High Court allows appeal for Cenvat credit refund in Coco Cola case, emphasizes CBIC Circular compliance

The judgment by HC on 26 June 2023 allowed the appeal of the Appellant, an authorized bottler of Coco Cola, for the refund of Cenvat credit of Sugar cess. The rejection of the refund claim based on the pendency of proceedings without a stay order was deemed incorrect. The Tribunal emphasized the importance of following CBIC Circulars and judicial discipline to avoid unnecessary litigation. The rejection of the refund application on grounds not mentioned in the Show Cause Notice was held unjustified, and the Tribunal clarified its competence to hear and dispose of the appeal.

---

---

Issues involved:
The judgment involves the issue of entitlement to refund of Cenvat credit of Sugar cess, rejection of refund application, pendency of proceedings, and applicability of CBIC Circulars.

Entitlement to refund of Cenvat credit of Sugar cess:
The appellant, an authorized bottler of Coco Cola, claimed Cenvat credit of Sugar cess in its ER 1 return for June 2017. The department rejected the refund claim on the ground of pendency of proceedings without any stay order from a higher court. The Tribunal found that the rejection was incorrect as no stay had been granted by the Hon'ble High Court, and the appellant was entitled to the refund as per CBIC Circulars. The judgment emphasized the need to follow judicial discipline to avoid unnecessary litigation.

Rejection of refund application:
The department issued a Show Cause Notice (SCN) questioning the refund claim, which was later rejected by the lower authorities based on grounds not mentioned in the SCN. The Tribunal held that such additional grounds beyond the SCN's scope cannot be sustained, and the rejection was unjustified.

Pendency of proceedings:
The department contended that the Tribunal was not competent to hear the appeal based on a previous judgment. However, the Tribunal clarified that the present issue did not deal with the same subject matter and proceeded to pass the order on merits, emphasizing that the appeal could be heard and disposed of by the Tribunal.

Applicability of CBIC Circulars:
The Tribunal relied on CBIC Circulars to support the appellant's entitlement to the refund of Sugar cess. It highlighted the importance of following the Circulars to avoid unnecessary litigation and emphasized the need for strict adherence to legal procedures in such cases.

The judgment, pronounced on 26 June 2023 by HON'BLE SHRI P. K. CHOUDHARY and HON'BLE SHRI K. ANPAZHAKAN, allowed the appeal of the Appellant, granting consequential benefits as per law.

---