2017 (2) TMI 249 - AT - Central Excise

Refund claim - CENVAT credit availed on HR/CR coils - denial on the ground that processes such as de-coiling, cutting and slitting of HR steel coils and pickling and oiling the same, does not amount to manufacture - Held that - All the refund sanctioned and appropriated in the Order-in-Original now become refundable to the appellant. Since the demand has been dropped now status is as if demand was not recoverable. Though the appellant pursuing their appeals against the demand, department should not have appropriated the amount of rebate against confirmation of demand - appellant also entitle for the interest from the filing of rebate application till the release of the rebate amount to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Appropriation of sanctioned refund against confirmed demand in the order-in-original dated 23-5-2007.

Analysis:

The case involved the appellant receiving HR/CR coils and availing Cenvat credit for activities like de-coiling, cutting, slitting, pickling, and oiling of steel coils cleared to SEZ unit. The department disputed the eligibility for Cenvat credit, leading to demands being confirmed in various orders. The appellant's appeals before the Commissioner (Appeals) were rejected, prompting an appeal to the CESTAT. The CESTAT, in its order, allowed the appeals, emphasizing that even if the activities did not amount to manufacture, since duty was paid on processed sheets, Cenvat credit was admissible. The Revenue then appealed to the Bombay High Court, which upheld the CESTAT's decision, resulting in the dropping of the duty, penalty, and interest demands.

Regarding the rebate claims filed by the appellant during the proceedings, the sanctioned refunds were appropriated against the demand confirmed in the order-in-original. However, since the demand was set aside by the Tribunal and upheld by the High Court, the amount appropriated was deemed refundable to the appellant. The Tribunal noted that all the refunds sanctioned and appropriated now needed to be returned to the appellant, as the demand was no longer recoverable. The Tribunal held that the department should not have offset the rebate amount against the demand, and the appellant was entitled to interest from the rebate application filing until the refund release. Consequently, the appeals were allowed with any consequential relief deemed appropriate under the law.

In conclusion, the Tribunal ruled in favor of the appellant, declaring that the sanctioned refunds appropriated against the confirmed demand were now refundable due to the demand being dropped. The department was directed not to offset rebate amounts against demands that were no longer recoverable, and the appellant was entitled to interest on the refund amount.