2011 (2) TMI 1171 - AT - Central Excise

Tribunal allows appeal on Sulphur Bentonite excisability, directs reassessment for duty payment & Cenvat credit

The Tribunal held that 'Sulphur Bentonite' was excisable, allowing the appeal and remanding the matter for calculating duty payment and irregularly ... Duty paid under protest on Sulphur Bentonite - Consequent to the Final Order of this Bench [2006 (10) TMI 348 - CESTAT, BANGALORE] holding such activity does not amount to manufacture, they claimed the refund of the amount paid through PLA - Held that:- If the appellant is liable to discharge the duty liability on the final product, then he is eligible to avail Cenvat credit on the inputs utilized for the manufacture of such products - Decided in favor of the assessee by way of remand Issues:1. Classification of product 'Sulphur Bentonite' as excisable2. Rejection of refund claim by Adjudicating Authority3. Adjustment of Cenvat credit against refund claim4. Allegation of unjust enrichmentAnalysis:1. The appeal pertains to the classification of 'Sulphur Bentonite' as an excisable product. The Tribunal had previously held that 'Sulphur Bentonite' was not a manufactured product, leading to the appellants filing a refund claim for the duty paid under protest. The Adjudicating Authority rejected the refund claim, prompting an appeal before the Commissioner (A).2. The Commissioner (A) allowed the appeal by remanding the matter to the original authority for calculating the total duty payment made against the goods and the irregularly availed credit. The learned Counsel for the appellant argued against the adjustment of Cenvat credit and interest liability against the refund claim, citing previous decisions and asserting that they had not wrongly availed credit.3. The Revenue contended that the appellant had taken Cenvat credit despite knowing that 'Sulphur Bentonite' was not leviable to duty, thus justifying the levying of interest on the wrongly availed credit. The issue revolved around whether the appellant had reversed the Cenvat credit and the question of unjust enrichment due to collecting amounts from customers.4. The Tribunal examined the submissions and records, determining that the appellant had utilized Cenvat credit to discharge duty liability on 'Sulphur Bentonite.' As the duty liability was forced upon the appellant, the credit availed during the relevant period was not incorrect. Therefore, the contention of wrongly availed credit and interest recovery was deemed incorrect based on legal precedents.5. Consequently, the impugned order was set aside, and the matter was remanded to the Adjudicating Authority to assess the refund claim's eligibility concerning unjust enrichment. The Adjudicating Authority was directed to ensure natural justice principles in determining whether there was unjust enrichment before deciding on the refund claim. The appeal was allowed for the limited purpose of considering the refund claim without unjust enrichment.