2019 (8) TMI 485 - AT - Central Excise

Tribunal favors appellant in CENVAT credit refund claim emphasizing procedural fairness and clear reasoning

The Tribunal ruled in favor of the appellant, emphasizing that procedural lapses were insufficient grounds for rejecting the refund claim related to ... Refund of unutilized CENVAT Credit - rejection on the ground that the appellant failed to declare the credit held by them under TRANS-1 - validity of SCN - HELD THAT:- The SCN 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 - 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. 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 - appeal allowed by way of remand. Issues:Refund claim rejection based on non-disclosure of CENVAT credit balance in monthly returns and TRANS-1 declaration.Analysis:The appellant, engaged in ready-mix concrete manufacturing, filed a refund claim for unutilized CENVAT credit. The claim was rejected due to non-disclosure of credit balance in monthly returns and TRANS-1 declaration. The Assistant Commissioner and Commissioner(Appeals) upheld the rejection. The appellant argued that the impugned order lacked reasoning, violated natural justice, and misinterpreted facts and laws. They contended that all required documents were submitted, citing procedural lapses for non-disclosure in ER1 returns. The appellant relied on legal precedents to support their claim, emphasizing that substantial benefit cannot be denied due to procedural errors. The AR defended the rejection, citing lack of provision mention and document annexation. The Tribunal found the show-cause notice vague and lacking reasons for rejection. It noted that the appellant had submitted necessary documents, and any missing documents could have been requested. The refund claim was made under specific provisions, and non-disclosure in ER1 returns was deemed a procedural lapse. Relying on legal precedents, the Tribunal set aside the impugned order, remanding the matter for re-examination of documents and directing a decision within two months.Conclusion:The Tribunal ruled in favor of the appellant, highlighting procedural lapses as insufficient grounds for refund claim rejection. The decision emphasized the importance of specific legal provisions and the need for clear reasoning in rejection notices. The case serves as a reminder that substantial benefits like CENVAT credit refunds should not be denied solely on procedural grounds, especially when necessary documents have been submitted.