2024 (3) TMI 402 - AT - Central Excise

Process amounting to manufacture or not - benefit availed on Henko Stain Champion Detergent Powder cleared from the factory on payment of duty in cash - Denial of benefit of N/N.21/2007-CE dated 25.04.2007 on the ground that goods which have been subjected to packing or repacking only and is not subject to any other process amounting to manufacture - Invocation of Extended period of Limitation - HELD THAT - At the time of filing of the refund claim by the appellant in terms of Notification No.32/99-CE dated 08.07.1999, the refund claims were sanctioned by passing a speaking order during the period from 25.04.2007 to 31.01.2008. In that circumstances, a showcause notice issued to the appellant by invoking extended period of limitation on 15.03.2012, is not sustainable as held by the decision of the Hon ble Jammu Kashmir High Court in the case of COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE VERSUS KRISHI RASAYAN EXPORTS PVT. LTD. 2023 (7) TMI 661 - JAMMU AND KASHMIR AND LADAKH HIGH COURT , wherein the Hon ble High Court has held The revenue, if it is of the opinion that the Adjudicating Authority has made an erroneous refund in favour of assessee to which it was not otherwise eligible, can avail the remedy of filing appeal or revision under the Act. So long as the orders stand as having attained finality, the same cannot be tampered with by the Adjudicating Authority by launching collateral proceedings purportedly under Section 11A of the Act. As this case also, the demand has been raised against the appellant by invoking extended period of limitation whereas initially, the refund claims were sanctioned to the appellant by passing a speaking order, therefore, the extended period of limitation is not invokable. Accordingly, the impugned demand is set aside. Appeal allowed.

Summary

Issues involved:
The denial of benefit under Notification No.21/2007-CE dated 25.04.2007 to the appellant.

Summary:

Issue 1: Denial of benefit under Notification No.21/2007-CE
The appellant, engaged in manufacturing 'Henko Stain Champion Detergent Powder', was denied the benefit of Notification No.21/2007-CE dated 25.04.2007. The appellant had set up the unit in Assam and was availing exemption under Notification No. 32/99-CE dated 08.07.1999, as amended by Notification No. 21/2007-CE dated 25.04.2007. The dispute arose when the authorities alleged that the activity undertaken by the appellant was only packing of goods and not eligible for the exemption. The show-cause notice (SCN) proposed to recover the refund sanctioned to the appellant, invoking the extended period of limitation and alleging willful suppression. The appellant contended that the manufacturing process involved adding specific elements to the 'Pre-mix' received, thus qualifying for the exemption. Despite the appellant's submissions, the Commissioner confirmed the recovery of the sanctioned refund, leading to the appeal.

Issue 2: Barred by Limitation
The appellant argued that the demand was barred by limitation as the refund orders had attained finality before the show-cause notice was issued. Citing a decision of the Jammu & Kashmir High Court, the appellant contended that the demand, raised by invoking the extended period of limitation, was not sustainable. The Tribunal agreed with this argument, emphasizing that once refund claims were sanctioned by passing speaking orders, launching recovery proceedings later was impermissible. Relying on the precedent, the Tribunal set aside the demand, ruling that the extended period of limitation was not applicable in this case.

Conclusion:
The Tribunal allowed the appeal, providing consequential relief to the appellant. The demand, raised against the appellant based on the extended period of limitation, was set aside due to the finality of the refund orders. The Tribunal's decision aligned with the principle that once excise duty refunds were sanctioned through proper procedures, subsequent attempts to recover them through collateral proceedings were not valid unless reversed through appeal or revision.