Amul Crank Case (P) LTD Through Its Authorized Signatory Dharmendra Kumar Das vs. The Commissioner Of Central Excise And Service Tax

Held

The Court held that the respondent-Department's failure to refund the amount reversed by the petitioner under protest, despite the CESTAT setting aside the Order-in-Original, was unjust enrichment, arbitrary, and without jurisdiction. The Court found it inexplicable why the refund application was not entertained even after the Tribunal's order. It was established law that the mere filing of an appeal before a higher authority does not absolve a party from obeying an existing order. The Court noted that the department had issued a show cause notice for refund rejection but failed to adjudicate it, instead delaying the refund by merely stating that an appeal had been filed before the High Court. The Court directed the respondent-Department to refund the amount of Rs. 2,57,38,894.67 along with interest, as a consequence of the Tribunal's order dated April 8, 2022. This entire exercise was to be completed within six weeks, failing which the petitioner would be entitled to a cost of Rs. 50,000/- from the responsible respondent.

Facts

The petitioner, Amul Crank Case (P) Ltd., engaged in manufacturing excisable goods on a job work basis for Tata Motors Ltd., had an investigation conducted by the respondent-Department. The department believed the petitioner was only carrying out job work and not eligible for credit. Consequently, the petitioner reversed an amount of Rs. 2,57,38,894.67 under protest on September 11, 2008. A show cause notice was issued, and an Order-in-Original dated March 16, 2010, by the Commissioner of Central Excise and Service Tax, Jamshedpur, confirmed the demand of Rs. 2,57,38,894.67 and appropriated the reversed amount, also imposing a penalty. The petitioner appealed to the CESTAT, which set aside the Commissioner's order and allowed the appeal on April 8, 2022, entitling the petitioner to the reversed amount. The petitioner then applied for a refund, but the department issued a show cause notice on August 11, 2022, proposing rejection of the refund.

Key Issues

1. Whether the respondent-Department can illegally withhold the refundable amount of Rs. 2,57,38,894.67 consequent upon the Order dated 08.04.2022 passed by the Hon'ble Tribunal, despite the petitioner having reversed the said amount under protest and the Tribunal setting aside the Order-in-Original. (Mixed question of law and fact, concerning the implementation of Tribunal orders and refund principles). Petitioner's Arguments: The petitioner argued that the refund application was filed after the Order-in-Original was set aside by the Tribunal. They contended that the proposal for rejection of the refund was arbitrary, as the credit was reversed under protest at the department's instance, and they merely sought restoration of the position post-Tribunal's order. They further argued that in the absence of any stay order, the implementation of the Tribunal's order by way of refund could not be delayed. Revenue's Arguments: The judgment does not record any specific arguments made by the respondent-Department in opposition to the petitioner's claims or in support of their show cause notice for rejecting the refund. The judgment notes that the department had filed an appeal before the High Court challenging the Tribunal's order.