2011 (10) TMI 304 - AT - Central Excise

Refund of duty Period of limitation suo-moto credit availed of duty paid under original invoices cancelled subsequently paid the duty related to original invoices and refund claimed Refund granted by lower authority on ground that no limitation was prescribed in the Central Excise Act for refund claim of the above kind - Held that - In case of BDH Industries Ltd. Vs. CCE (A), Mumbai-I (2008 - TMI - 30889 - CESTAT Mumbai) it was held that no suo motu credit of any duty paid in excess could be taken by the assessee and that all types of refund claims required to be filed u/s 11B of the Central Excise Act. In view of aforesaid decision the suo motu credit taken in April 2007 has to be treated as non est in law. Hence, refund claim filed by the assessee on 5.12.2007 was undisputedly for an amount of duty covered by two invoices of November 2006 which were cancelled by them. Relevant date u/s 11B of the Act for purposes of refund claim in question is thus 05.12.06. None of the authorities took note of the Tribunal s Larger Bench decision. Therefore, Order granting refund is absurd & liable to be set aside.

Summary

Issues:
Grant of refund of duty, Time-barred refund claim, Application of Limitation Act, Suo motu credit taken by assessee, Tribunal's Larger Bench decision

Grant of refund of duty:
The appeal filed by the department challenges the grant of a duty refund of Rs.1,07,395 to the respondent. The respondent initially paid excise duty and education cess in November 2006, realized a mistake in computation, cancelled the earlier invoices, and paid a revised duty amount in December 2006. Subsequently, they took credit of the initial duty amount in their CENVAT account and later paid the same amount under TR-6 Challans. The refund claim was filed on 5.12.2007, and the Assistant Commissioner sanctioned the refund under Section 11B of the Central Excise Act. The Commissioner (Appeals) upheld this decision, leading to the department's appeal.

Time-barred refund claim - Application of Limitation Act:
The lower authorities held that there was no time bar provision in the Central Excise Act for a refund claim, applying the Limitation Act, 1963. However, the judge found this view absurd as Section 11B of the Act clearly prescribed a limitation period for refund claims. The judge emphasized that the refund claim in question was filed under Section 11B and should be governed solely by its provisions. The Commissioner (Appeals) decision was set aside on this ground.

Suo motu credit taken by assessee - Tribunal's Larger Bench decision:
The judge highlighted that the respondent took suo motu credit of the duty paid, which was not disclosed to the department. Referring to the Tribunal's Larger Bench decision in another case, it was established that no suo motu credit could be taken, and all refund claims must be filed under Section 11B. The judge noted that the refund claim filed by the assessee was for duty covered by cancelled invoices from November 2006, and the suo motu credit taken was deemed invalid. The authorities' failure to consider this aspect led to an erroneous decision.

Conclusion:
The judge set aside the lower authorities' orders and remanded the case to the original authority for a fresh decision on the refund claim. The party was to be given a reasonable opportunity to present their case. The judgment highlighted the importance of adhering to the provisions of the Central Excise Act, particularly Section 11B, in handling refund claims and emphasized the need for a thorough examination of factual and legal aspects in such cases to avoid absurd outcomes.