2015 (10) TMI 1289 - AT - Central Excise

Denial of refund claim - Restriction on utilization of cenvat credit for delayed payment of duty according to the provisions of Rule 8 (3A) - duty was initially debit to Cenvat account, but later paid in cash - held that - Revenue has simply alleged fraud/forgery but the same has not been conclusively held nor any inquiry initiated into the same. In view of the fact that the amount in default for the month of April, May and June 2007 was paid on 24/09/2007 and on 01/10/2007, I hold that the relevant date, for the claim of refund under the provisions of Section 11B is 24/09/2007 I hold that the learned Commissioner was in error for rejection of refund on the ground of limitation and the balance on the ground of mischief on the part of the appellant or its staff. Thus, the impugned order is set aside and it is held that the appellant is entitled to take Cenvat credit of the amount of ₹ 1,81,356/- which is admittedly paid through PLA, the second time along with interest - Decided in favour of assessee.

Summary

Issues involved:
- Appeal against rejection of refund claim upheld by Commissioner of Central Excise (Appeals)
- Allegation of fraud and forgery by the appellant
- Rejection of refund claim on the grounds of time bar and malpractice

Analysis:

1. Appeal against rejection of refund claim:
The appellant filed an appeal against the rejection of their refund claim by the Commissioner of Central Excise (Appeals). The appellant defaulted in duty payment in December 2006 and March 2007, leading to a requirement to pay duty by cash instead of utilizing Cenvat credit. The appellant paid the duty by debiting the Cenvat Credit in subsequent months. Despite the appellant's payment and refund claim, a show-cause notice was issued alleging the submission of fabricated documents to mislead the department. The adjudicating authority rejected the refund claim, citing time bar for a portion of the claim and the appellant's excise clerk's malpractice. The Commissioner (Appeals) upheld this decision, prompting the appellant to appeal to the Tribunal.

2. Allegation of fraud and forgery:
The Revenue alleged that the appellant intentionally forged a letter to mislead the department, leading to the rejection of the refund claim. The appellant denied involvement in any fraud and highlighted that the letter in question was not issued. The Tribunal noted that the Revenue failed to conclusively prove fraud or initiate an inquiry. The appellant contended that the refund claim was not time-barred as the duty was paid through PLA on specific dates, entitling them to the refund. The Tribunal found the rejection of the refund claim on the grounds of fraud and malpractice unsubstantiated and set aside the impugned order.

3. Rejection of refund claim on grounds of time bar and malpractice:
The rejection of the refund claim was based on the grounds of time bar for a portion of the claim and the alleged malpractice by the appellant's excise clerk. The appellant argued that the refund claim was not time-barred as the duty payment dates determined the relevant date for the claim under Section 11B. Additionally, the appellant sought to take Cenvat credit for the amount paid through PLA, as per relevant case laws. The Tribunal agreed with the appellant's arguments, holding that the rejection based on limitation and malpractice was erroneous. Consequently, the Tribunal allowed the appeal, permitting the appellant to take Cenvat credit for the amount paid through PLA.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the rejection of the refund claim and allowing them to take Cenvat credit for the duty paid through PLA. The decision emphasized the importance of substantiated allegations and adherence to legal provisions in refund claim rejections.