2023 (3) TMI 1208 - AT - Central Excise

Excise Duty Refund Appeal Decision: Scope of Issues Raised Criticized (5A)

The Commissioner (Appeals) allowed the appellant's refund claim for Excise Duty on used and scrapped refractories, finding the payment compliant with Rule ... Refund of Excise Duty paid - Revenue issued SCN seeking to know as to why the refund claim should not be rejected since they are required to pay the Excise Duty on used and scrapped refractories and the payment done by them is correct - applicability of Principles of unjust enrichment. HELD THAT:- From the OIA passed by the Commissioner (Appeals), it is seen that he has not even addressed this issue raised by the Department in their ‘Grounds of Appeal’. There are no findings as to why or why not the unjust enrichment clause is invokable in the present case. He has gone into the classification and excisibilty of used refractories which was not a Ground before him. Further, this issue was already decided by his predecessor on which no Appeal was filed by the Department. It is seen that the Tribunal in the case of CCE, Mumbai-V, Vs. Pam Pharmaceuticals and Allied Machinery Company Pvt. Ltd.- 2017-TIOL- 1595-CESTAT-MUM has held that Law is well settled that the Appellate Authority is not expected to create jurisdiction for himself to decide the controversy which was not before him. Therefore to the extent learned Commissioner’s view is contrary to the direction of the Tribunal, that calls for set aside. The Commissioner (Appeals) has traversed beyond the Grounds taken by the Department. The OIA is dismissed on the ground of traversing beyond the grounds taken by the Department. As the Appeal is allowed on the ground of Commissioner (Appeals) traversing beyond the Grounds of Appeal before him, the question as to whether the Department could have taken the ground of ‘unjust enrichment’ at the Appeal stage, not perused - appeal allowed. Issues involved:The issues involved in the judgment are the payment of Excise Duty on used and scrapped refractories, the claim for refund of Excise Duty, the grounds of unjust enrichment, and the jurisdiction of the Commissioner (Appeals) to address specific issues raised by the Department.Payment of Excise Duty on used and scrapped refractories:The appellant had initially paid Excise Duty on scrapped refractories under the mistaken impression that it was liable. However, upon realizing the error, they filed a refund claim. The Adjudicating Authority rejected the claim, but the Commissioner (Appeals) allowed it, leading to the Department filing an Appeal. The Commissioner (Appeals) held that Rule 3(5A) of CCR'04 required payment equal to the duty leviable on transaction value for capital goods cleared as waste and scrap, regardless of whether the goods were excisable. The Commissioner (Appeals) concluded that the payment made was in compliance with the law, and therefore, no refund was due.Claim for refund of Excise Duty:The appellant filed a refund claim after paying Excise Duty on used and scrapped refractories, which was initially rejected by the Adjudicating Authority. However, the Commissioner (Appeals) allowed the refund, stating that the payment made was in compliance with Rule 3(5A) of CCR'04. The Department appealed this decision, arguing that the refund was erroneous as the duty paid had already been passed on to the customer. The Commissioner (Appeals) allowed the Department's Appeal and set aside the order granting the refund.Grounds of unjust enrichment:The Department raised the issue of unjust enrichment during the Appeal before the Commissioner (Appeals), arguing that the duty paid had been passed on to the customer. The Commissioner (Appeals) allowed the Department's Appeal based on this ground, stating that the payment made was in compliance with the law and no refund was due. The appellant's advocate contended that the issue of unjust enrichment was not raised when the Show Cause Notice was initially issued, and the refund claim was properly granted after the Department decided not to file further Appeals against the initial order.Jurisdiction of the Commissioner (Appeals):The Commissioner (Appeals) was criticized for traversing beyond the grounds raised by the Department in their Appeal. The Commissioner (Appeals) did not address the issue of unjust enrichment raised by the Department and instead focused on the classification and excisability of used refractories, which was not a ground before him. The Tribunal's decision in a similar case highlighted that the Appellate Authority should not create jurisdiction to decide issues not raised before him. Consequently, the Appeal was allowed on the grounds of the Commissioner (Appeals) exceeding the scope of the issues raised by the Department.Separate Judgment:The judgment was delivered by the Commissioner (Appeals) and was reviewed by a committee of Commissioners before deciding not to file further Appeals. The decision to allow the refund was based on the interpretation of Rule 3(5A) of CCR'04, emphasizing the requirement to pay an amount equal to the duty leviable on transaction value for capital goods cleared as waste and scrap.