Rejection of CENVAT Credit Claim not justified as ground is premature u/s 11B of Central Excise Act: CESTAT remands matter for Re-adjudication [Read Order]

The Mumbai bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT) held that the rejection of the refund claim was not justified as the ground of rejection was premature as per Section 11B of the Central Excise Act 1944 and remanded the matter for fresh adjudication in the appeal by Global Wool Alliance Pvt Ltd (The Appellant) against the Commissioner of Central Excise (CCE) (The Respondent).

The appellant was a manufacturer of articles of wool and polyester and had been availing CENVAT credit of duty paid on several inputs deployed in production, and had been clearing export goods on payment of duty under rebate procedure while availing the benefit of exemption as per notification no. 30/2004-CE for local clearances.

The appeal was filed against some orders issued by the CCE demanding duty and rejection of application for refund. The duty demanded was Rs. 42,81,112 and 32,32,131 for 2005 and Rs. 22,07,315 for September 2008 to February 2009. The refund was applied for Rs. 1,19,37,987 remitted as a ‘deposit’ for July 2004 to February 2009 during the pendency of the dispute.

The counsel who appeared on behalf of the appellant contended that the dispute had come before the Tribunal in Global Wool Alliance Pvt Ltd and others v. Commissioner of Central Excise and the matter was remanded. The counsel also submitted that the factual report dated 4th July 2014 about the lack of facility as claimed, rendered the appellant eligible for benefit of notification, as held High Court of Bombay in Raymond Limited v. Union of India (2009). The counsel further submitted that the unquestionable eligibility, upon incorporation in notification no. 30/2004-CE by notification dated 12/2009-CE arising from the decision of the High Court of Bombay, was clarificatory and, hence, retrospectively applicable

The counsel who appeared on behalf of the revenue disputed the applicability of the decision of the High Court of Bombay in Raymond Ltd with the submission that the appellant did have the facility for manufacturing of ‘staple fiber’ and, therefore, ineligible. The claim that ‘tow’ was also ‘staple fiber’ was countered with the submission that ‘tow’ finds fitment within heading 5501 of the Schedule to Central Excise Tariff Act, 1985 while ‘staple fiber’ is described elsewhere and also by reliance on note 1 of chapter 55 in Schedule to Central Excise Tariff Act, 1985. The counsel further submitted that the record of investigation had clearly adduced the existence of a facility for the manufacture of ‘staple fiber’ in their factory.

The two-member bench consisting of Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) after hearing both sides held that “We find that the factual aspects of eligibility – both by reversal of CENVAT credit as well as the existence of facility for the manufacture of ‘staple fiber’ in the light of decisions of the Tribunal – have not been examined by the lower authorities. With the claim for refund restored to the original authority and with these two aspects having to be examined afresh, the issues would have to go back for re-adjudication. Accordingly, the impugned order is set aside and all the disputes restored to the original authority for a fresh determination “and the appeal was remanded

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