2023 (7) TMI 1118 - HC - Central Excise

Refund - Refund was sanctioned by the lower authority pending the audit objection - Reversal of decision on the show cause notice till the final settlement of audit objection between the Department of Revenue and the Comptroller Auditor General of India - refund of unutilised cenvat credit - HELD THAT - The Tribunal ought to have considered the contentions as urged on behalf of the revenue on all the issues instead of confining the scope of the appeal merely on the ground of CERA objections, this more particularly considering the fact that the show cause notice itself was issued on 11th April 2007 which was certainly before closure of the objection, which was the first time recorded by the revenue by a communication dated 26th May 2008 addressed by the office of Commissioner, Central Excise, Raigad to the Assistant Registrar, Central Excise Service Tax Appellate Tribunal - However, it is quite surprising that neither the appellant revenue nor the respondent had brought to the notice of the Tribunal such communication and as to what would be the effect and consequences thereof, more particularly in relation to the adjudication of the show cause notice dated 11th April 2007 and the reason for the appellant/Revenue to take recourse of the provisions of Section 11A read with Sections 11AC and 11B of the Central Excise Act, 1944. It is also clear that there could have been no warrant for issuance of the show cause notice in view of the subsequent developments which has been taken place after about 7 months of issuance of the show cause notice that is in view of the order dated 22nd November 2007 by which the revenue s appeal against refund order itself came to be rejected. All these issues ought to have been raised and fell for consideration on rival contentions raised. Impugned order set aside - Matter restored back before the tribunal - appeal disposed off.

Summary

Issues involved:
The issues involved in the judgment are the dismissal of an appeal by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) based on primary grounds related to audit objections, the issuance of a show cause notice by the revenue, and the jurisdiction of the Commissioner to drop the show cause notice without applying certain provisions.

Dismissal of Appeal Based on Audit Objections:
The appeal arose from an order passed by CESTAT, where the Tribunal dismissed the appeal primarily on the ground of an audit objection raised by the Central Excise Revenue Audit (CERA). The Tribunal's decision was based on the fact that the issue could be decided solely on this ground without delving into the merits of the case. The Tribunal emphasized that internal procedures between the Department of Revenue and the Comptroller & Auditor General of India were not within its purview as an appellate authority. The Tribunal highlighted that deciding on the merits of the case would be akin to deciding an order of the first appellate authority, which was not before them. The Tribunal set aside the impugned order and directed the Tribunal to consider all issues raised by the parties and decide the appeal on its own merits.

Show Cause Notice Issued by the Revenue:
The revenue issued a show cause notice objecting to the claim for refund of unutilized cenvat credit. The notice was issued before the decision taken by CERA and prior to the filing of an appeal against the order granting the refund. Subsequently, the Commissioner of Central Excise (Appeals) rejected the revenue's appeal against the refund order, which was accepted by the revenue without filing any further appeal. The respondent argued that the issuance of the show cause notice was unwarranted since the revenue had accepted the order rejecting their appeal. The Commissioner dropped the show cause notice, which was reviewed by the Committee of Chief Commissioners. The Tribunal was of the opinion that all issues should have been considered, and the show cause notice should not have been dropped without a thorough examination of the contentions raised.

Jurisdiction of the Commissioner to Drop Show Cause Notice:
The respondent contended that the Commissioner did not have the jurisdiction to drop the show cause notice without applying the relevant provisions of the Central Excise Act, 1944. The respondent relied on previous Supreme Court decisions to support their argument. The Tribunal acknowledged the importance of considering all contentions raised by the parties and directed the Tribunal to decide the appeal afresh, keeping all contentions open for consideration. The Tribunal emphasized the need for expeditious resolution of the appeal by the adjudicating authority within a specified timeframe.