By TIOL News Service

MUMBAI, OCT 23, 2017: A Refund claim filed by the appellant was rejected by the original authority. The Commissioner (Appeals) set aside the order and remanded the matter for fresh consideration. The Commissioner(A) directed the Appellant to make available ticket books for verification of the Department.

Revenue challenged this order of remand.

The CESTAT observed, that at the material time,the Commissioner (Appeals) had no power to pass an order of remand. Secondly, it was found that the refund claim was rejected by the Adjudicating Authority on the ground that the Appellant had not produced relevant records.

The CESTAT remanded the matter to the original authority and in paragraph 7 also observed that the Appellant was not entitled to any interest on the amount of refund in the event the refund claim was allowed. This, the CESTAT observed,was because the refund claim was rejected as relevant records were not produced by the Appellant.

The appellant is before the High Court with the following substantial question of law –

"Whether after passing an order of remand to the Adjudicating Authority for deciding afresh the refund claim of the Appellant, CESTAT could have concluded the issue of entitlement of interest on the refund claim?"

The High Court observed -

"7. Once it is an admitted position that it is only the Adjudicating Authority which has jurisdiction to decide whether interest on refund claim should be granted, there was no reason for the CESTAT to have decided the issue of entitlement of the Appellant to claim interest on the refund claim. In fact, the adjudication on the question, whether the Appellant is entitled to refund is not yet made. In the event, the Adjudicating Authority is inclined to grant refund, the fact that at the relevant time necessary documents were not produced by the Appellant, is only a factor to be considered for consideration of the question of grant of interest. However, this factor may not be conclusive."

Concluding that the finding recorded in paragraph 7 of its order is completely erroneous, the Tribunal order was set aside and the matter as to whether the appellant was entitled for interest on the refund claim was kept open to be decided by the adjudicating authority.

The appeal was partly allowed.

(See 2017-TIOL-2197-HC-MUM-CX)