2015 (10) TMI 1560 - AT - Central Excise

Claim of refund - period of limitation - duty was paid under protest or not - Denial of exemption under the Notification13/94-CE(NT) and 8/96 - Classification - Held that - Appellant protested the recovery of duty by the ordinance factory from him and later contested the claim right up to the Hon ble High Court. It is only when High Court decided that the civil Courts did not have jurisdiction in the matter they approached the department with a refund application. There is no doubt that the appellants have been protesting against recovery of this amount right from the day the same was recovered from them. However can this be considered a valid protest for the purpose of section 11 B. Tribunal in the case of Kota Oxygen Limited 2000 (9) TMI 163 - CEGAT, NEW DELHI has ruled that the duty paid while contesting the said payment before appellate forum is to be considered as duty paid under protest. For this the tribunal relied on the decision of Hon ble Supreme Court in case of Mafatlal Industries 1996 (12) TMI 50 - SUPREME COURT OF INDIA . There is no evidence that the delay or litigation was deliberate. In the instant case it is apparent that the appellants were contesting the liability right from the date of payment of duty before various forums. Thus it can be considered that the duty was paid by them under protest. In view of above the refund claim cannot be considered as time-barred. Issue of classification and availability of exemption - Held that - impugned order does not deal with the same. No findings have been given on the matter of classification in the impugned order and to that extent it is a non-speaking order. - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of refund claim based on limitation and protest of duty payment.
2. Classification of material cleared by the ordinance factory and availability of exemption.

Analysis:

Issue 1: Validity of Refund Claim
The appellants purchased Cupro Nickle Swarf (CNS) from an ordinance factory that initially cleared the material at nil rate of duty under specific notifications. However, the factory later paid Central Excise duty on the material and recovered this amount from the appellants. The appellants protested this demand through various legal avenues, including arbitration, court suits, and High Court proceedings. The dispute arose when the appellants filed a refund claim in 2005, which was rejected on the grounds of limitation and lack of protest during duty payment. The Commissioner (Appeals) held that since the ordinance factory did not protest while paying the duty, it cannot be considered as paid under protest. However, the appellants argued that their continuous protests against the recovery of duty constituted valid protest. The Tribunal referenced legal precedents and the Limitation Act to establish that contesting liability before appellate forums can be deemed as a protest against such liability. Therefore, the Tribunal concluded that the refund claim was not time-barred as the duty was paid under protest.

Issue 2: Classification of Material and Exemption Availability
The impugned order did not address the classification of the material cleared by the ordinance factory and the consequential availability of exemption under the specific notifications. The Tribunal noted that no findings were provided on the classification issue, rendering the order a non-speaking one. As a result, the Tribunal allowed the appeal on the issue of limitation but remanded the appeal concerning classification and exemption availability. The Commissioner (Appeals) was directed to hear the appellant on the classification matter, record findings, and provide an opportunity for a hearing.

In conclusion, the Tribunal allowed the appeal on the issue of limitation, considering the duty payment as made under protest. However, the appeal regarding classification and exemption availability was remanded for further examination and findings by the Commissioner (Appeals).