2009 (10) TMI 623 - AT - Central Excise

Refund - penalty under Section 11AC - payment of duty at the time of the visit of the preventive officers to their factory on 23-12-2003 yet the fact remains that the duty was paid on the directions of the preventive officers. Such payment cannot be considered due to the own volition by the appellant. The very fact that the appellant contested the demand indicates that the payment made by them was involuntary and was forced upon them by the preventive officers - Held that - payment of duty made by the appellant under protest. Hence, the time-bar will not apply. The appellant is entitled to the refund. order passed by the Commissioner (Appeals) is set aside. The appeal filed by the appellant is allowed

Summary

Issues:
1. Central Excise Duty demand on debit notes issued by the appellant.
2. Admissibility of refund of amount paid by the appellant before issuance of show cause notice (S.C.N).

Issue 1: Central Excise Duty demand on debit notes
The appellant, a manufacturer of excisable goods, issued debit notes to customers for transport charges paid on their behalf. The preventive officers alleged the debit notes were for collecting excess value of goods sold and demanded Central Excise Duty on the amount. The appellant clarified that the amount represented transport charges paid for customers, but the officers demanded payment. The Assistant Commissioner issued a show cause notice (S.C.N) for duty payment and penalty under the Central Excise Act, which was confirmed initially but later set aside by the Commissioner (Appeals) for re-adjudication.

Issue 2: Admissibility of refund of amount paid by the appellant
The appellant paid an amount under protest before the issuance of the S.C.N, which was later dropped by the Assistant Commissioner. The authorities rejected the refund claim citing non-payment under protest. The appellant argued that the payment was involuntary and forced by the preventive officers, invoking a Supreme Court judgment stating duty paid under protest is not time-barred. The appellant's contention was supported by the Supreme Court's observation that duty paid in cases ending in court orders is deemed paid under protest, exempting it from time limitations.

In conclusion, the Tribunal held that the payment made by the appellant was under protest, entitling them to a refund. The impugned order was set aside, and the appeal was allowed in favor of the appellant.