2026 (1) TMI 1153 - AT - Central Excise

Refund under area-based exemption scheme requires remand for de novo consideration and issuance of a speaking order after hearing submissions

Refund claim under an area-based exemption scheme was challenged on grounds that the original authority failed to issue a speaking order and violated ... Refund under area-based exemption scheme - speaking order - principles of natural justice - value addition norm - remand for de novo decision - Notification No. 56/2002-CE - Notification No. 01/2010-CE - HELD THAT:- We fail to understand the logic of the impugned order. Though, we understand that the original authority has no role to play decision by the Commissioner, it can in no way be a reason for not issuing a speaking order, which is clear violation of principles of natural justice. We find that the order in original having been issued in contravention of the principles of natural justice, should have been set aside by the Commissioner and the issue must have been remanded to the original authority for a fresh consideration following principles of natural justice. We find that it was for the original authority to examine the issue with available records and issue a speaking order. The appellate authority cannot supplement what has not been done by the original authority remanded the matter to him for de novo decision with directions to examine as to whether the appellant's unit is located in the areas specified under the first Notification and they satisfy the other conditions, if any, of that notification. Commissioner (Appeals) while accepting that this Bench remanded the matter to Commissioner directing him. Inter alia, to see whether appellants are eligible for the first notification, finds that no request of the appellant to consider the refund under the first notification is not on record. However, the period under consideration before this Bench in the previous order was concerning the period after 2011 only. Therefore, the issue pending before Commissioner has a bearing on the impugned proceedings. Ideally, the adjudicating authority should have waited for the Commissioner to decide the issue in remand, before rejecting the claim of the appellant. Anyway, it is for the adjudicating Authority, to consider all the issues involved before passing a speaking order after considering the submissions of the appellants and after following the principles of natural justice. Thus, we set aside the impugned order and remand the matter to original authority, in above terms, with a direction to consider all the submissions of the appellant and to pass a speaking order. Issues: (i) Whether the adjudicating authority correctly processed and rejected the appellants' refund claims under Notification No. 01/2010-CE instead of Notification No. 56/2002-CE; (ii) Whether the original orders rejecting refunds were non-speaking and in violation of principles of natural justice, requiring interference.Issue (i): Whether the adjudicating authority was justified in processing the refund claims under Notification No. 01/2010-CE rather than under Notification No. 56/2002-CE.Analysis: The appellants had commenced production after issuance of Notification No. 01/2010-CE and had earlier sought fixation of special rates and an option to avail exemption under the earlier Notification; CESTAT had remanded related earlier proceedings to the jurisdictional Commissioner to examine eligibility under Notification No. 56/2002-CE. The adjudicating authority processed the refund claims under the notification that the appellants had initially opted to avail and which applied to production commencement date; the Tribunal examined whether the departmental authorities had followed the earlier remand and whether relevant records or options for self-credit under the earlier notification were placed before the adjudicating authority.Conclusion: The Tribunal found no substantive error in processing the refund claims under the notification for which the appellants had opted and observed that admissibility of refund remains subject to value-addition norms; however, this matter of eligibility under the earlier notification was remitted and pending determination before the jurisdictional Commissioner.Issue (ii): Whether the original adjudicating orders rejecting the refund claims were non-speaking and violated principles of natural justice, requiring setting aside and remand.Analysis: The Commissioner (Appeals) recorded that the de novo proceedings on remand were pending and that the original authority had no role in respect of the remanded directions; however, the Tribunal found that lack of a reasoned, speaking order by the original adjudicating authority amounted to a breach of principles of natural justice because the authority should have examined available records, considered the appellants' submissions and the CESTAT directions, and produced a reasoned decision rather than merely rejecting the claims without adequate reasoning.Conclusion: The Tribunal concluded that the impugned orders are vitiated for want of a speaking order and for failure to follow principles of natural justice and therefore must be set aside and the matter remanded to the original authority for fresh consideration.Final Conclusion: The Tribunal set aside the impugned appellate order and remanded the matter to the original adjudicating authority with directions to consider all submissions, examine records in light of earlier CESTAT directions, decide eligibility and admissibility issues afresh, and pass a reasoned speaking order following principles of natural justice.Ratio Decidendi: An adjudicating authority must examine available records and submissions and pass a reasoned speaking order complying with principles of natural justice; absence of such a speaking order vitiates the decision and warrants remand for fresh adjudication.