2008 (4) TMI 160 - AT - Central Excise

Appellate Tribunal allows refund claims after manufacturers' eligibility dispute

The Appellate Tribunal CESTAT AHMEDABAD rejected the refund claims initially due to non-compliance with prescribed procedures and failure to reverse ... Appellants purchased duty (BED & AED) paid HSD-LSHF (ship stores) and supplied the same to the Naval Ships – refund claim filed as clearance to the Naval Vessels is exempted under Notification No. 64/95- supply was not made directly from manufacture to Indian Navy is just a procedural omission, hence refund can’t be denied for that – moreover refund is not hit by unjust enrichment because there is no element of recovery of duty – appeal allowed Issues:Refund claims rejection by the Appellate Tribunal CESTAT AHMEDABAD.Analysis:1. Non-fulfillment of prescribed procedure: The appellants' refund claims were rejected due to non-compliance with the prescribed procedure, as argued by the Department.2. Non-reversal of Cenvat credit: The Department contended that Reliance Industries Ltd. did not reverse the Cenvat credit as required under Rule 6(3) of the Cenvat Credit Rules, 2004, leading to the rejection of refund claims.3. Correlation between purchased and supplied goods: The Department raised concerns about the appellants' inability to correlate the goods purchased from Reliance Industries Ltd. and supplied to the Navy, which was a basis for rejecting the refund claims.4. Eligibility to file refund claims: The Department argued that only the manufacturer, not the buyer, is eligible to file refund claims, which was another ground for rejecting the appellants' claims.5. Interpretation of Notification No. 64/95-C.E.: The appellants argued that the condition of reversing Cenvat credit is not mentioned in the Notification granting exemption, citing a Supreme Court judgment. They emphasized that the benefit of exemption can be claimed at any stage and that the buyer can file a refund claim if the duty incidence was not passed on.6. Doctrine of unjust enrichment: The appellants contended that there was no unjust enrichment as they did not recover the duty, especially highlighting that the doctrine does not apply to Public Sector Undertakings (PSUs), supported by various judgments.7. Relevance of past decisions: The Tribunal noted the relevance of a previous order in favor of the appellant, where a similar issue was decided, and the Department was not allowed to appeal, indicating the finality of the decision.8. Direct supply requirement: The Department argued that as per the Notification, the supply should be made directly from the manufacturer to the Navy, and strict interpretation of Notifications is necessary, which the appellants did not fulfill.9. Verification and remand: The Tribunal held that the appellants are eligible for refund claims but remanded the matter to verify the quantum of duty to be refunded based on the purchases from Reliance Industries Ltd. and duty paid goods supplied, emphasizing the importance of proper verification by the original authority.10. Final Decision: The Tribunal pronounced the decision in favor of the appellants, allowing the refund claims subject to verification, highlighting the significance of adherence to procedures and the need for proper correlation between purchased and supplied goods for refund eligibility.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the rejection and subsequent approval of the refund claims.