Case Law Details
Hawco Petrofer LLP Vs Commissioner of Central Excise (CESTAT Chandigarh)
In the case abovementioned it was held by CESTAT Chandigarh that held that without challenging the refund order, the refund cannot be recovered.
Assessee was working under Notification No.56/2002-CE dated 14.11.2002 which provides for exemption from the duty of excise to specified goods cleared from industrial units in the State of Jammu & Kashmir to the extent of duty paid in cash by way of a refund mechanism, for a period of ten years from the date of publication of the notification or from the date of commencement of commercial production, whichever is later. During the scrutiny of ER-1 Returns, it was found that the assessee had availed self-credit of the duty paid by it and not taken into account discount paid at the end of the financial year while paying the duty. Department found that assessee had violated the conditions of the Notification and hence they have claimed refund of an excess amount which was sanctioned. However, subsequently a show cause notice was issued to them proposing to recover the said amount on the grounds that they have availed excess refund. The demand was confirmed along with interest and penalty against the appellant and the Commissioner (Appeals) has upheld the order of the Adjudicating Authority.
On appeal before CESTAT it was submitted that appellant had availed the refund of duty paid by them and had not claimed anything in excess of an amount actually paid by them in cash. Even if it is assumed that duty has been paid in excess what was payable by them even then also the amount cannot be recovered because the self-credit has been claimed of what has been paid by them. Reliance was placed on the decision of the tribunal in the case of Medly Pharmaceutical Vs CCE, Chandigarh-I – 2019-21 GSTL 522 (Tri. Chd.) where it was held that the refund cannot be rejected even if higher duty has been paid than what was payable, because the refund is eligible for the amount of duty paid by them. Department had not challenged the refund sanction order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon’ble Guwahati High Court in the case of CCE, Shilong Vs Jellalpur Tea Estate- 2011 (268) ELT 14 (Gau). Further reliance was placed on M/s Ravi Crop Science Vs CCE,J&K- Final Order No.60486-60487/2023 and M/s Pace nonWoven Fabric Products decided by Final Order No.60442/2024 dated 23.07.2024 wherein also the Tribunal has followed the earlier decision cited supra and held that without challenging the refund order,
the refund cannot be recovered.
Finally CESTAT put reliance on the above cited decisions and allowed the appeal of the assessee.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 31.10.2022 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the present case are that the appellants were working under Notification No.56/2002-CE dated 14.11.2002. During the scrutiny of ER-1 Returns, it was found that the appellant had availed self-credit of the duty paid by them. It was also alleged that the appellant had not taken into account discount paid at the end of the financial year while paying the duty. It was the allegation of the department that they have violated the conditions of the Notification and hence they have claimed refund of an excess amount. The refund was sanctioned to the appellant. However, subsequently a show cause notice was issued to them proposing to recover the said amount on the grounds that they have availed excess refund. The demand was confirmed along with interest and penalty against the appellant and the Commissioner (Appeals) has upheld the order of the Adjudicating Authority. Hence, the present appeal.
2. Heard both sides and perused the records of the case.
3. Shri Vikrant Kackaria, learned Counsel for the appellant appears on behalf of the appellant. He submits that the impugned order is not sustainable in law as the same has been passed by ignoring the precedents on the same issue. He further submits that the appellant had availed the refund of duty paid by them and had not claimed anything in excess of an amount actually paid by them in cash. He further submits that even if it is assumed for the sake of argument that duty has been paid in excess what was payable by them even then also the amount cannot be recovered because the self-credit has been claimed of what has been paid by them. He further submits that this issue is no more res integra and has been settled by the Tribunal in the case of Medly Pharmaceutical Vs CCE, Chandigarh-I – 2019-21 GSTL 522 (Tri. Chd.). In the said case, there was difference of opinion and the matter was referred to the Third Member and thereafter by majority view, it was held that the refund cannot be rejected even if higher duty has been paid than what was payable, because the refund is eligible for the amount of duty paid by them. He further submits that the Department had not challenged the refund sanction order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon’ble Guwahati High Court in the case of CCE, Shilong Vs Jellalpur Tea Estate- 2011 (268) ELT 14 (Gau). He also submits that this Tribunal has followed the above cited decision of the Hon’ble Guwahati High Court in the case of M/s Ravi Crop Science Vs CCE, J&K- Final Order No.60486-60487/2023 dated 11.10.2023 and in that case also, the refund sanction order was not challenged then it was held that the same cannot be recovered by way of Show Cause Notice. He further submits that this Tribunal in the case of M/s Pace non Woven Fabric Products decided by Final Order No.60442/2024 dated 23.07.2024 wherein also the Tribunal has followed the earlier decision cited supra and held that without challenging the refund order, the refund cannot be recovered.
4. On the other hand, learned Authorized Representative for the Department reiterates the findings of the impugned order.
5. After considering the submissions of both the parties and perusal of the material on record, I find that this issue is no more res integra as held in various decisions cited supra. Further, I find that this Tribunal in the case of M/s Pace Non Woven Fabric Products (cited supra) has considered the identical issue and has held as under:
6. After considering the submissions made by both the sides and perusal of the material on record, I find that this issue is no more res integra as the same is covered by the majority decision of the Tribunal in the case of M/s Medley Pharmaceutical Ltd vs. CCE & ST Chandigarh-I (supra).
7. Further, I find that since the department has not challenged the refund sanctioned order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon’ble Gauhati High Court in the case of CCE, Shillong vs. Jellalpur Tea Estate (supra).
8. Further, I find that the Division Bench of this Tribunal in the case of M/s Ravi Crop Science vs. CCE, Jammu (supra) by following the decision of the Hon’ble jurisdictional High Court of Jammu & Kashmir in the case of Krishi Rasayan Exports Pvt Ltd – CEA No. 06 of 2018, has held that if the refund sanctioned order is not challenged by the department, then the same cannot be recovered by way of issuance of show cause notice.
10. In view of my discussion above and by following the ratios of the decisions cited supra, I am of the considered view that the impugned order is not sustainable in law and therefore, I set aside the same by allowing the appeal of the appellant with consequential relief, if any, as per law.
6. In view of my discussion above, I am of the considered opinion that the impugned order is not sustainable in law and accordingly, I set aside the same by allowing the appeal of the appellant with consequential relief, if any, as per law.
(Operative part of the order pronounced in the open Court)
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