Appeal allowed, refund claim rejection set aside. Lower authority's denial based on incorrect calculation found unsustainable.

The appeal was allowed with consequential relief. The impugned order was set aside to the extent of the rejection of the refund claim amounting to Rs. 103240 and Rs. 67238. The lower authority's denial of the refund claim without issuing a show cause notice and based on incorrect calculation of proportionate Cenvat credit and procedural lapses in the input excise invoices was found unsustainable.

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Issues Involved:
1. Rejection of refund claim without issuing a show cause notice.
2. Denial of refund claim based on proportionate Cenvat credit calculation.
3. Denial of refund claim due to procedural lapses in the input excise invoices.

Detailed Analysis:

1. Rejection of Refund Claim Without Issuing a Show Cause Notice:
The appellants contended that the impugned order was not sustainable as no show cause notice was issued, and no personal hearing was granted before rejecting a portion of their refund claim. This contention was found valid as the lower authority rejected part of the refund claim without observing the principles of natural justice. Thus, the order was liable to be set aside on this ground alone.

2. Denial of Refund Claim Based on Proportionate Cenvat Credit Calculation:
The appellants argued that Rule 5 of the Cenvat Credit Rules, 2004, and Notification No. 5/2006-C.E. (N.T.) dated 14-3-2006, do not prescribe calculating the proportionate Cenvat credit on inputs used in making exported final goods. The lower authority had incorrectly applied this non-existent condition by considering the lowest rate for determining the assessable value of inputs used in exported goods. The appellant's claim was based on actual use of inputs, supported by stock registers and verified by the jurisdictional Superintendent of Central Excise. Therefore, the rejection of Rs. 103240 was found unsustainable.

3. Denial of Refund Claim Due to Procedural Lapses in the Input Excise Invoices:
The lower authority denied the refund of Rs. 67238 on the grounds that the input excise invoices did not mention the specific plot numbers of the factory address. The appellants provided evidence, including input excise invoices, gate registers, and issue slips, to show actual use of inputs in the manufacture and export of finished goods. The jurisdictional Range Superintendent confirmed that no Cenvat credit was availed by the unit at the disputed address. The denial of the refund claim based on minor procedural lapses was found untenable, and the appellants were entitled to the refund.

Conclusion:
The appeal was allowed with consequential relief. The impugned order was set aside to the extent of the rejection of the refund claim amounting to Rs. 103240 and Rs. 67238.

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