2012 (12) TMI 175 - AT - Central Excise

Refund - manufacture of various photographic chemicals - assessees were clearing empty MS. Drums/HDPE/PP/LDPE bags/PVC drums and cans, in which the raw materials were received by them without payment of duty alleged that duty was required to be paid by them on the sold empty containers - duty was being paid by them under protest Held that - Empty containers of modvatable raw materials do not attract duty at the time of their sale - show cause notice having not been issued, the deposits made by the appellant cannot take the colour of the duty so as to invite the limitation provisions - appellants were admittedly not required to pay the said duty and the refund claim does not pertain to the routine payment of duty in the ordinary course of the business where such refund claim requires scrutiny from the angle of limitation as also from unjust enrichment angle refund allowed

Summary

Issues:
1. Duty payment on empty containers received without payment of duty.
2. Refund claim for duty paid under protest.
3. Interpretation of Rule 233(B) of Central Excise Rules, 1944.
4. Applicability of limitation provisions on refund claim.

Analysis:

Issue 1:
The appellant was engaged in the manufacture of photographic chemicals and cleared empty containers without paying duty for the period 1993-94 and 1996-97. Subsequently, they paid an amount under protest upon insistence by the department. The duty demands were raised against the appellant for the sale of empty containers, leading to a refund claim dispute.

Issue 2:
The original adjudicating authority sanctioned the refund claim, stating that the claim was legitimate as it was filed within the prescribed time and the deposit was made under protest. However, the Commissioner (Appeals) overturned this decision, claiming that the deposit was not made under protest due to the timing of the deposit and the protest letter.

Issue 3:
The Commissioner (Appeals) relied on Rule 233(B) of the Central Excise Rules, 1944, regarding the procedure for payment of duty under protest. However, the appellate tribunal found that this rule was not directly applicable to the situation at hand, emphasizing that the deposit was made under protest within a short period after payment.

Issue 4:
The tribunal noted that no show cause notice was issued for the appropriation of the deposit, and the law stipulates that duty on empty containers of modvatable raw materials does not apply at the time of sale. As such, the deposit made by the appellant could not be considered duty, and the refund claim did not fall under routine duty payment scenarios subject to limitation provisions. The tribunal allowed the appeal, setting aside the denial of the refund claim based on limitation grounds.

In conclusion, the tribunal ruled in favor of the appellant, emphasizing that the deposit was made under protest, and the refund claim was not subject to limitation provisions as it did not pertain to routine duty payments. The denial of the refund claim based on limitation grounds was overturned, granting consequential relief to the appellant.