2018 (11) TMI 1369 - AT - Central Excise

Refund of accumulated CENVAT Credit - export of goods - Rule 5 of the CENVAT Credit Rules, 2004 - Held that - The Hon ble Madras High Court in its judgement in COMMISSIONER VERSUS BALA HANDLOOMS EXPORTS CO. LTD. 2015 (10) TMI 694 - MADRAS HIGH COURT has recorded a finding after recording a subsequent development in the nature of an Order dated 26.03.2008 passed by the Assistant Commissioner of Central Excise; in that Order, the Assistant Commissioner had granted refund of ₹ 12,15,461/-. Thus, The Hon ble High Court was pleased to record that the concerned appeals would become infructuous and consequently, the same were dismissed. It is an admitted position that both the assessee as well as the Revenue had accepted the above verdict of the Hon ble Madras High Court without any further challenge and thus the finding having become final, the same requires strict adherence by the Revenue - the Revenue is not justified in its action of rejecting the refund claim with the admitted position of it having accepted the Hon ble High Court s directions, more so since it appears to me that challenge in the manner known to law does not call for any shortcuts as has been done in the case on hand - appeal allowed - decided in favor of appellant.

Issues:
1. Refund claims under Rule 5 of the CENVAT Credit Rules for unutilized credits on fabrics purchased and exported.
2. Dispute regarding rejection of refund claims by Revenue.
3. Protective Show Cause Notice issued during pendency of appeal before High Court.
4. Orders-in-Original and Orders-in-Appeal rejecting refund claims.
5. Acceptance of High Court's judgment by both assessee and Revenue.
6. Revenue's actions in issuing subsequent Show Cause Notice.
7. Justification of Revenue's rejection of refund claim.
8. Final decision and consequential benefits.

Analysis:

1. The appellant made refund claims under Rule 5 of the CENVAT Credit Rules for unutilized credits on fabrics purchased and exported. The appellant undertook various activities on the fabrics before export, leading to duty payments. Two refund claims were made for specific amounts related to unutilized credits.

2. The Revenue issued Show Cause Notices proposing to deny the refund claims. Orders-in-Original were passed rejecting the claims, followed by rejection at the first appellate authority level. However, the CESTAT Chennai allowed the appeal, stating the appellant's eligibility for the refund. The High Court upheld this decision, making it final.

3. During the appeal process, a protective Show Cause Notice was issued by the Revenue, which was later confirmed by the Assistant Commissioner, leading to the recovery of the refund. The Commissioner (Appeals) also upheld this decision, resulting in the present appeal by the assessee.

4. The Revenue's actions in rejecting the refund claim despite accepting the High Court's judgment were questioned. The subsequent Show Cause Notice issued by the Revenue raised concerns about conflicting approaches taken by the Revenue in the matter.

5. The High Court's judgment recorded subsequent developments, including the Assistant Commissioner granting a refund, which influenced the dismissal of Revenue's appeal. Both parties accepted the High Court's decision without further challenge, making the finding final and binding.

6. The Revenue's issuance of a subsequent Show Cause Notice while accepting the High Court's judgment raised doubts about the Revenue's actions and intentions in the case.

7. The Tribunal found the Revenue unjustified in rejecting the refund claim, especially after accepting the High Court's directions. The Tribunal emphasized the need for adherence to legal procedures and set aside the impugned order rejecting the refund claim.

8. Consequently, the appeal was allowed, granting the appellant consequential benefits as per the law. The Tribunal's decision highlighted the importance of following legal processes and respecting final judgments in such matters.

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