unjust enrichment aspect - Adjudication by Tribunal - Restoration of Revenue's Appeals by High Court.

Analysis:

1. The appellant challenged the CESTAT's order, arguing substantial questions of law regarding the reversal of credit on duty paid inputs for exempted final products. The Tribunal's decision was criticized for not considering evidence indicating compliance with Notification No. 67 of 1995, which was amended in 2001. The appellant contended that the Tribunal's findings on the non-availment of Cenvat credit were unjust as the Notification conditions were substantially met. The High Court acknowledged the appellant's concerns regarding the Tribunal's adjudication on this matter.

2. Another issue raised was the application of Section 11B of the Central Excise Act, 1944. The appellant disputed the Tribunal's reliance on the Mafatlal Industries Ltd. case, arguing that the Tribunal failed to consider the specific circumstances of the case involving the manufacture of intermediate products. The appellant highlighted the presence of materials supporting their position, including financial statements and the Chartered Accountant's certificate. The High Court noted the appellant's dissatisfaction with the Tribunal's incomplete adjudication on this aspect.

3. The Revenue contended that the appellant had opportunities to present evidence before the Adjudicating Authority and the Appellate Authority. The Revenue argued that the Tribunal's findings were not perverse as the appellant failed to produce material supporting their claims. The High Court considered the Revenue's arguments but acknowledged the appellant's concerns regarding the lack of opportunity to rely on factual materials before the Tribunal.

4. Upon reviewing the Commissioner's order and the materials submitted, the High Court found the Tribunal's disposal of the appeals unsatisfactory. The High Court admitted the appeal on two substantial questions of law related to the reversal of credit on duty paid inputs and the obligation to prove non-passing of duty incidence to buyers. The High Court concluded that the Tribunal's order was inadequate and set it aside, restoring the Revenue's Appeals for fresh consideration by the Tribunal to ensure a comprehensive and just adjudication.

5. In the interest of justice, the High Court emphasized the need for a thorough examination of the materials before rendering a final decision. The High Court directed the Tribunal to reevaluate the appeals without being influenced by previous observations, ensuring a fair and complete order. The High Court allowed the appeal and ordered the restoration of the Revenue's Appeals to the Tribunal for a fresh determination.