The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside the rejection order of the refund claim of sugar cess in the absence of evidence showing the pending order of the Higher Authority.
M/s. Diamond Beverages Private Limited, the appellant being Authorised bottler of Coco Cola purchases sugar from the market on which Sugar cess is charged by the suppliers and the Appellant has claimed the Cenvat credit of the said sugar cess in its ER 1 return for the month of June 2017 i.e. until the onset of the Goods and Services tax indirect tax regime in India.
The appellant had filed a refund application under section 11B of the Central Excise Act, 1944 read with section 142(9)(b) of the Central Goods and Services Tax Act, 2017 for a refund of Cenvat credit of Sugar cess as availed by the Appellant in its revised ER 1 return for the month of June 2017 vide its application dated 17.03.2018 and submitted on 21.03.2018 before the office of the Ld. Assistant Commissioner, CGST & CX, Taratalla II Division, Kolkata South CGST & CX Commissionerate.
The refund was rejected on the only ground that the matter is pending and has not attained finality. The appellant preferred an appeal before the first appellate authority with regard to the OIO which got rejected and upheld the OIO albeit on new grounds which was never an allegation in the SCN issued by the department for rejection of the refund claim.
The appellant has produced records before us to show that the appeal filed by the revenue against the Tribunal’s order dated 07.08.2019 is pending before the Hon’ble High Court at Calcutta in CEXA 9/2020 and there has been no orders passed by the Hon’ble High Court granting stay of operation of the said order of the Tribunal.
The revenue department has not been able to produce any document to show that the order has been stayed by any higher authority. The CESTAT viewed that both the lower authorities were not correct in rejecting the refund claim of the appellant on the ground of pendency of proceedings when no stay has been given by any higher court in the earlier order regarding eligibility of Cenvat credit.
Inlight of the Board Circulars, the two member bench comprising Shri P K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical) viewed that the Appellants are entitled to the refund of sugar cess and that there is no basis to deny the said refund at the present moment by the department.
As per the Instruction issued by the CBIC as regards “Instructions regarding need to follow Judicial discipline in However the binding adjudication proceedings” wherein it was stated that – “2. precedent was not followed which led to litigation before the Hon’ble High Court to which Hon’ble High Court took a serious view. It may be noted that on the subject of consequential refund, where the department has gone in appeal, there already exists a Circular No. 695/11/2003-CX., dated 24-2-2003 [2003 (152) E.L.T. (T42)]. This circular of the Board is binding on all field officers. Had this circular been followed in the case, unnecessary litigation , as well as adverse observation of the Hon’ble High Court, could have been avoided.”
The CESTAT held that “the appellate order to that extent goes beyond the allegations raised in the SCN and cannot be sustained.”
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