2019 (11) TMI 172 - AT - Central Excise

Refund claim - refund claim was returned to the appellant stating that it was premature as show-cause notice for recovery of the credit had been pending adjudication - Reversal of CENVAT Credit - capital goods brought to their factory in the year 2008-09 - HELD THAT - The proceedings initiated for recovery/ appropriation of the credit ultimately dropped by the Commissioner vide order dated 15.01.2014. In the meantime, the proceedings relating to refund claim by the appellant was decided by the learned Commissioner (Appeals) rejecting their claim. Since the adjudicating Commissioner dropped the demand notice, therefore, the order rejecting heir refund claim needs to be re-examined. The impugned order is set aside and the matter is remanded to the adjudicating authority for fresh adjudication of their claim - appeal allowed by way of remand.

Summary

Issues:
1. Admissibility of CENVAT Credit on capital goods.
2. Rejection of refund claim.
3. Dropping of show-cause notice.
4. Remand for fresh adjudication.

Analysis:
1. The appeal was filed against an order passed by the Commissioner of Central Excise (Appeals) regarding the availing of CENVAT Credit on capital goods in 2008-09. The appellant was directed to reverse the credit amount of ?51,41,758 following an EA-2000 Audit objection. The appellant reversed the credit and later filed a refund claim, which was initially returned as premature due to a pending show-cause notice for credit recovery. The refund claim was rejected, leading to the present appeal.

2. The appellant contended that since the show-cause notice demanding the CENVAT Credit was dropped after the rejection of the refund claim, they are entitled to the refund. The Revenue accepted this submission but suggested remanding the matter for fresh adjudication due to the sequence of events. The Tribunal observed the appellant's deposit in response to the audit objection and the initiation of proceedings for recovery and refund. With the dropping of the demand notice, the rejection of the refund claim needed re-examination, leading to setting aside the impugned order and remanding the matter for fresh adjudication.

3. The Tribunal emphasized that the dropping of the demand notice necessitated a re-examination of the rejection of the refund claim. Therefore, the matter was remanded to the adjudicating authority for fresh adjudication, ensuring a reasonable opportunity of hearing for the appellant. The appeal was allowed by way of remand, providing a chance for the appellant to have their claim reconsidered in light of the dropped show-cause notice and subsequent developments.

Conclusion:
The Tribunal's decision focused on the interplay between the dropped show-cause notice and the rejection of the refund claim, leading to a remand for fresh adjudication to consider the refund claim in light of the changed circumstances. The appellant was granted a new opportunity to present their case before the adjudicating authority.