P.G. Chacko, Member (T) - (1.)THE appellants are engaged in the manufacture and export of "cotton fabrics" and "made -ups". In May, 2003, they had an accumulated credit of duty of Rs. 42,838/ - in their CENVAT account, which they could not utilise on account of the fact that they were exporting their product. They filed a refund claim for the above amount under Rule 5 of the CENVAT Credit Rules, 2002 on 16.05.2004. The Department, by a show -cause notice dated 03.08.2004, proposed to reject the claim, alleging that the claimant had not executed necessary bond for export of the textile made -ups and, further, noting that they had not filed the "calculation" for the 'inputs' contained in the exported goods. The party contested the above proposal, in a letter dated 31.08.2004, wherein, inter alia, the formula for consumption of yarn in the manufacture of the export goods was also given. The original authority took the cue from the pleadings contained in the second para of the assessee's reply and proceeded to reject their refund claim on the ground that they had neither exported goods in accordance with the procedure laid down in the Central Excise Rules, 2002 nor claimed rebate as per the provisions of Notification No. 41/01 -CE(NT) dated 26.06.2001 (as amended). The order of adjudication was taken in appeal to the Commissioner (Appeals) and the latter affirmed the same. Hence the present appeal.
(2.)LD . Counsel for the appellants submits that the refund claim has been rejected on a ground extraneous to the show -cause notice. Ld. JCDR reiterates the findings of the lower appellate authority. After considering their submissions, I find that both the lower authorities chose to dwell at length on irrelevant pleadings made by the party. The second para of the party's reply to the show -cause notice reads as under: We have manufactured and exported textile made ups (cotton bags) and claimed rebate of the duties paid on raw materials used in the manufacture of export goods, in terms of Rule 18 of the Central Excise Rules, 2002 read with Notification No. 41/2001 dated 26.06.2001, issued thereunder. We have purchased the raw materials required for the manufacture of export goods, on payment of duty and availed Cenvat Credit thereof. As we were not in a position to utilize the Cenvat credit availed thereon, due to the exports, we have claimed refund of the Cenvat Credit, in terms of Rule 5 of the Cenvat Credit Rules, 2002. The party's statement that they had manufactured and exported "cotton bags" and claimed rebate of the duties paid on raw materials used in such manufacture in terms of Rule 18 of the Central Excise Rules, 2002 read with Notification No. 41/01 ibid was seriously taken note of and, on that basis, the refund claim was rejected, despite the fact that it had also been pleaded by the party that they were claiming the refund under Rule 5 of the CENVAT Credit Rules, 2002 as they were not in a position to utilise the Cenvat credit. I have seen the refund application and have found it as one filed under Rule 5 of the CENVAT Credit Rules, 2002. The claim requires to be treated as such and to be disposed of in accordance with law. For this purpose, I set aside the orders passed by both the lower authorities and remand the matter to the original authority, with a direction to pass a fresh speaking order on the refund claim treating the same as one filed under Rule 5 of the CENVAT Credit Rules, 2002. It is clarified that any averment contained in the party's reply to the show -cause notice, having nothing to do with the allegations in the notice, be treated as irrelevant and that de novo adjudication be made with reference to the allegations in the show -cause notice and the reply thereto. It also goes without saying that the parties should be given a reasonable opportunity of being heard. (Dictated and pronounced in open Court)