2017 (10) TMI 787 - AT - Central Excise

Substantive Benefit Over Procedural Objections: Review of Documents Required for Refund Claims

The Tribunal emphasized that the substantive benefit of credit should not be denied on procedural or hyper technical objections. It directed the original ... 100% EOU - Refund claim - final product of the appellant is exempted from excise duty - Rule 5 of the CCR - refund claim has been rejected on the ground of technical discrepancies in the invoices raised by the appellant - Held that: - it is a settled principle of law that substantive benefit of credit cannot be denied on procedural or hyper technical objection. Since in this case, all the invoices are raised in relation to services utilised for Malphe Unit which are used for export of final product and benefit has been denied that the input service has not been utilised for the provision of output service - it is already held in the catena of judgements that the substantive benefit of CENVAT credit cannot be denied on mere procedural lapses. It is expected from the adjudicating authority to consider the various decisions given by the Tribunal and relied upon by the appellant - appeal allowed by way of remand. Issues Involved:Refund claims under Rule 5 of the CENVAT Credit rules, 2004 for the period April 2009 to June 2010; Denial of refund on the ground of technical discrepancies in invoices; Substantive benefit of credit being denied on procedural or hyper technical objections.Analysis:Refund Claims under Rule 5 of the CENVAT Credit Rules:The appellant, a 100% EOU engaged in ship/tug manufacturing, filed refund claims under Rule 5 of the CENVAT Credit rules for various periods. The Commissioner(Appeals) partially allowed the appeals but rejected refund claims on certain grounds. The Assistant Commissioner initially rejected the refund claim, citing non-compliance with conditions for claiming refund under Notification No.5/2006CE. The subsequent rejection was based on irregular invoices for unutilized CENVAT credit. The appellant contended that they were eligible for the refund, emphasizing compliance with rules and export activities. The Commissioner(Appeals) partially rejected the refund claim based on irregular invoices.Denial of Refund due to Technical Discrepancies:The main issue leading to the denial of the refund was technical discrepancies in the invoices raised by the appellant. The appellant argued that all invoices were related to services utilized for the export of final products. The appellant stressed that the substantive benefit of credit should not be denied on procedural grounds. The Tribunal supported this argument, stating that the benefit of CENVAT credit cannot be denied solely on procedural lapses. The case was remanded back to the original authority for further examination and verification of documents.Substantive Benefit of Credit Denied on Procedural Objections:The Tribunal reiterated that the substantive benefit of credit should not be denied on procedural or hyper technical objections. It emphasized that all invoices were linked to services utilized for export purposes and should not be disregarded based on technical discrepancies alone. The Tribunal directed the original authority to review the receipt of inputs and input services, verify purchase orders, and consider all relevant documents to support the appellant's claim. The adjudicating authority was instructed to follow principles of natural justice and provide a reasoned order.In conclusion, the Tribunal disposed of the appeals by way of remand, highlighting the importance of considering substantive benefits over procedural objections and ensuring a fair assessment of refund claims based on the provided evidence and compliance with legal requirements.