2025 (7) TMI 563 - AT - Service Tax

Refund of CENVAT Credit - accumulation of unutilized cenvat credit - Rule 5 of Cenvat Credit Rules 2004 read with N/N. 27/2012-CE (NT) dated 18.06.2012 - HELD THAT - It is pertinent to note that the issue on merits has already been decided by this Tribunal in favour of the appellant and the same has attained finality as no information regarding challenge to the said order has been brought to notice. Show Cause Notice in issue has been issued in the year 2016 for recovery of cenvat credit refunded to the appellant which has already been settled by the Tribunal. In view of the fact that the learned Commissioner has rejected the appeal of the appellant without going into the merits coupled with the recent development i.e. order dated 6.9.2024 of this Tribunal and also in view of settled legal position that substantial justice cannot be sacrificed due to procedural irregularities it is deemed proper to remand the matter back to the Commissioner (Appeals) to decide the appeal afresh after taking into consideration the facts stated hereinabove and also after affording proper opportunity of hearing to the appellant. The appellant is directed to produce all supporting documents/evidence in its favour alongwith proper authorization before the learned Commissioner (Appeals). The impugned order is set aside and the appeal is allowed by way of remand to the Commissioner (Appeals).

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the appeal filed by the appellant against the Order-in-Appeal dated 09.01.2024, which was rejected on procedural grounds without considering the merits, deserves an early hearing and disposal.

- Whether the rejection of the appeal by the Commissioner (Appeals) on the ground of non-filing of a valid Board Resolution authorizing the signatory is sustainable in light of the settled merits of the case by this Tribunal.

- Whether the recovery of refund amount of Rs.38,30,224/- for the period April to June 2013 along with interest and penalty, as proposed by the department through show cause notice, is justified given the Tribunal's prior decision allowing the refund claim.

- Whether procedural irregularities such as failure to file proper authorization can justify denial of substantive justice when the merits of the case have already been adjudicated in favor of the appellant.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Early Hearing and Disposal of Appeal

Relevant Legal Framework and Precedents: The Tribunal has discretionary power to allow early hearing of appeals where issues are interconnected with other pending or decided appeals and where delay may cause prejudice. The principle of judicial expediency supports early disposal to avoid multiplicity of litigation.

Court's Interpretation and Reasoning: The Tribunal noted that the issue in the instant appeal is directly connected with the appellant's earlier Service Tax Appeals Nos. 85128 & 85129 of 2017, which were decided in favor of the appellant by the Tribunal on 6.9.2024 allowing availment of cenvat credit. Since the impugned show cause notice is an offshoot of the earlier Order-in-Appeal, the Tribunal found it appropriate to allow early hearing and take up the appeal for disposal with consent of both parties.

Application of Law to Facts: The Tribunal exercised its discretion in favor of early hearing, recognizing the direct bearing of the earlier decision on the present appeal and the need to avoid conflicting outcomes.

Issue 2: Merits of the Refund Claim and Recovery Notice

Relevant Legal Framework and Precedents: Under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE (NT), refund of accumulated unutilized cenvat credit is permissible. The adjudicating authorities initially sanctioned the refund claim for April-June 2013 and subsequent periods, but the Commissioner (Appeals) set aside these orders on departmental appeals. The Tribunal later allowed the appellant's appeals, affirming the refund entitlement.

Court's Interpretation and Reasoning: The Tribunal emphasized that the merits of the refund claim have already been conclusively decided in favor of the appellant by the Tribunal's final order dated 6.9.2024. The show cause notice for recovery of the refunded amount was issued post the refund orders but prior to the Tribunal's final decision. The appellant was in the process of filing appeals against the Commissioner (Appeals) orders when recovery proceedings were initiated.

Key Evidence and Findings: The refund orders sanctioned by the lower authorities, the Commissioner (Appeals) orders setting aside those refunds, and the Tribunal's final orders allowing the appeals and confirming the refund entitlement.

Application of Law to Facts: The Tribunal found that the recovery notice was premature and conflicted with the Tribunal's settled position on the refund claim. The appellant had received the refund amounts based on initial orders but was subsequently subjected to recovery proceedings despite ongoing appeals and eventual favorable Tribunal ruling.

Issue 3: Procedural Lapse - Non-filing of Valid Board Resolution

Relevant Legal Framework and Precedents: Procedural requirements such as filing of valid authorization or Board Resolution are mandated to ensure proper representation and compliance. However, settled legal principles dictate that procedural irregularities should not override substantive justice.

Court's Interpretation and Reasoning: The Commissioner (Appeals) rejected the appellant's appeal solely on the ground of failure to file a valid Board Resolution authorizing the signatory, without examining the merits. The Tribunal held that such procedural lapses cannot justify denial of justice when the substantive issue has been conclusively decided. The Tribunal referred to the principle that "substantial justice cannot be sacrificed due to procedural irregularities."

Treatment of Competing Arguments: While the Revenue relied on procedural non-compliance to reject the appeal, the Tribunal prioritized the settled merits and the appellant's right to be heard.

Application of Law to Facts: The Tribunal remanded the matter back to the Commissioner (Appeals) for fresh adjudication on merits after affording proper opportunity of hearing and allowing the appellant to produce all relevant documents, including proper authorization.

3. SIGNIFICANT HOLDINGS

- "In view of the fact that the learned Commissioner has rejected the appeal of the appellant without going into the merits coupled with the recent development i.e. order dated 6.9.2024 of this Tribunal (supra) and also in view of settled legal position that substantial justice cannot be sacrificed due to procedural irregularities, I deem it proper to remand the matter back to the Commissioner (Appeals) to decide the appeal afresh after taking into consideration the facts stated hereinabove and also after affording proper opportunity of hearing to the appellant."

- The Tribunal established the core principle that procedural lapses, such as failure to file valid authorization, cannot be a ground to reject appeals outright when the substantive issues have been adjudicated in favor of the appellant and when doing so would defeat substantial justice.

- The Tribunal emphasized the importance of consistency and finality in adjudication by linking the instant appeal with the earlier appeals decided in favor of the appellant, thereby avoiding contradictory outcomes.

- The appeal rejected on procedural grounds was set aside, and the matter was remanded for fresh consideration on merits, ensuring due process and adherence to principles of natural justice.