2019 (1) TMI 313 - AT - Central Excise

Refund claim - claims on the belief that during the said period, the Commissioner (Appeals) had held that there is no provision for recovery of the Credit availed on common inputs used for manufacture of exempted goods - CENVAT Credit - common inputs have been used in the manufacture of dutiable and exempted goods - non-maintenance of separate records - demand of 8% of the sale value of exempted goods - Held that - While adjudicating the refund proceedings, the same has been taken note of by the Refund Sanctioning Authority whereby it is seen that during the relevant period, there was amendment brought forth with retrospective application so that the appellant has to pay 8% of the value of exempted goods if common inputs are used for the manufacture of dutiable and exempted products - appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of provisions related to recovery of duty on exempted goods.
2. Validity of refund claims in light of retrospective amendments.
3. Applicability of Finance Act, 2005 on demands for non-compliance.
4. Eligibility for refund based on exemption notifications.
5. Consideration of common inputs in the manufacture of goods.

Analysis:
1. The appellant, engaged in manufacturing Semi Trailers, cleared goods to Defence Research Laboratory availing duty exemption. A demand was raised for payment of 8% of the sale value of exempted goods due to common inputs used. The Commissioner (Appeals) set aside the demand, but refund claims were rejected citing retrospective amendments under the Finance Act, 2005.

2. The appellant argued that the amounts claimed as refund were paid under protest, making the refund sustainable unless the protest is vacated. They contended that the Finance Act, 2005 does not apply to their case as the amounts were paid under protest. The Act was said to lack power to reject refunds arising from non-provision of recovery mechanisms under Rule 57AD.

3. The retrospective amendment was argued to only apply to cases pending at certain stages, not to the present case. The appellant maintained that the goods cleared to Defence did not fall under exempted goods, thus no reversal of credit or payment of 8% was required. The appellant's position was that the refund should have been allowed based on the exemption notification.

4. The respondent supported the rejection of refund claims, citing provisions for payment of credit attributable to exempted goods during the relevant period. The retrospective effect of the Finance Act, 2005 from 01.04.2000 was highlighted to justify the legality of amounts paid by the appellant. The rejection of refund claims by the authorities was deemed appropriate.

5. The Tribunal found that the retrospective amendment required the appellant to pay 8% of the value of exempted goods if common inputs were used. The Tribunal upheld the impugned order, stating there were no grounds to interfere. The arguments presented by the appellant's counsel were considered without merit, leading to the dismissal of the appeal.