2011 (10) TMI 532 - AT - Central Excise

Denial of refund claim - Double payment made by mistake - Mistake notices after 2 years of payment - Held that - whether the payment is due to accounting error or whatever may be the reason, the debit entry in the accounts is only towards the payment of duty and therefore, refund of any amount which is debited in the accounts has to be treated as refund of duty only - amount paid for the second time, is only a deposit and cannot be considered as duty, cannot be sustained - Following decision of BDH Industries v. CC(A), Mumbai 2008 (7) TMI 78 - CESTAT MUMBAI - Decided against assessee.

Summary

Issues:
1. Refund claim for excess payment of duty made by mistake.
2. Applicability of Section 11B of the Central Excise Act.
3. Treatment of second payment as a deposit.
4. Interpretation of the decision of the Larger Bench of the Tribunal in BDH Industries case.
5. Applicability of the Limitation Act in the present case.
6. Comparison of relevant provisions with the decision of the Hon'ble Supreme Court in Auriaya Chamber of Commerce case.
7. Relevance of the Board's Circular F. No. 5/7/71-CX-1.

Analysis:
1. The Appellant cleared PVC resin and took CENVAT Credit on 19-3-2007 but mistakenly paid duty again on 31-3-2007. The Refund Claim for the second payment was rejected citing Section 11B of the Central Excise Act, which requires such claims to be filed within one year from the date of excess payment of duty.

2. The Appellant argued that the second payment should be considered a deposit and not duty, thus falling under the Limitation Act's 3-year period for refunds made under mistake of law. They also relied on a Board's Circular and a Supreme Court decision to support their argument.

3. The Tribunal, however, held that any payment debited in the accounts towards duty must be treated as duty, as per the decision of the Larger Bench in the BDH Industries case. Therefore, the second payment cannot be considered a deposit, and the Refund Claim is for duty paid, subject to the one-year limitation under Section 11B.

4. The Tribunal dismissed the Appellant's argument regarding the applicability of the Limitation Act, clarifying that the decision of the Larger Bench must be followed in this case. The Tribunal differentiated the Auriaya Chamber of Commerce case, stating that without comparing relevant provisions, no decision could be reached.

5. The Tribunal also disregarded the Board's Circular, noting that the Tribunal's decision of the Larger Bench postdates both the Circular and the Supreme Court decision. Consequently, the Appeal was deemed to lack merit and was rejected.