2016 (6) TMI 1194 - HC - Central Excise

Refund claim - amount paid as pre-deposit - Time limitation - Held that - the refund claim preferred by the assessee is dated 1-7-1998, which is less than three months after the date of the final order of the CESTAT (21-4-1998) and, further, insofar as the amount sought to be refunded was one that was recognised by the CESTAT as a pre-deposit of duty, the assessee s claim would fall within the ambit of the Board s Circular 275/37/2K-CX. 8A, dated 2-1-2002 - the order of the Tribunal, that is impugned in this appeal, does not need to be interfered with - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Whether the refund claim by the assessee was time-barred under Section 11B of the Central Excise Act.
2. Whether the amount paid by the assessee should be considered as a pre-deposit and thus not subject to the time limitation under Section 11B.

Detailed Analysis:

Issue 1: Time-Barred Refund Claim
The Revenue appealed against the CESTAT order, arguing that the refund claim by the assessee was time-barred as per Section 11B of the Central Excise Act. The duty payment by the assessee was made on 24-3-1987, while the refund claim was filed on 1-7-1998, well beyond the stipulated time frame. The appellant cited the Supreme Court decision in Mafatlal Industries Limited & Ors. v. Union of India & Ors., which emphasized that all refund claims, including those arising from appellate or court orders, must comply with the requirements of Section 11B. The Court noted that the limitation period for filing a refund claim is six months from the relevant date, which is generally the date of payment of duty unless paid under protest.

Issue 2: Pre-Deposit Consideration
The assessee contended that the amount of ?7,50,000 paid on 24-3-1987 should be considered a pre-deposit. This argument was based on the fact that the CESTAT, in its Stay Order dated 23-3-1993, recognized this payment as a pre-deposit pending the appeal's disposal. The assessee argued that the limitation period under Section 11B does not apply to pre-deposits, supported by the Department's Circular M.F. (D.R.) F. No. 275/37/2K-CX. 8A, dated 2-1-2002. This Circular clarified that pre-deposits made during the pendency of appeals are not considered duty and should be refunded upon the appellant's success without insisting on a formal refund application under Section 11B.

Court’s Findings:
The Court found merit in the assessee's argument. It noted that although the initial payment was made in 1987, the CESTAT's Stay Order in 1993 effectively treated it as a pre-deposit. The final appellate order dated 21-4-1998 allowed the appeal, entitling the assessee to a refund. The refund claim was filed on 1-7-1998, within three months of the final order, and thus timely if considered a pre-deposit.

The Court referred to the Department's Circular, which allows for the return of pre-deposits without a formal refund application under Section 11B. It concluded that the amount paid by the assessee was indeed a pre-deposit, and the refund claim was not subject to the time limitation under Section 11B.

Conclusion:
The Court upheld the CESTAT's order, dismissing the Revenue's appeal. The refund claim was not time-barred as it related to a pre-deposit, and the assessee was entitled to the refund. The judgment emphasized the distinction between duty payments and pre-deposits concerning the applicability of Section 11B's limitation provisions.