In a recent ruling, the Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the excise refund cannot be recovered when the department has not challenged the excise refund order.
In this case, during the scrutiny of ER-1 Returns, it was discovered by the department that the appellant had availed self-credit of the duty paid by them and was of the view that the appellant had not taken into account the discount paid at the end of the financial year while the assessee paid the duty.
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A show cause notice ( SCN ) was issued to the department that proposed to recover the said amount on the grounds that they had availed of an excess refund. The demand was confirmed along with interest and penalty against the appellant by the adjudicating authority, and the same was upheld by the Commissioner (Appeals).
It was contended by the counsel on behalf of the assessee that the appellant had availed the refund of duty paid by them and had not claimed anything in excess of an amount actually paid by them in cash. It was submitted that the self-credit has been claimed for what has been paid by them.
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It was further submitted by the counsel on behalf of the assessee that in the case of Shilong Vs Jellalpur Tea Estate- 2011 (268) ELT 14 (Gau), the Gujarat High Court had held that in the absence of the department to challenge the refund sanction order, the refund cannot be rejected.
The CESTAT, comprising of Mr. S.S Garg ( Judicial Member ) allowed the appeal filed by the assessee and held that as the refund sanctioned order is not challenged by the department, then the same cannot be recovered by way of issuance of SCN.
The assessee was represented by Mr. Vikrant Kackaria and the appellant by Mr. Raman Mittal.
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