2015 (3) TMI 660 - HC - Central Excise

Denial of refund claim - Refund claim of accumulated CENVAT Credit - Claim barred by limitation - Duty drawback claim - Tribunal, by following the decision of the Madhya Pradesh High court in the case of STI India Ltd. V. CCE reported in 2008 (10) TMI 246 - HIGH COURT OF MADHYA PRADESH AT INDORE dismissed the appeal holding that the limitation prescribed under the provisions of Section 11B of the Central Excise Act will not apply to the case - whether the refund claim is filed within the period prescribed under Section 11B of the Central Excise Act - Held that - In exercise of the powers conferred by rule 5 of CENVAT Credit Rules, 2002, the Central Government hereby directs that refund of CENVAT credit of specified duty allowed in respect of inputs used in or in relation to the manufacture of final products which are cleared for export under bond may be allowed subject to the safeguards, conditions and limitations, set out in the notification No.11/2002-C.E.(N.T.). The application in Form A along with the proof of due exportation and the relevant extracts of the records maintained under the said rules or the deemed credit register maintained in respect of textile fabrics, as the case may be, in original are lodged with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 - Section 11B, prescribes the limitation date and the Notification 11 of 2002 dated 1.3.2002, which the Department failed to enclose in the typed set of papers and in all fairness produced before this Court by the counsel for the first respondent, it is clear that refund application should be filed before the expiry of the period specified in Section 11B of the Central Excise Act. - Here is a case, where the claim for refund is filed after a period of one year and hence, the same is clearly hit by the provisions of Section 11B of the Central Excise Act read with Notification No.11 of 2002 dated 01.03.2002 - Decided in favour of Revenue.

Summary

Issues Involved:
1. Whether the refund claim was filed within the time limit prescribed under Section 11B of the Central Excise Act.
2. Whether the Tribunal's reliance on the decision of the Madhya Pradesh High Court in the case of M/s. STI India Ltd. was acceptable when a similar issue was decided differently by the Madras High Court in the case of M/s. GTN Engineering.

Detailed Analysis:

Issue 1: Time Limit for Refund Claim

The primary question was whether the refund claim was filed within the period prescribed under Section 11B of the Central Excise Act. The first respondent/assessee, engaged in manufacturing readymade garments, filed a refund claim on 29.3.2005 for Rs. 12,76,088/- being the accumulated Cenvat Credit paid on inputs for clearances made during February and March 2004. The Adjudicating Authority rejected the refund claim, stating it was filed after the expiry of one year as specified under Section 11B and was thus time-barred. The assessee's appeal to the Commissioner (Appeals) was successful, but the Department's subsequent appeal to the Tribunal was dismissed based on the Madhya Pradesh High Court's decision in STI India Ltd. The Tribunal held that the limitation prescribed under Section 11B did not apply. However, the High Court of Madras disagreed, emphasizing that the refund application should be filed within the one-year period specified in Section 11B, as reinforced by Notification No.11/2002-C.E.(N.T.) dated 1.3.2002. Consequently, the High Court ruled that the refund claim was indeed time-barred.

Issue 2: Reliance on Madhya Pradesh High Court Decision

The second issue was whether the Tribunal's reliance on the Madhya Pradesh High Court's decision in M/s. STI India Ltd. was appropriate, given the Madras High Court's contrary ruling in M/s. GTN Engineering. The Madras High Court had previously held in GTN Engineering that the limitation period under Section 11B of the Central Excise Act applies to claims for CENVAT credit refunds. The Court noted that the Madhya Pradesh High Court's decision did not consider Rule 5 of the Cenvat Credit Rules, 2002, and was based on procedural rules and notifications. Therefore, the Madras High Court found the Madhya Pradesh High Court's decision unpersuasive and reiterated that the limitation period under Section 11B must be adhered to for refund claims.

Conclusion:

The High Court of Madras concluded that the refund claim was filed beyond the one-year period specified under Section 11B of the Central Excise Act and was thus time-barred. The Court also held that the Tribunal's reliance on the Madhya Pradesh High Court's decision was misplaced, reaffirming its own precedent in GTN Engineering. Consequently, the appeal filed by the Department was allowed, and the refund claim was denied.

Result:

The Civil Miscellaneous Appeal was allowed, and the refund claim was rejected for being time-barred. No costs were awarded, and the accompanying Miscellaneous Petition was closed.