2016 (5) TMI 1213 - AT - Central Excise

Whether the order of refund sanctioned by the JAC is in accordance with Rule 5 of Cenvat Credit Rules 2004 read with Notification No. 5/2006 dated 14.03.2006 and whether the Order-in-Appeal has traversed beyond the grounds of appeal authorized in the review order of the Commissioner of Central Excise under Section 35E(2) of the Act and finally whether for recovery of an erroneous refund, the department is required to issue a show-cause notice under Section 11A or not - Held that - the Assistant Commissioner has sanctioned the refund claims after satisfying himself with regard to the conditions as contained in the Notification 5/2006 dated 14.03.2006 and there is no infirmity in the orders granting refund whereas the Commissioner (Appeals) has wrongly observed that the original authority has failed to bring on record in the impugned order whether the input/input services are used in relation to the manufacture of exported goods. Therefore, the appellants have furnished all the relevant documents to the satisfaction of the sanctioning authority and the sanctioning authority in all the refund orders has clearly held that the appellants have fulfilled all the conditions stipulated in the Notification No. 5/2006 dated 14.03.2006 and there are no legally sustainable ground on which the validly sanctioned refund orders should be set aside and therefore the findings returned by the Commissioner (Appeals) on merit are set aside. it is also found that the impugned order is beyond the grounds on which the permission was granted to prefer an appeal in the review order which is not permitted by law. Therefore, I do not consider it appropriate to record a finding on this point once the appellant is succeeding on merit and therefore I do not think it appropriate to decide this issue in this case when the appellant is otherwise entitled to the relief on merit and therefore I hold that the impugned orders are unsustainable in law and are set aside. - Decided in favour of appellant

Summary

Issues Involved:
1. Whether the order of refund sanctioned by the JAC is in accordance with Rule 5 of Cenvat Credit Rules 2004 read with Notification No. 5/2006 dated 14.03.2006.
2. Whether the Order-in-Appeal has traversed beyond the grounds of appeal authorized in the review order of the Commissioner of Central Excise under Section 35E(2) of the Act.
3. Whether for recovery of an erroneous refund, the department is required to issue a show-cause notice under Section 11A or not.

Issue-wise Detailed Analysis:

1. Compliance with Rule 5 of Cenvat Credit Rules 2004 and Notification No. 5/2006:
The appellant submitted four refund applications under Rule 5 of the Cenvat Credit Rules 2004, read with Notification 5/2006-CE (NT) dated 14.03.2006. The adjudicating authority, after verification by the jurisdictional Range Officer, sanctioned the refunds. The Commissioner (Appeals) later set aside these refunds, arguing that the original authority failed to establish whether the inputs/input services were used in the manufacture of the exported goods. However, the appellant argued that all relevant documents were furnished, and the conditions under Notification 5/2006 were met. The Tribunal found that the Assistant Commissioner had sanctioned the refunds after satisfying himself with the conditions of Notification 5/2006 and that the Commissioner (Appeals) wrongly observed the lack of evidence regarding the use of inputs/input services in exported goods. Thus, the Tribunal concluded that the refunds were validly sanctioned, and the Commissioner (Appeals)'s findings on this issue were set aside.

2. Grounds of Appeal Authorized in the Review Order:
The appellant contended that the Order-in-Appeal traversed beyond the grounds on which permission was granted to prefer an appeal in the review order of the Commissioner of Central Excise under Section 35E(2) of the Act. The Tribunal agreed with the appellant, stating that the impugned order went beyond the authorized grounds, which is not permitted by law. Consequently, the findings of the Commissioner (Appeals) on this issue were also set aside.

3. Requirement of Show-Cause Notice under Section 11A:
The appellant argued that proceedings under Section 35E(2) cannot be sustained without issuing a show-cause notice for the recovery of erroneous refunds under Section 11A of the Act. The appellant cited several case laws to support this argument. The respondent, however, maintained that a show-cause notice was unnecessary for the recovery of erroneous refunds, citing their own case laws. The Tribunal, while acknowledging the various decisions presented by both parties, chose not to record a finding on this point since the appellant succeeded on merit. The Tribunal held that the impugned orders were unsustainable in law, thereby allowing all four appeals.

Conclusion:
The Tribunal set aside the Commissioner (Appeals)'s orders and allowed all four appeals on the grounds that the refunds were validly sanctioned as per Rule 5 of the Cenvat Credit Rules 2004 and Notification No. 5/2006, the Order-in-Appeal exceeded the authorized grounds, and it was unnecessary to decide on the requirement of a show-cause notice under Section 11A given the appellant's success on merit.