2015 (8) TMI 1121 - HC - Central Excise

Denial of refund claim - Bar of limitation - payment of duty was made before issue of SCN - claim of refund was submitted after the SCN was dropped - refund claim filed on 26-2-2001 i.e. after a period of 3 years from the date of such payment/debit was within the limitation of time as prescribed under section 11B of Central Excise Act, 1944 - Held that - Payment of duty was made by the assessee and that was in terms of the computation made by it. It was debited in the revenue account in November and December of 1997. It is true that this payment was not made under protest. Payment was made voluntarily but the revenue did not accept it as a clearance of duty liability and in accordance with law. The revenue therefore proceeded to raise a demand and issued four show cause notices. A reading of the show cause notices would reveal as to how the revenue proceeded to demand the sums set out therein and purported to adjust the payment already made by the assessee. Thus, the liability of the assessee was not crystallized according to the Revenue until this show cause cum demand notice was adjudicated. Demand was required to be adjudicated and was indeed adjudicated by the competent authority under the Central Excise Act, 1944, the order passed by him resulted in dropping of the proceedings and the demand. Therefore, once the show cause notice was dropped the assessee in this case became entitled to seek refund. That such an application was maintainable and could have been granted, provided it was lodged within the period of limitation and as prevalent in terms of the applicable legal provision. At the relevant time, the period of limitation was six months. The period of six months was not reckoned in this case from the payment but from the date of adjudication order. - claim for refund can also be made if the duty is paid voluntary and not under protest or without prejudice. The only requirement is that the refund must be sought within the specified period and the limitation is provided by the second proviso to Section 11B. If the application was filed within this period it could have been considered and the refund sanctioned and granted. - Decided against Revenue.

Summary

Issues:
1. Refund of duty rejected on the ground of limitation.
2. Whether the refund claim was within the limitation period as prescribed under Section 11B of the Central Excise Act, 1944?

Analysis:
1. The appeal challenged the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zone Bench, Mumbai, rejecting the refund of duty on the ground of limitation. The Tribunal allowed the refund claim, stating that the duty paid should be deemed to have been paid under protest as per the provisions of the Mafatlal Industries Ltd. case. The Tribunal held that since the view was settled in favor of the appellant, there was no cause to deny the refunds on the grounds of limitation.

2. The appellant contended that the refund claim was not within the limitation period as prescribed under Section 11B of the Central Excise Act, 1944. The facts revealed that the assessee cleared goods without paying Central Excise duty, leading to show cause cum demand notices. The Additional Commissioner dropped the demand, and the assessee filed a refund claim based on this order. However, the Commissioner of Central Excise held the refund to be contrary to Section 11B due to non-protest payment, leading to the appeal.

3. The High Court analyzed the timeline of events, emphasizing that the liability of the assessee was not crystallized until the show cause cum demand notice was adjudicated. The Tribunal's decision was upheld, stating that the refund application was well within the time frame stipulated by the second proviso of Section 11B(1). The Court highlighted that the claim for refund could be made even if the duty was paid voluntarily, as long as it was within the specified period.

4. The Court concluded that the appeal could not be allowed, answering the substantial question of law in favor of the assessee and against the revenue. The appeal was dismissed with no order as to costs, affirming the Tribunal's decision to grant the refund based on the legal provisions and the specific circumstances of the case.