2014 (11) TMI 994 - AT - Service Tax

Denial of refund claim - Bar of limitation - Held that - Action of the Respondent by contesting the issue on merits itself constitutes a case of deemed protest and no time limit will be applicable even as per the second proviso to Section 11B of the Central Excise Act, 1944. However, the amounts were not paid as duty at the time of providing of services but was paid only when the investigation was initiated by the Revenue. In the facts and circumstances the amounts paid will be a case of Deposit and will not be a situation of payment of duty when on merits Respondent got a favourable order from the appellate channel. The amount so paid was not recovered on the invoices and department has also not rejected the refund claim on unjust-enrichment. Accordingly, it is held that amounts paid by the Respondent was a Deposit and not payment of duty when on merits the case was decided in favour of the Respondent. - Decided against Revenue.

Summary

Issues:
1. Whether the refund claimed is time-barred as per Section 11B of the Central Excise Act, 1944?
2. Whether the amounts paid during the investigation constitute a deposit or payment of duty?
3. Whether the provisions of refund under Section 11B of the Central Excise Act, 1944 are applicable in the present case?

Analysis:
1. The appeal was filed by the Revenue against the order allowing the refund claim by the first appellate authority. The Revenue argued that the refund claim filed after one year from the date of CESTAT's order should be considered time-barred under Section 11B. However, the Respondent contended that the amounts paid were deposits and not payment of duty, thus not subject to Section 11B. The first appellate authority's decision was based on this distinction.

2. The case records revealed that the amounts were paid during the investigation and were considered sufficient for the deposit requirement under Section 35F by CESTAT. The Respondent won the case on merits and sought a refund. The Tribunal observed that the amounts were not paid as duty but as a deposit, especially since the investigation initiated the payment. The Respondent's contesting of the issue on merits constituted a 'deemed protest,' exempting it from time limitations under the second proviso to Section 11B.

3. The Tribunal relied on the precedent set by CESTAT, Bangalore, in a similar case, where it was held that Section 11B does not apply to refunds of deposits. The case cited Supreme Court judgments emphasizing the obligation of public bodies to refund erroneous levies without time limitations. Several other case laws were also referenced to support the position that time limits under Section 11B do not apply to refunds of pre-deposits made under Section 35F.

In conclusion, the Tribunal rejected the Revenue's appeal based on the established legal principles and the distinction between deposits and duty payments. The decision was in favor of the Respondent, emphasizing that the amounts paid were deposits and not payments of duty, thus not subject to the time limitations under Section 11B.