IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, BANGALORE
Arising out of No. MLR-EXCUS-000-APP-MSC-225-2018-19, Dated: 22.03.2019|
Passed by Commissioner of Central Tax, BELGAUM (APPEALS)
Date of Hearing: 02.08.2019
Date of Decision: 08.08.2019
RMC READY MIX INDIA
PLOT NO 38A BAIKAMPADY INDUSTRIAL AREA
MANGALORE KARNATAKA 575001
COMMISSIONER OF CENTRAL TAX
BELAGAVI COMMISSIONERATE NO. 71
CLUB ROAD BELGAVI KARNATAKA 590001
Appellant Rep by: Shri Mahesh B. Raichandani, Adv.
Respondent Rep by: Shri Gopakumar,, Jt. Commissioner(AR)
CORAM: S S Garg, Member (J)
CX – Refund – CENVAT – Rule 5 of CCR – SCN for denial of refund claim is vague and does not state reasons on which the department proposed to reject the refund claim – documents have been attached by the appellant in support of his refund claim and no defect memo has been issued by department if any documents were missing – not disclosing the unutilized balance of CENVAT credit in ER-1 returns is only a procedural lapse and cannot be a ground to reject refund claim – impugned order is not sustainable, hence same is set aside and matter remanded to original authority to examine all documents filed in support of refund claim – original authority to dispose of claim within two months: CESTAT [para 6]
Case laws cited:
Serco Global Services Pvt. Ltd. Vs. CCE – 2015-TIOL-1044-CESTAT-DEL… Para 4
Jagdamba Polymers Ltd. Vs. CCE – 2010-TIOL-522-CESTAT-AHM… Para 4
UOI Vs. Slovak India Trading Co. Pvt. Ltd. – 2006-TIOL-469-HC-KAR-CX… Para 4
Srinivasa Hair Industries Vs. CCE, Chennai-II – 2016-TIOL-1203-CESTAT-MAD… Para 4
FINAL ORDER NO. 20626/2019
Per: S S Garg:
The present appeal is directed against the impugned order dt. 22/03/2019 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 appellant is engaged in the manufacture of ready-mix concrete. The appellant filed a refund claim for Rs.4,75,112/- on 26/03/2018 for refund of CENVAT credit lying unutilized in their accounts. After examining the said claim, it was noticed that for the corresponding period, the appellant had shown NIL balance of CENVAT credit in the Monthly Return, the appellant never carried out export for the corresponding period, failed to declare credit balance in TRANS-1. Accordingly, a show-cause notice dt. 12/06/2018 was issued to the appellant asking them to show-cause as to why instant refund should not be rejected on the above mentioned grounds. The Assistant Commissioner, Central Excise & Central Tax, North Division, Mangaluru vide his order dt. 25/06/2018 rejected the refund claim of the appellant and pointed out that as per the Statutory Returns filed by them for the month end, the CENVAT credit balance held by them was NIL, the appellant failed to declare the credit held by them under TRANS-1. Aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner(Appeals) who rejected the same. Hence the present appeal.
3. Heard both sides and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the learned Commissioner(Appeals) has overruled all the submissions made by the appellant and has also overlooked the case laws cited by them. He further submitted that the impugned order is violative of the principles of natural justice as no reasoning has been given for rejection of the appeal. He further submitted that in the impugned order, the Commissioner(Appeals) has held that (a) the sanctity of the amount of refund claimed by the appellants is not fortified; (b) the appellants have not enclosed any documents in support of their claim for refund; (c) the claim for refund has been made based on illustration and not with relevant documentary evidence; (d) the refund claim does not indicate the provision under which refund is sought; and (e) Rule 5 of the CENVAT Credit Rules, 2004 applies only in case of exports. The learned counsel further submitted that all these grounds on which the Commissioner(Appeals) has rejected the refund claim is beyond the show-cause notice because in the show-cause notice, no such ground has been alleged and the show-cause notice is absolutely vague with regard to the grounds on the basis of which the refund is proposed to be rejected. He further submitted that the finding of the Commissioner(Appeals) that the appellant has not disclosed the provision under which the refund claim has been filed is incorrect because the appellant has specifically mentioned in reply to the show-cause notice that the refund is sought under the Rule 5 of CENVAT Credit Rules, 2004 read with Section 11B of the Central Excise Act. He further submitted that appellants have filed all the documents in support of their claim along with refund application but both the authorities have wrongly observed that the appellant has failed to furnish the necessary documents in support of their claim. He further submitted that if some document was lacking, then original authority as well as the Commissioner(Appeals) could have asked the appellant to furnish the required document before examining their claim but they have chosen to reject the refund claim straightaway without examining the documents submitted by them. he further submitted that the appellant has in fact submitted the details of the amount claimed as refund, copies of ER-1 returns, copy of the CENVAT credit register which is required for processing the refund claim. He further submitted that the refund has also been rejected on the ground that unutilized balance of CENVAT credit was not disclosed in ER1 returns. To counter this finding, the learned counsel submitted that they have not disclosed the balance of CENVAT credit in ER1 returns under a bona fide belief i.e. the credit cannot be utilized for payment of output liability and hence there is no requirement for disclosure of the same in the return. Further non-disclosure in the ER1 return is only a procedural lapse and substantive right of the refund cannot be denied on this procedural lapse. In support of this, he relied upon the decision in the case of Serco Global Services Pvt. Ltd. Vs. CCE [2015(39) STR 892] = 2015-TIOL-1044-CESTAT-DEL wherein the Tribunal has held that refund can be granted on the basis of CENVAT credit available in CENVAT credit account and not on the basis of closing balance disclosed in ER-1 returns. He further submitted that it is well settled legal position that substantial benefit of CENVAT credit cannot be denied on the ground of procedural lapse. The appellant submitted that failure to reflect the closing balance of CENVAT credit in ER1 returns is a rectifiable mistake in terms of Central Excise Rules, 2002. For this submissions, he relied upon the decision in the case of Jagdamba Polymers Ltd. Vs. CCE [2010(253) ELT 626] = 2010-TIOL-522-CESTAT-AHM. He also relied upon the decision in the case of UOI Vs. Slovak India Trading Co. Pvt. Ltd. [2006(201) ELT 559 (Kar.) = 2006-TIOL-469-HC-KAR-CX which was affirmed by the Hon’ble Supreme Court as reported in 2008(233) ELT A170 (SC). He further submitted that this decision cited before the Commissioner(Appeals) was ignored on the ground that the facts in the case of Slovak India Trading Co. Pvt. Ltd. was different as it was a case of closure of unit whereas in this case it is not so. Learned counsel further submitted that it is not the facts but the principle / ratio of the decision which is significant. He also submitted that in the case of Srinivasa Hair Industries Vs. CCE, Chennai-II – 2016-TIOL-1203-CESTAT-MAD wherein it was held that in cases where an assessee is unable to utilize the credit for due to closure of their business or any other circumstances beyond their control, law cannot be interpreted to cause absurdity or impossibility.
5. On the other hand, the learned AR defended the impugned order and submitted that the appellant failed to mention the provision under which they have filed the refund claim and also failed to annex the required documents to process the claim and therefore both the authorities have rightly rejected the refund claim.
6. After considering the submissions of both sides and material on record, I find that the show-cause notice for denial of the refund claim is vague and does not state reasons on which the Department proposed to reject the refund claim. Further I find that appellant has attached the documents in support of his refund claim application and no defect memo was issued by the Department, if some documents were missing in the application seeking refund, the Department could have sought those documents from the appellant. Further I find that the refund claim by the appellant was under Section 11B read with Rule 5 of CENVAT Credit Rules which are the only provisions for seeking the refund. Further I find that not disclosing the unutilized balance of CENVAT credit in ER1 returns is only a procedural lapse and cannot be a ground to reject the refund claim in view of the decision in the case of Jagdamba Polymers Ltd. and Slovak India Trading Co. Pvt. Ltd. cited supra. In view of my discussion above, I am of the considered view that the impugned order is not sustainable in law and the same is set aside and the matter is remanded back to the original authority to examine all the documents which have been filed by the appellant in support of his refund claim application. further the appellant is free to file documents before the original authority in support of their refund claim and the original authority will examine those documents to decide the claim of refund. The original authority is directed to dispose of the appeal within two months after the receipt of a certified copy of this order. Appeal is allowed by way of remand.
(Order was pronounced in Open Court on 08.08.2019)