AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1471
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.... limitation. In fact, he upheld the order of the Assistant Commissioner. 3. We have heard Shri. Vipin Kumar Jain, learned Counsel on behalf of the appellants and Shri. Anil Choudhary, learned Assistant Commissioner (AR), on behalf of the Revenue. 3.1 Arguing on behalf of Appellant learned counsel submitted that: i. the appellants are challenging the order of the Commissioner (Appeals) both on merits and limitation. Both the authorities have failed to appreciate they were deprived from filing the refund claim immediately after the surrender of the registration. When they surrendered their registration, the range officer advised them that their surrender will be accepted only after closure of proceedings. ii. Since they filed the refund claims immediately after closure of all proceedings their claim should not be hit by limitation. iii. On merits Assistant Commissioner has not recorded any findings on contrary he records that concerned range officer has in his verification report found the claim in order. The Commissioner (Appeals) has rejected the refund claim on merits and has thus traversed beyond the order of Adjudicating Authority. Such approach of Commissioner (A....
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....ed reading of the above judgments, leads in to the fact that wherever the assessee was unable to utilize the credit on account of objection raised by the Department or actions taken by them by way of initiation of proceedings or paid duty out of modvat account at the Department's insistence, and for that reason, he had to pay duty in cash or out of the PLA, they would be entitled to refund of that credit in cash, on the dispute being ultimately settled in their favour. In the decisions holding that such refund in cash is not possible, it has been observed that there is no provision allowing refund of such credit in cash. However, we are not in agreement with the above proposition for the simple reason that there is also express no bar in the modvat Rules to that extent. We have to keep in mind that it is not the refund of unutilized credit, but the credit which has been used for payment of duty at the insistence of the revenue or has been reversed because the Department was of the view that the same is not available for utilization. This is a simple and basic principle of equity, justice and good conscience. Had the Department not prevented the assessee from utilizing the credit ot....
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....s well settled principles of law that what cannot be done directly should not be allowed to be done indirectly. On surrendering of their licence, the appellants was not allowed to claim the refund of the unutilized credit in the Modvat account, the same would have lapsed. As such, utilization of the same towards payment of disputed demand of duty, after surrendering of their registration, has not led to a situation where the assessee was compelled not to use the credit for regular clearances and had to make payment from PLA. As such, in this case we find that the refund in cash is not to be allowed." 5.2 It is not the case of the appellant that they were at any time barred by the revenue from utilizing the MODVAT Credit balance available in their MODVAT account on the date of surrender of registration. Thus by applying the logic laid down by the larger bench we do not find any merit in the refund claim filed by the appellants claiming refund of the balance in their MODVAT account. 5.3 It is a settled law that MODVAT Credit, has been allowed as procedural requirement for payment of duty on the finished products manufactured and cleared by the appellants. In no case it is refun....
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....n by the show cause notice. Thus distinction make the proceedings undertaken in terms of section 11B different from the proceedings under Section 11A. 6.3 While rejecting or admitting the refund claim by any authority all the three grounds forming the basis of refund claim have to be considered by the Assistant Commissioner and if the refund claim has been rejected on time bar even without mentioning a merits, the refund claim has been rejected in which merits and all other things have been considered. Thus in appeal appellant challenges the order of the Assistant Commissioner will have to satisfy the Appellate Authority with regards to admissibility of the refund claim. 6.4 Appellate Authority while deciding on the appeal will be required to apply his mind to the all the grounds leading to such refund claim and then decide upon the appeal. He cannot adjudicate such an appeal and allow the refund just by setting aside the order of the Assistant Commissioner which may have rejected the refund claim on one of the grounds. This is more crucial as the power to remand the matter s was specifically withdrawn from the Commissioner (Appeal) and in Section 35A (3) of the Central Excis....
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....tled to agitate the question of dutiability in appeal before the Tribunal." 6.6 To support their arguments on limitation, appellants have shown certain correspondences/ letters written by the range officer to them when they surrendered the registration certificate. On the basis of the said letter they claim that they were not allowed to file the refund claim. 9.2 They have enclosed a copy of the surrender letter available at page 26 of the paper book. By the said letter they have stated the manufacturing activities undertaken by them at the said registered premises shall come to close with effect from 21st December 1999. In the said letter they have also disclosed the credits available in their MODVAT and PLA account. The said para of their letter is reproduced below: "The credit of duty lying unutilized in the RG23A Pt-II Register after reversing MODVAT on above stock is Rs. 1,52,45,465/- in RG23C Part II Register is Rs. 8004/- and the balance in PLA Register is Rs. 15,224/-. This is for your information and necessary action." While the said letter is disclosing the balances available in various account it do not show any intention of filing the refund claim in respect of....
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....s duty either without protest or after registering his protest. It may also be a case where he disputes the levy and fights it out up to first Appellate or second Appellate/Revisional level and gives up the fight, being unsuccessful therein. It may also be a case where he approaches the High Court too, remains unsuccessful and gives up the fight. He pays the duty demanded or it is recovered from him, as the case may be. In other words, so far as `X' in concerned, the levy of duty becomes final and his claim that the duty is not leviable is finally rejected. But it so happens that sometime later - may be one year, five years, ten years, twenty years or even fifty years - the Supreme Court holds, in the case of some other manufacturer that the levy of that kind is not exigible in law. (We must reiterate - we are not speaking of a case where a provision of the Act whereunder the duty is struck down as unconstitutional. We are speaking of a case involving interpretation of the provisions of the Act, Rules and Notification.) The question is whether `X' can claim refund of the duty paid by him on the ground that he has discovered the mistake of law when the Supreme Court has declared the....
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....osed of in above terms. (Pronounced and dictated in Court) (Archana Wadhwa) Member (Judicial) (Sanjiv Srivastava) Member (Technical) Per: Mrs. Archana Wadhwa 10. While agreeing with the findings of the learned Brother as regards the refund of PLA amount of Rs. 15,224/-, I have different views as regards the refund of unutilised Cenvat Credit lying in the assesse's accounts at the time of closing of their manufacturing unit. Though my learned Brother has detailed the facts in his order, but to elaborate further factual position, which is required to be taken into consideration, I would like to refer to some of the further facts. 11. The appellants, who are engaged in the manufacture of petroleum gases were availing the benefit of Cenvat Credit of duty paid on various inputs, which were being utilised by them in the manufacture of their final products and the credit so earned was being utilised for payment of duties. The appellant filed a letter dated 21/12/1999 to their jurisdictional Range Superintendent of Central Excise surrendering their Central Excise registration on the ground that the management has decided to discontinue the activities of their manufa....
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....documents to be produced in this communication or attend any personal hearing may kindly be communicated to us and oblige." 12. As is clear from the above letter, there is a reference to the earlier correspondence clarifying that since their surrendering of registration application was not accepted by the Government on the ground of continuation of certain disputes against them, which disputes now stand settled, the deregistration may be accepted vide the same letter, they filed a refund of the pending unutilised Cenvat Credit. 13. It is seen that against the said refund application filed by the appellant no show-cause notice was issued to the appellants proposing to deny the same specifying the grounds on which Revenue intends to deny the refund. The refund application was taken up directly by the Assistant Commissioner for adjudication. No doubt a personal hearing was granted to the appellant before rejection, during which the appellant relied upon the Hon'ble High Court decision in the case of UOI Vs. Slovak India Trading Co. Pvt. Ltd., reported in2 006 (201) ELT 559 (Kar). 14. However, the Assistant Commissioner vide his order dated 04/04/2007 rejected the refund claim....
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.... (supra). However, the merits did not stand discussed by him and his views on the merits are not available. 16. The first issue, which arises is as to whether in such a scenario, was it open to the Commissioner (Appeals) to frame an issue on the merits of the case. The appellate authority has gone to the merits of the case and has rejected the appeal on merits as also on limitation. 17. In my views when the original authority has not expressed any opinion on the merits of the case, it is not even clear as to whether he has agreed with the assessee on merits or not. We have also seen the appeal filed by the assessee before the Commissioner (Appeals) wherein the rejection of refund claim has not been challenged on merits. Obviously, when there is no rejection on merits, it is neither possible nor practicable for the assessee to challenge the order on merits. In such a scenario, it was not open for the Commissioner (Appeals) to go to the merits of the case and to reject the refund claim on merits. To further clarify my views, it is observed that when the Assistant Commissioner is rejecting the appeal on limitation it may be that he has agreed on merits of the case. Further, the ....
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....all till the clearances of all the proceedings pending against them relatable to excise or customs. As per the appellants, such proceedings were over by 2006 only. 20. In such a scenario, the appellant could not have filed refund claim at all inasmuch as the refund would arise only when their surrender application is accepted by the Revenue. As such, with due respect, the findings of my Ld. Brother that the said letter of December, 1999 written by the Superintendent has not debarred the assessee to file the refund claim are being differed by him inasmuch as the cause of action would arise only when the assessee becomes a non-excisable unit. In the absence of acceptance of their registration certificate surrendered, the assessee unit continued to remain an excisable units and it is beyond imagination that an excisable unit would file a refund claim relatable to unutilised Cenvat Credit. According to me, the refund of unutilised excess credit would arise only when the appellant's registration certificate gets surrendered with due acceptance of the same by the Central Excise authorities inasmuch as the refund is of unutilized accumulated Cenvat Credit at the time of surrender of li....