2016 (9) TMI 1411 - AT - Central Excise

Refund of penalty - time limitation - Section 11B of the Central Excise Act, 1944 - Held that - Section 11B ibid deals with filing of refund application in respect of Central Excise duty. Since there is no specific mention about refund of penalty in Section 11B ibid, the time limit prescribed therein would not have any application for sanction of such refund amount - refund of penalty allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of refund claim of ?1,50,000 based on time limitation under Section 11B of the Central Excise Act, 1944.

Analysis:
The case involved a dispute regarding the denial of a refund claim amounting to ?1,50,000 by the authorities, which was the subject matter of the appeal. The appellant had a duty demand and penalty imposed on them in the adjudication proceedings. However, in the appeal, the Tribunal dropped the duty demand and set aside the penalty. During the pendency of the appeal, the Department recovered the penalty amount from the rebate claim filed by the appellant under Section 11 of the Central Excise Act, 1944. Subsequently, upon receiving a favorable order from the Tribunal, the appellant filed a refund application for the penalty amount, which was rejected on the grounds of being time-barred under Section 11B of the Act.

The appellant argued through their advocate that Section 11B did not apply to the refund of penalty amounts, and since the Tribunal's order allowed for the refund, the appellant was entitled to claim it. On the other hand, the Revenue's representative contended that since the penalty amount was not appealed against by the appellant and was recovered by the Department earlier, the refund claim was time-barred under Section 11B.

After hearing both sides and examining the records, the Tribunal found that Section 11B, which deals with the filing of refund applications for Central Excise duty, did not specifically mention refunds for penalties. Therefore, the time limitation prescribed under Section 11B was deemed not applicable for the refund of the penalty amount. The Tribunal noted that the penalty amount was recovered by the Department before the appeal decision by the Tribunal, and as a consequence of the Tribunal's order, the appellant was entitled to claim the refund. Consequently, the Tribunal held that the refund claim could not be denied based on the appellant not appealing against the earlier penalty order.

In conclusion, the Tribunal found no merit in the impugned order denying the refund claim and allowed the appeal in favor of the appellant, granting them the benefit of the refund.