2021 (12) TMI 672 - AT - Central Excise

Refund of CENVAT Credit - the payment was made with reference to the audit objection - whether the appellant s payment of Cenvat Credit is attained finality in terms of Section 11A (2) of Central Excise Act, 1944? - HELD THAT - There was no agreement by the appellant and in the column of department conclusion is that the Jurisdiction Assistant Commissioner/Jurisdiction Range Officer was supposed to issue show cause notice. It is clear that the payment made by the appellant was deemed to be provisional and not final to attract provision of Section 11A (2) of Central Excise Act, 1944. The appellant have made the payment with reference to the audit objection, however, in the said letter it is not mentioned that the case be settled and show cause notice be waived in terms of Section 11A (2) of Central Excise Act, 1944. Whether the appellant is required to file appeal with reference to the audit objection and payment made by them? - HELD THAT - Firstly, the payment made by the appellant was not the final payment hence, the same cannot be a part of the assessment. Secondly, there is no assessment by the department which needs to be challenged. As per the audit proceeding, the department was supposed to issue show cause notice which it failed to do so, therefore, there is no occasion and reason for appellant to file appeal before the Commissioner (Appeals). The only remedy is to claim the refund of such payment made as per the objection raised by the audit. As regard, the judgment relied upon by the appellant it is settled that unless and until the payment along with interest is made by the assessee and the same is intimated specifically in writing to the department, the case cannot be closed under Section11A (2) of Central Excise Act, 1944. The appellant s refund needs to be processed in accordance with law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Finality of payment of Cenvat Credit under Section 11A(2) of Central Excise Act, 1944.
2. Requirement of filing an appeal in case of audit objection and payment made by the appellant.

Analysis:
1. Finality of payment of Cenvat Credit under Section 11A(2) of Central Excise Act, 1944:
The case involved a dispute regarding the finality of the appellant's payment of Cenvat Credit. The appellant had reversed an amount due to an audit objection, but it was contended that the payment was provisional and not final. The audit report highlighted that the payment was made based on objection and was not agreed upon by the appellant. The appellant's letter also indicated that the payment was made in response to the audit objection, without any mention of final settlement or waiver of show cause notice under Section 11A(2). The tribunal held that the payment did not attain finality under Section 11A(2) as it was made due to objection by the audit party and not by mutual agreement, rejecting the Revenue's contention that the payment was final.

2. Requirement of filing an appeal in case of audit objection and payment made by the appellant:
The lower authorities had contended that the appellant should have filed an appeal based on judgments like M/s. Priya Blue Industries Ltd. and M/s. Flocks India Pvt Ltd. However, the tribunal found that since the payment was not final and there was no assessment by the department, there was no need for the appellant to file an appeal. The tribunal emphasized that the appellant was entitled to claim a refund of the payment made as per the objection raised by the audit, as there was no show cause notice issued by the department. The tribunal distinguished the cited judgments where the assessee had proposed to settle the case based on payment, whereas in this case, the appellant had not proposed or opted for waiver of show cause notice under Section 11A(2). Therefore, the tribunal allowed the appeal, setting aside the impugned order and directing the processing of the appellant's refund in accordance with the law.

In conclusion, the tribunal ruled in favor of the appellant, emphasizing that the reasons for rejecting the refund claim were not valid. The tribunal highlighted that the payment made by the appellant was not final and that there was no requirement for the appellant to file an appeal in the absence of a finalized assessment by the department.