2009 (10) TMI 655 - AT - Central Excise

Refund of unutilised Modvat credit due to export of entire production by 100% EOU - time limitation - Held that - the strict law of limitation provided in Section 11B of the Central Excise Act would not apply to the claim of refund claimed pursuant to notification issued under Rule 57F. It is in our opinion procedural in nature rather than mandatory - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for duty paid on inputs for the period November, 2006 to July, 2007 rejected on the ground of limitation.

Analysis:
The appellant, a 100% EOU engaged in confectionary manufacturing, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 for duty paid on inputs from November, 2006 to July, 2007 due to exporting the entire production and being unable to utilize the credit. The original adjudicating authority allowed a partial refund, which was challenged by the Revenue on the basis of limitation. The Commissioner (Appeals) rejected the refund claim, leading to the appeal. The appellant's representative argued that the claim falls under Clause 6 of the notification issued under Rule 5, similar to the notification under erstwhile Rule 57F, citing favorable decisions by the High Courts of Gujarat and Madhya Pradesh. The learned SDR failed to present any contrary decisions to challenge the appellant's position.

The Tribunal considered the submissions and noted that the claim was rejected based on not meeting the time limit under Section 11B of the Central Excise Act, 1944. However, it was observed that Clause 6 of the notification under Rule 57F and Rule 5 of Cenvat Credit Rules, 2004 are similar. The Tribunal referred to the High Court of Madhya Pradesh's decision, which stated that the strict law of limitation under Section 11B does not apply to refund claims under the notification issued under Rule 57F, deeming it procedural rather than mandatory. The Tribunal also referenced the High Court of Gujarat's ruling, emphasizing that Section 11B does not apply to claims for refund of unutilized deemed credit, as it is not equivalent to duty paid in certain circumstances.

Ultimately, the Tribunal found that the issue was settled by the decisions of the High Courts of Madhya Pradesh and Gujarat, leading to the allowance of the appeal with consequential benefits to the appellant. The judgment highlighted the inapplicability of Section 11B's time limit to refund claims under specific notifications, emphasizing the procedural nature of such claims and the distinction from duty paid.