Kandarp Dilipbhai Dholakia vs Union of India

Mukesh R. Shah, J.—Rule. Ms. V.D. Nanavati, learned advocate waives service of notice of Rule on behalf of respondents. In the facts and circumstances of the case and for the reasons stated hereinafter, the matter is required to be remanded to the First Authority, present Special Civil Application is taken up for final hearing with the consent of the learned advocates for the respective parties. Feeling aggrieved and dissatisfied with the impugned order passed by the Respondent No. 2 - Union of India - Revisional Authority in dismissing the revision application preferred by the petitioners-assessee and confirming the Order-in-Original passed by the Assistant Commissioner, Central Excise, Division IV, Ahmedabad-II rejecting the refund claim of Rs. 4,30,762/- filed by the petitioners, which was further confirmed by the learned Commissioner (Appeals), petitioners have preferred present Special Civil Application.

Shri Trivedi, learned advocate for the petitioners has vehemently submitted that as such the order passed by all the authorities below rejecting the refund claim filed by the petitioners is absolutely on misinterpretation of Section 11B(2)(a) r/w Rule 18 of the Central Excise Rules, 2002. It is submitted that as such the petitioners claimed the rebate of the duty paid on inputs/materials used in the manufacturing or processing of the final product. It is submitted that all the authorities below have rejected the claim on the ground that final product is not excisable goods. It is submitted that apart from the above even all the authorities below, more particularly, Order-in-Original has been passed by the Assistant Commissioner, which is beyond the scope of show cause notice. It is submitted that the refund claim has been rejected by all the authorities below on the ground that procedure for rebate of duty paid on materials required to be followed under Rule 8 of the Central Excise Rules, 2002 r/w Notification No. 21/2004-C.E. , dated 6-9-2004 has not been followed by the petitioners. It is submitted that at the time when the original authority issued the show cause notice directing the petitioners to show cause as to why its rebate/refund claim may not be rejected, the same was not on the ground that the petitioners have not followed the procedure as specified in the aforesaid notification. It is submitted that therefore, Order-in-Original passed by the Assistant Commissioner confirmed by the learned Commissioner (Appeals), further confirmed by the Revisional Authority is beyond scope of show cause notice. Therefore, it is requested to quash and set aside the impugned orders and either remand the matter to the First Authority to consider the show cause notice afresh in accordance with law and on merits and without in any way being influenced by the earlier Order-in-Original passed by the Commissioner (Appeals) and the Revisional Authority and after giving an opportunity to the petitioners or to consider same before this Court.

Ms. Nanavati, learned advocate for the respondents has tried to oppose the present Special Civil Application. It is submitted that as such the final product was not excisable under the Central Excise Act and it was subject to excise duty by the State Government and therefore, the petitioners would not be eligible for the refund/rebate claim and therefore, as such all the authorities below have rightly rejected the refund/rebate claim of the petitioners. However, she is not in a position to dispute that one of the ground on which the rebate claim is rejected i.e. not following procedure by the petitioners as provided under the Notification No. 21/2004-C.E.(N.T.), dated 6-9-2004 was not mentioned in the show cause notice. Therefore, she is not in a position to dispute that so far as denial of claim on the aforesaid ground would be beyond show cause notice.

We have heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that when the original authority -Assistant Commissioner issued the show cause notice calling upon the petitioners to show cause as to why its rebate/refund claim may not be rejected. It was sought to be denied on the ground set out in Paras 7 to 9 which reads as under:

"7. Whereas, it appears from the documents submitted along with refund claim that the finished goods viz. Paclitaxel Injection (of different strengths) have been exported by the assessee under the supervision of Prohibition & Excise Department of the State Government. Whereas, it further appears that the said product contained Alcohol and is therefore, not excisable under Central Excise Act, 1944 read with Central Excise Tariff, 1985 in view of Chapter Note 5 to Chapter 30 of Central Excise Tariff and therefore, not covered under its ambit.

8(i) Whereas, the said assessee have filed the said refund claim as per the provisions of Section 11B(2)(a) of the Central Excise Act, 1944 which is reproduced as under:

(2) If on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund.

Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of the sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to-

(a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India.

8(ii). From the above, it appears that the Section 11B(2)(a) of the Central Excise Act, 1944 provides that if the refund filed under Section 11B(1) is related to rebate of duty of excise on excisable goods exported out of India or on excisable material used in the manufacture of goods which are exported out of India, then the amount of refund would not be credited to Consumer Welfare Fund but would be paid to the applicant. The provision of Section 11B(2)(a) do not provide filing of the refund claim. Hence, there is no provision under the said Section 11B(2)(a) for the filing of any refund claim. Therefore, the said refund claim by the assessee under Section 11B(2)(a) is not sustainable and liable for rejection.

It also appears that there is no provision under Central Excise Act, 1944 to allow refund/rebate for the duty paid on the inputs used in the manufacture of non-excisable goods exported. Hence, the refund claim of Rs. 4,30,762/- for the duty paid on goods used in non-excisable goods viz. Pacilitaxel Injection (as it contained alcohol and not under the ambit of Central Excise Act) is not admissible and liable for rejection."

4.1 However, from the impugned orders, it appears that so far as rebate/refund claim of the petitioners on the inputs/used excisable goods used in manufacturing of the final product is denied also on the ground that petitioners have not followed the procedure while claiming rebate/refund under Rule 8, which is required to be followed under Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004. However, on that ground, show cause notice was not issued and the rebate claim was not sought to be denied. Under the circumstances, to the aforesaid extent, the impugned orders are beyond the show cause notice. Under the circumstances, we are of the opinion that impugned orders deserve to be quashed and set aside and the matter is required to be remanded to the First Authority to consider the same in accordance with law and on merits.

In view of the above and for the reasons stated above and on the aforesaid ground alone and without further expressing anything on merits in favour of either parties and as it is found that the impugned orders are beyond the scope of show cause notice to the extent stated herein above, impugned orders passed by the respective authorities denying/rejecting the refund/rebate claim to the petitioners are hereby quashed and set aside and the matter is remanded to the original authority - Assistant Commissioner, Central Excise, Division IV, Ahmedabad-II to decide the refund claim of the petitioners afresh in accordance with law and on merits. It will be open for the adjudicating authority to issue fresh show cause notice contending aforesaid ground also and same may be considered in accordance with law and on merits and after giving an opportunity to the petitioners on the aforesaid. It is made clear that we have not expressed anything on merits in favour of either of the parties and adjudicating authority to pass appropriate order afresh in accordance with law and on merits and after giving an opportunity to the petitioners and without in any way being influenced by any of the earlier order passed by the original authority, Commissioner (Appeals) and the Revisional Authority. The aforesaid exercise shall be completed Within a period of six months from today. Rule is made absolute to the aforesaid extent.