2009 (9) TMI 666 - HC - Central Excise

Cenvat credit - petitioner paid excise duty in advance, when the petitioner sought permission to store the molasses in kutcha earthern pits - excise duty was paid by taking the market value as on the date of storage. But by the time they were actually sold, the market price fell - Department disputes the claim for refund on two grounds viz. (i) that their claim for remission was rejected earlier and it had attained finality and (ii) that the claim for refund was made beyond the period of limitation prescribed under Section 11-B of the Central Excise Act, 1944 Held that - relevant date are defined in Explanation (B) under Section 11-B. Sub-clause (eb) under Explanation (B) defines a relevant date to mean the date of adjustment of duty after final assessment in case where the duty on excise is paid provisionally under the Act. Therefore the claim of the petitioner for refund cannot be said to be beyond the period of limitation, writ petitions are allowed and the respondents are directed to refund the excess duty payable to the petitioner, after appropriating the duty in respect of the goods actually sold with reference to their sale value

Summary

Issues:
Claim for refund of excise duty on stored molasses due to reduced sale value and spoilage.

Analysis:
1. The petitioner, a Cooperative Sugar Mill, sought permission to store molasses in kutcha earthen pits due to limited tank capacity, paying excise duty in advance. Subsequently, faced with reduced sale value and spoilage of stored molasses, the petitioner claimed a refund of the excise duty paid. The claim was rejected by various authorities, leading to the present writ petitions.

2. The main contention by the Department against the refund claim was twofold: first, that a prior remission claim rejection had finality, and second, that the refund claim exceeded the limitation period under Section 11-B of the Central Excise Act, 1944.

3. Regarding the first ground, the court held that a warning letter by the Superintendent of Central Excise did not constitute an adjudication of the dispute. The claim for refund must be processed under statutory provisions by an authority with quasi-judicial powers, and a mere letter cannot annul such powers. Thus, the court rejected this ground put forth by the Department.

4. Concerning the second ground, Section 11-B(1) allows a claim within one year from the "relevant date," with an exception if duty and interest were paid under protest. The petitioner had paid the duty under protest, although the Department argued it did not follow the prescribed procedure. Citing the Indian Pistons Limited case, the court dismissed this argument, stating that the protest did not need to strictly adhere to Rule 233-B.

5. Additionally, the court referred to Explanation (B) under Section 11-B, where a relevant date is defined. The date of duty adjustment after final assessment is considered the relevant date in cases of provisional excise duty payment. Therefore, the petitioner's refund claim was within the limitation period as per the defined relevant date.

6. Consequently, the court allowed both writ petitions, directing the respondents to refund the excess duty paid by the petitioner, after adjusting the duty concerning the sold goods based on their sale value within three months from the date of the order, without imposing any costs.