2018 (11) TMI 731 - AT - Central Excise

Refund of duty paid under protest - remission of duty - scope of SCN - CBEC Circular No. 800/33/2004-CX dated 01.10.2004 - Held that - It is settled legal principle that no authority is allowed to travel beyond the show cause notice - In the present matter, the show cause notice proposes the disallowance of refund mainly on the ground of clarification issued by CBEC Circular dated 01.10.2004, and the Adjudicating Authority also rejected the claim on the said ground. But in the impugned order there is not even a whisper by the Commissioner (Appeals) about the said Circular. A new case cannot be made out at the Appellate level and the department cannot travel beyond the show cause notice. The matter is remitted to the Commissioner (Appeals), Raigad for passing a fresh order after taking into consideration all the contentions raised by the Appellant - appeal allowed by way of remand.

Summary

Issues:
Appeal against order-in-appeal rejecting refund claims based on CBEC Circular; Challenge of Circular's validity due to Tribunal's decision and rule amendments; Commissioner (Appeals) rejecting appeal on new ground of non-challenged remission order.

Analysis:
The case involved an appeal against the rejection of refund claims by the Commissioner of Central Tax, Central Excise, and Service Tax (Appeals) based on a CBEC Circular. The appellant, a medicine manufacturer, had reversed Cenvat credit and paid interest on finished goods unfit for consumption. The appellant argued that the Circular, dated 01.10.2004, was no longer valid due to a Tribunal decision overruling its basis. Additionally, the appellant cited the insertion of Rule 3(5C) of Cenvat Credit Rules and explained that interest recovery under Rule 14 was not applicable as they had already reversed the Cenvat amount promptly.

In the impugned order, the Commissioner (Appeals) rejected the appeal on the grounds that the appellant had not challenged the remission order imposing the condition for interest payment. The appellant contended that the Commissioner (Appeals) exceeded the show cause notice's scope by introducing a new ground for rejection. The appellant argued that the Circular cited was no longer valid due to Tribunal decisions and a High Court approval. The case highlighted that authorities cannot go beyond the show cause notice, and any new grounds introduced at the appellate level are impermissible.

The Tribunal, in its judgment, emphasized the principle that authorities must not exceed the show cause notice's scope. As the Commissioner (Appeals) did not address the Circular issue raised by the appellant and introduced a new ground for rejection, the impugned order was set aside. The matter was remitted to the Commissioner (Appeals) for a fresh order, instructing to consider all contentions raised by the appellant and provide a reasonable opportunity for a hearing. The appeals were allowed by way of remand, ensuring due process and adherence to legal principles.