2007 (1) TMI 454 - AT - Central Excise

Summary

Issues:
The case involves the irregular availment of Modvat credit, rejection of refund claim as time-barred, and the applicability of Section 11B of the Central Excise Act, 1944.

Irregular Availment of Modvat Credit:
The appellants were engaged in the manufacture of V.P. Sugar and molasses and had been availing Modvat facility of duty paid on inputs and capital goods. A show cause notice was issued alleging irregular availment of Modvat credit, which the appellants contested by filing a reply. The case was decided in favor of the appellants by Order-in-Appeal. The appellants filed a refund claim in respect of consequential benefit arising from the Order-in-Appeal. The adjudicating authority rejected the refund claim as time-barred, a decision upheld by the Commissioner (Appeals).

Applicability of Section 11B - Time Limit for Refund:
The advocate for the appellants argued that since the appellants contested the demand of duty by filing a reply to the show cause notice, it should be deemed to be under protest. He contended that the limitation under Section 11B of the Central Excise Act is not applicable as the refund claim was filed after the Order-in-Appeal. The Departmental Representative, however, supported the findings of the Commissioner (Appeals), stating that the limitation under Section 11B applies as the duty was not paid under protest or deposited in pursuance of an order.

Tribunal Decision and Conclusion:
After hearing both sides, the Tribunal found that the duty was contested by the appellants in the show cause notice and was deposited as per the Range Superintendent's direction. The Tribunal held that the amount deposited immediately after the issue of the show cause notice and before the adjudication order must be treated as a deposit, with no time limit for claiming a refund. Citing a relevant Tribunal decision, the Tribunal concluded that the time limit under Section 11B does not apply when the duty is paid under protest while contesting an issue. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.