2018 (3) TMI 846 - AT - Central Excise

CENVAT credit - non-excisable goods - power generated out of bagassee - Rule 6 of CCR 2004 - principles of natural justice - Held that - the amount of the refund of ₹ 9,95,016/-, which is disputed in this appeal by the appellant needs reconsideration by the First Appellate Authority - the First Appellate Authority in the impugned order has only reproduced the provisions of Explanation I to Rule 6 which was inserted by an amendment in 2015, but has not gone into detail, as to how explanation will apply to the case in hand and also the grounds of appeal before him - this issue needs reconsideration in the hands of the First Appellate Authority. The matter is remitted back to the First Appellate Authority to decide the same after following the principles of natural justice.

Summary

Issues:
Refund claim rejection under Rule 6 of CENVAT Credit Rules, 2004 for power generated from bagassee. Interpretation of Explanation I inserted in the CENVAT Credit Rules amended of 2015. Applicability of the explanation on the case. Reconsideration of refund amount by the First Appellate Authority.

Analysis:
The appeal challenged the rejection of a refund claim under Rule 6 of the CENVAT Credit Rules, 2004 for power generated from bagassee. The appellants, manufacturers of dutiable goods, claimed a refund of approximately &8377; 1.95 crores, contending that the payment under Rule 6 was inadvertently discharged as the goods were non-excisable. The Adjudicating Authority rejected the claim, but the First Appellate Authority allowed it for the period August 2012 to February 2015, except for a specific amount for March 2015 due to an amendment in Rule 6.

The Revenue appealed against the allowance of the refund for the mentioned period, pending consideration by the DB. The appellant argued that this appeal was distinct from the Revenue's appeal for April 2012 to February 2015. The tribunal found merit in this argument and proceeded to independently decide the present appeal.

The tribunal noted the insertion of Explanation I in the CENVAT Credit Rules amended in 2015, emphasizing its application to goods cleared from the factory premises. The appellant contended that this explanation conflicted with Rule 3 of the CENVAT Credit Rules, 2004, as it restricted the appellant from changing the opted scheme for the year. The tribunal agreed that the matter required reconsideration by the First Appellate Authority due to insufficient analysis in the impugned order regarding the application of the explanation to the case at hand.

Consequently, the tribunal set aside the impugned order concerning the disputed refund amount of &8377; 9,95,016 for March 2015 and remitted the matter back to the First Appellate Authority for a fresh consideration following the principles of natural justice. The tribunal refrained from expressing an opinion on the case's merits, focusing on the procedural aspect of reconsideration by the First Appellate Authority.