2024 (2) TMI 249 - AT - Central Excise

100% EOU - refund of unutilized cenvat credit - appellant was neither issued a SCN nor given a personal hearing - ex-parte order - violation of principles of natural justice - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE (NT) dated 18.06.2012 - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT - Apart from issuing a letter dt. 27.11.2015 informing the appellant to furnish the relevant A.R.E-1 documents duly certified by Customs authorities, there is no show cause notice issued to the appellant proposing to reject the refund claim. So also, the appellant was not granted a personal hearing by the adjudicating authority. It is indeed very much clear that the order has been passed by the adjudicating authority in violation of principles of natural justice. Even though the appellant had put forward this plea of violation of natural justice before the Commissioner (Appeals) the same was not considered and he has upheld the rejection of refund claim. Rejection of refund on the ground that the appellant has not furnished A.R.E-1 documents to establish that the goods have been exported - HELD THAT - The appellant has produced the shipping bill, packing list, invoices as well as bank realization certificates. All these documents would show that the goods have been exported. Notification No.42/2001 provides for conditions in para-1 and procedures in para-2. The conditions in para-1 does not stipulate for submitting A.R.E-1 document at the time of export. However, in para-2 which lays down the procedure for export without payment of duty, it is stated that the exporter shall present the goods along with four copies of application in the Form A.R.E-1. Thus it can be inferred that the requirements to submit ARE-1 is not a condition but only a procedure - It is not the case of department that the goods have been exported without their approval or without issuing Let Export Order. In fact, the allegation that there is no proof for export itself is purely procedural. The department is well aware that goods have been exported. On the allegation of non-production of documents it is alleged that there is no evidence of export goods. When the exporter is following the self-certification procedure, he is not required to submit the A.R.E-1 document - It is found that the rejection of refund claim holding that the appellant has not produced A.R.E- document to evidence the export of the goods is wholly unjustified. Rejection on the ground that the invoices do not tally as to the address so as to show that the goods have originated from Hosur unit itself - HELD THAT - In the invoice though address is that of Bangalore, after the description of goods it is stated that the goods are manufactured by Hosur unit. The corresponding packing list shows appellant s Bangalore address. But the invoice number is same. Again the EDI Shipping Bill shows Factory sealed . The policy is that duty / tax are not to be exported. These notifications are to facilitate hassle free exports so as to earn foreign exchange for the country. If the compliances can be verified by checking the invoice number in the documents the department ought not to resort to reject refund claims on flimsy and minor procedural aspects - Further, the said ground has not been informed to the appellant by issuing a show cause notice. The appellant has not been given an opportunity for personal hearing also. The refund has been rejected without following the principles of natural justice. The rejection of refund claim is not justified - Appeal allowed.

Summary

Issues Involved:
1. Rejection of refund claims due to non-submission of A.R.E-1 documents.
2. Mismatch of addresses in export invoices and shipping bills.
3. Procedural lapses and violation of principles of natural justice.

Summary of Judgment:

1. Rejection of Refund Claims Due to Non-Submission of A.R.E-1 Documents:
The appellant, a 100% EOU, filed refund claims for unutilized cenvat credit under Notification No. 27/2012-CE (NT) and Rule 5 of Cenvat Credit Rules, 2004. The refund claims were rejected by the original authority on the grounds that the appellant did not submit A.R.E-1 documents certified by Customs. The appellant argued that EOUs exporting goods under B-17 Bond are not required to follow the procedure detailed under Notification No. 42/2001-CE (NT), as clarified by Public Notice No. 10/2001 and Circular No. 17/2006-Cus. The Tribunal found that the requirement to submit A.R.E-1 is procedural and not a condition for export. The appellant had followed the self-sealing and self-certification procedure, submitting all necessary documents like shipping bills, packing lists, and bank realization certificates. The Tribunal held that the rejection of refund claims on this ground was unjustified.

2. Mismatch of Addresses in Export Invoices and Shipping Bills:
The refund claims were also rejected on the ground that the export invoices contained the address of the Bangalore office, while the shipping bills had the address of the Hosur unit. The appellant explained that the invoices showed the Bangalore address for accounting purposes but clearly declared that the goods were manufactured and exported from the Hosur unit. The Tribunal noted that the credit of duty paid on inputs and input services was not disputed, and the invoice numbers in the documents tallied. The Tribunal held that the rejection based on address mismatch was flimsy and unjustified, especially when the goods were exported under self-sealing and self-certification procedure.

3. Procedural Lapses and Violation of Principles of Natural Justice:
The Tribunal observed that the appellant was not issued a show cause notice proposing to reject the refund claims, nor was a personal hearing granted. The orders were passed ex parte, violating the principles of natural justice. The Tribunal emphasized that the department cannot reject refund claims without issuing a show cause notice and informing the appellant of the grounds for rejection.

Conclusion:
The Tribunal set aside the impugned orders rejecting the refund claims and the consequential demand, interest, and penalties. All appeals were allowed with consequential reliefs, if any. The judgment highlighted the procedural lapses and emphasized the importance of adhering to principles of natural justice.