By TIOL News Service

MUMBAI, AUG 28, 2015: THE appellant is a 100% EOU and exempt from payment of duty in terms of Notification No. 24/2003-CE dated 31.03.2003. The appellant cleared goods under ARE-1 on payment of duty by debit in their Cenvat Credit account i.e. RG 23A Pt-II.

Subsequently, they filed a refund claim. The jurisdictional authorities observed that the payment of duty was without authority of law and the payment made would not constitute duty and, therefore, refund claim was liable for rejection as the provision of Rule 5 of CCR, 2004 grants refund in respect of unutilized accumulated balance of Cenvat Credit.

The rejection of the refund claim was upheld by the Commissioner(A) and, therefore, the appellant is before the CESTAT.

It is submitted that both the lower authorities had misunderstood the case. Inasmuch as being a 100% export oriented unit they were not required to discharge Excise duty on the goods cleared for export(a position which is accepted and admitted by both sides) and having debited the amount in Cenvat account they should have been at least allowed to take re-credit of the amount paid by them.

The AR mentioned that the order of the lower authorities was proper and legal.

The Bench observed -

"6. It is undisputed that appellant is an export oriented unit not required to discharge any Excise duty on the goods exported by them. It is also undisputed that appellant had debited the Cenvat account for discharge of duty liability on the goods cleared for export. The refund claim filed by the appellant was also rejected on the same grounds; the findings are not contested by both sides. If it is so, the revenue authorities holding that the amount debited by the appellant on goods cleared for export is without any authority of law. Natural corollary would be the amount should be returned back to appellant, as revenue authorities can collect tax/duty only by authority of law. In the case in hand, from the records, it transpires that appellant though having filed refund claim, subsequently withdrew the same, with a request to lower authorities, seeking permission to recredit the amount in their Cenvat account; this legitimate request of the appellant is also dismissed by the lower authorities. In my view, the lower authorities have erred in passing the order of rejecting the request of re-credit of the amount paid by the appellant and not due to the government. To me, the impugned order is not in consonance with the law settled by the higher judicial forums, holding that duty collected without authority of law cannot be retained by the government."

The order was set aside and the appellant was permitted to avail the credit of the amount erroneously debited in their Cenvat account only.

(See 2015-TIOL-1814-CESTAT-MUM)