TaxTMI 
TaxTMI 
2021 (8) TMI 339
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....t, 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. Suc....
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.... Pisiculture [2006 (202) ELT 199 (T-LB)]. In the said decision tribunal larger bench has held as follows: "8. Detailed 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....
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....ny duty out of PLA. If the said refund is granted to theappellants by way of cash, the samewouldamount to making him unjustifiable enrich. It is 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,....
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....g authority states its the ground for said proceedings. Thus in all the proceedings after the issuance of show cause notice department is bound within the four boundaries laid down 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 ref....
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....ion 35B indicates that the decision of order passed by the Commissioner (A) shall be treated as an order of an adjudicating authority. In the circumstances the High Court had erred in holding that the assessee was not entitled 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 ....
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....r this argument reference is made to para 22 of the Supreme Court decision in case of Mafatlal Industries [1997 (89) ELT 247 (SC)]- "22.There is as yet a third and an equally important category. It is this : a manufacturer (let us call him "X") pays 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 speakin....
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....n view of the above discussion and relying on the decision, the Larger Bench of Tribunal in the case of Gauri Plasticulture (P) Ltd., reported in 2006 (202) ELT 199 (Tri-LB), the order of the lower authority is upheld except for the refund of PLA amount. The appeal is disposed 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 ....
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....actual payments made by us in the form of CVD and all the credits have been verified as can be seen from the attached copy of RG 23A (Part-II). We request your honour to kindly pass our refund application and order for refund of unutilized balance in PLA as well as RG 23A (Part II) at your very earliest. In case you need any other 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 adj....
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.... Central Excise Act, 1944." 15. A reading of the above order of the Assistant Commissioner leads to an inevitable conclusion that the refund claim stands rejected by him only on the point of limitation, without giving any findings on the merits of the case, though a reference stands made by him to the Hon'ble Karnataka High Court in the case of Slovak India Trading Co. Pvt. Ltd. (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....
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.... filed an application surrendering their licence in December 1999. Such surrendering was not accepted by the Revenue. There is no further communication accepting such surrendering by the proper officer. As such in terms of the first letter written by the Range Superintendent intimating the appellants that their surrender application would not be accepted and registration would not be considered as cancelled at 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 u....
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....t concluded. As such, the Court observed that they cannot take a different view from the view taken by a co-ordinate bench and the questions are required to be decided by the Larger Bench of the court. As such, the matter stands referred to the Larger Bench. 23. Inasmuch as I have observed that the matter needs to be remanded to the original adjudicating authority for decision on limitation as also on merits, the adjudicating authority is expected to take into consideration the entire development on the said legal issue by way of various decisions of the Tribunal as also the fact that the matter stands referred to Larger Bench and it would be in the interest of justice that the Larger Bench of the Bombay High Court decision in the above referred case may be awaited till the final decision is taken. 24. In view of my forgoing discussion, I deem it fit to set aside the impugned order and remand the matter to the adjudicating authority for fresh decision on limitation as also on merits, in the light of the observations made as above, instead of rejecting the appeal on both the issues. (Pronounced and dictated in Court) (Archana Wadhwa) Member (Judicial) &....
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.... 27. Appellant intended to shut down their manufacturing operations in pursuance of which intimation was furnished to the jurisdictional central excise authority on 22nd December 1999 along with balances, aggregating Rs. 1,52,60,692, in account current and duty credit account maintained by them. Having been intimated that de-registering could be taken up only upon outcome of proceedings pending for recovery of duties, the application for refund preferred on 9th November 2006, on conclusion thereof, was, nevertheless, disallowed by the competent sanctioning authority for not having been sought within the period from the 'relevant date' stipulated in section 11B of Central Excise Act, 1944. On challenge mounted by the claimant against the rejection, the first appellate authority reiterated the disallowance as ineligible on merit too even as he concurred with the original authority that claim failed to overcome the bar of limitation at the threshold of the process. That the impugned order has decided on limitation and, despite absence of finding thereon in the order of the original authority, on eligibility is not a point of divergence. Likewise, of the two strands of refund, ....
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.... thereon being without fault, the appeal should be dismissed. 30. Considering that the reference to be answered is on the appropriateness of remand, and the Tribunal having decided on the scope of such option, in Commissioner of Central Excise, Meerut-II v.Honda Siel Power Products Ltd [2013 (287) ELT 353 (Tri-Del)], thus '10. Otherwise also Section 35A(3) of the Act as amended confers powers on the Commissioner (Appeals) to annul the order-in-original and also to pass just and proper order. There may be circumstances where only just and proper order could be remand of the matter for fresh adjudication. For example, if the order-in-original is passed without giving opportunity of being heard to the assessee or without permitting him to adduce evidence in support of his case then only order-in-appeal by the Commissioner (Appeals) could be to set aside the impugned order on the ground of failure of justice. This would create an anomaly and cause prejudice to the Revenue as it would bring an end to the litigation without adjudicating on the demand raised by the show cause notice. Therefore, only just and proper order in such a case would be the order of remand to adj....
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....ing power vested in the Central Government with intent to give effect to levy on the 'taxable event' by bridging section 3 of Central Excise Act, 1944 and section 4 of Central Excise Act, 1944, drawing authority from the power conferred on the Central Government to prescribe the manner of payment of duty, and inherently assuring distinguishment of the final consumer from the intermediate manufacturer for eligibility of credit. The balance in the account, thus, either represented unutilised inputs or signified inefficiencies of production or is attributable to transactions beyond the 'value added chain' and none of these, by equity or by law, legitimize monetisation. Whether this conceptual image of the scheme may have had the effect of affording clarity on application of the judicial decisions referred to in the opinions of Division Bench is a matter of conjecture. Third, refund of accumulated credit has had a controversial backdrop with some decisions of the Tribunal, drawing upon the judgement of the Hon'ble High Court of Karnataka in Union of India v. Slovak Trading Company [2006 (201) ELT 559 (Kar)], allowing disbursement while others, holding otherwise, prompted references to ....
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....or short-paid or erroneously refunded shall be passed unless the appellant is given notice within the time- limit specified in section 11A to show cause against the proposed order. xxxx of Central Excise Act, 1944 that the jurisdictional competence of the first appellate authority to decide on eligibility for refund is to be located. That a taxing statute must encompass both the power to recover undischarged duty liability and an appellate mechanism for judicial redressal is axiomatic. The routine jurisdiction for collection of tax stems from cognizance of the 'taxable event' within the territorial limit over which the tax collector has exclusive authority. Adjudicatory jurisdiction is pressed into service by the tax collector, as 'cadet branch' so to speak, for recovering undischarged liability in quasi-judicial proceedings that cannot encroach beyond the framework of show cause notice requiring the assessee to respond to allegation of short-payment or non-payment of duties. In Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd [2007 (215) ELT 489 (SC)], with the finding that '21.......... However, it is made clear that Rule 7 of the Valuation Rules,....
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....tions by a party, against whom an appeal has been preferred, notwithstanding that he has not himself appealed against the decision or any part thereof and such cross-objections are to be disposed of by Appellate Tribunal as if it were an appeal. Then comes sub-section (4) which enumerates the various powers conferred upon the Appellate Tribunal while disposing of such appeals (including cross-objections) and the power conferred upon the Appellate Tribunal under section 4(a)(i) is "to confirm, reduce, enhance or annul the assessment"; the power to enhance the assessment must be appropriately read as relatable to an appeal or cross-objections filed by the Department. The normal rule that a party not appealing from a decision must be deemed to be satisfied with the decision, must be taken to have acquiesced therein and be bound by it. and, therefore, cannot seek relief against a rival party in an appeal preferred by the latter, has not been deviated from in sub-section (4)(a)(i) above. In other words, in the absence of an appeal or cross-objections by the Department against the Appellate Assistant Commissioner's order the Appellate Tribunal will have no jurisdiction or power to en....
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....y, the department has not filed any appeal against the Order-in-Original No. 48 of 2011, dated 29-9- 2011, by which, the original authority, has recorded a categorical finding that, "mere documentary evidence of 36 loose slips found in the security room is not enough to prove clandestine removal of raw materials from Unit-I to Unit-II." The original authority has also held that the allegation of clandestine removal is also not substantiated. xxxxxx 19. Though show cause notices have been issued by the original authority, for the shortage of raw materials noticed, which includes, allegation of clandestine removal of raw materials, the finding of the original authority against the revenue, on the latter, is clear. When the department has not chosen to challenge the finding of the original authority, on the allegation of clandestine removal of raw materials nor filed any cross-objection to the appeal filed by the assessee, we are of the view that the finding rendered, by the original authority, in favour of the assessee, has reached finality. 20. In such circumstances, there cannot be any order, by the appellate authority, adversely affecting the inter....
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....id judgment, the Hon'ble Division Bench has observed as under:- "25. In the absence of any appeal filed by the department on the finding, relating to alleged clandestine removal of raw materials, the appellant cannot be put in a worse position, in their own appeal, and in such circumstances, the principle of "no reformation in peius" would come into play, which means that a person should not be placed in a worse position, as a result of filing an appeal. It is a latin phrase, expressing the principle of procedure, according to which, using the remedy at law, should not aggravate the situation of the one who exercises it." 35. The conspectus of these judicial exposition is that, besides limiting the recovery process in its entirety to the show cause notice, the appellate process, triggered by grievance against orders emanating from the lower tier in the adjudicatory/appellate hierarchy, is even further limited to the grievance that is sought to redressed. Thus, it may be essayed that appellate jurisdiction is that which is conferred by the appellant as elaborated by the Hon'ble High Court of Madras in Rajaram Johra v. Commissioner of Customs, Chennai [2019 (365) EL....
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....rson should not be placed in a worse position, as a result of filing an appeal. It is a Latin maxim expressing the principle of procedure, according to which, using the remedy at law, should not aggravate the situation of the one who exercises it. 12. As pointed out earlier, the power of the appellate Tribunal is exercisable under Section 129B(1) only against the decision or order appealed against and in doing so, it may pass such orders as it thinks fit affirming, modifying and annulling the decision or order appealed against. Admittedly, the Department did not file an appeal against the order of the Commissioner (Appeals) permitting the redemption of the seized gold. In such circumstances, the Revenue should not be said to be aggrieved by such a direction granting redemption and the Tribunal clearly erred in dismissing the appellant's appeal and restoring the order passed by the original authority.' 36. Despite the contrary opinions emanating from the Division Bench on the determination of eligibility, the difference is solely on the contents of the order impugned before the first appellate authority - with Hon'ble Member (Judicial) acknowledging only ....