2013 (5) TMI 590 - AT - Central Excise

Refund claim denied - period of limitation - payment of excise duty from different accounts - Held that - There is no dispute about the fact that the appellant discharged his Central Excise liability by using a PLA, which was primarily meant for Service Tax. It was only subsequently when audit objected, they paid the duty from the Cenvat account meant for Excise duty payment purposes and claimed the refund of the first time duty paid by them. Such cause of action for claiming refund can arose only when the appellants pays the duty second time from a different account. As such, agreeing with the advocate that cause of action arose only on 15/11/06, when they paid the duty of excise for the second time out of a different account maintained by them and as a result of audit objection. Admittedly they could not have asked for refund of duty prior to the said date. As such, the refund having been filed in March 2007 has to be held as having been filed within the period of limitation. Otherwise also, it was only a question of payment of excise duty from different accounts and is not a case of any clandestine activity. The appellant having discharged his excise duty liability from PLA account meant for Service Tax, when asked to pay duty from the other Cenvat account of excise duty, is entitled to make corrective accounting entries. With the second time payment of duty, the appellant is admittedly entitled to take the credit of the duty earlier paid by them. As such, denial of refund claim on the ground of limitation is not justified - set aside the impugned order and allow the appeal with consequential relief to the appellant.

Summary

Issues:
1. Refund claim rejection based on limitation period calculation.

Analysis:
The appellant, registered with Central Excise and Service Tax, maintained separate PLA accounts for each. An audit objection led to the appellant paying duty of excise from the Service Tax PLA balance, which was later rectified by paying from the Cenvat account. The refund claim of the initial duty payment was made within the limitation period, but lower authorities rejected it, citing the original deposit date in the Service Tax PLA as the starting point for limitation calculation.

The Tribunal found that the cause of action for the refund claim arose when the duty was paid for the second time from a different account due to an audit objection. The appellant rectified the error promptly, and the refund claim was filed within the limitation period based on this correct cause of action. The Tribunal agreed that the refund claim was not barred by limitation as it was filed within the prescribed time frame.

Moreover, the Tribunal emphasized that the situation was a mere accounting error, not a deliberate evasion. The appellant rectified the mistake by paying duty from the correct account and was entitled to claim a refund for the initial payment. Denying the refund based on limitation grounds was deemed unjustified by the Tribunal, leading to the setting aside of the impugned order and allowing the appeal with consequential relief for the appellant.