100% EOU wins cenvat credit refund appeal after authority rejected claim without proper hearing

CESTAT Chennai allowed appeal of 100% EOU seeking refund of unutilized cenvat credit. Adjudicating authority rejected refund without issuing SCN or providing personal hearing, violating natural justice principles. Department rejected claim citing non-submission of A.R.E-1 documents and invoice address discrepancies. CESTAT held A.R.E-1 requirement is procedural, not conditional, and appellant provided sufficient export evidence through shipping bills, invoices, and bank certificates. Minor procedural non-compliance cannot justify refund rejection when export is established. Order set aside for violating natural justice.

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Issues Involved:
1. Rejection of refund claims due to non-submission of A.R.E-1 documents.
2. Mismatch of addresses in export invoices and shipping bills.
3. Procedural lapses and violation of principles of natural justice.

Summary of Judgment:

1. Rejection of Refund Claims Due to Non-Submission of A.R.E-1 Documents:
The appellant, a 100% EOU, filed refund claims for unutilized cenvat credit under Notification No. 27/2012-CE (NT) and Rule 5 of Cenvat Credit Rules, 2004. The refund claims were rejected by the original authority on the grounds that the appellant did not submit A.R.E-1 documents certified by Customs. The appellant argued that EOUs exporting goods under B-17 Bond are not required to follow the procedure detailed under Notification No. 42/2001-CE (NT), as clarified by Public Notice No. 10/2001 and Circular No. 17/2006-Cus. The Tribunal found that the requirement to submit A.R.E-1 is procedural and not a condition for export. The appellant had followed the self-sealing and self-certification procedure, submitting all necessary documents like shipping bills, packing lists, and bank realization certificates. The Tribunal held that the rejection of refund claims on this ground was unjustified.

2. Mismatch of Addresses in Export Invoices and Shipping Bills:
The refund claims were also rejected on the ground that the export invoices contained the address of the Bangalore office, while the shipping bills had the address of the Hosur unit. The appellant explained that the invoices showed the Bangalore address for accounting purposes but clearly declared that the goods were manufactured and exported from the Hosur unit. The Tribunal noted that the credit of duty paid on inputs and input services was not disputed, and the invoice numbers in the documents tallied. The Tribunal held that the rejection based on address mismatch was flimsy and unjustified, especially when the goods were exported under self-sealing and self-certification procedure.

3. Procedural Lapses and Violation of Principles of Natural Justice:
The Tribunal observed that the appellant was not issued a show cause notice proposing to reject the refund claims, nor was a personal hearing granted. The orders were passed ex parte, violating the principles of natural justice. The Tribunal emphasized that the department cannot reject refund claims without issuing a show cause notice and informing the appellant of the grounds for rejection.

Conclusion:
The Tribunal set aside the impugned orders rejecting the refund claims and the consequential demand, interest, and penalties. All appeals were allowed with consequential reliefs, if any. The judgment highlighted the procedural lapses and emphasized the importance of adhering to principles of natural justice.

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