2015 (12) TMI 233 - HC - Central Excise

Denial of refund claim - Duty paid under protest - Concessional rate of duty - Bar of limitation - Held that - First appellate authority has given a categorical finding that the duty was paid under protest. We also affirm this finding upon a perusal of the letter dated 21.01.1998 which has been considered by the first appellate authority as well as the letter dated 10.02.1998 and the challan dated 04.02.1998 through which the duty was deposited. - finding of the first appellate authority has not been challenged by the Department in any further appeal and, therefore, this finding is binding upon them. We are also of the opinion that when the appellant filed an appeal against the duty levied, it means that the deposit was made under protest. Once the deposit of duty was made under protest, the second proviso of Section 11-B of the Act comes into operation, namely, that the period of limitation of six months would not apply to a claim of refund. Consequently, the finding of all the authorities that the application of the appellant was barred by limitation, is patently erroneous. - judgment of the Tribunal was delivered on 22.01.1999. The application was filed on 31.08.1999 within a period of seven months which, in our opinion, is a reasonable period. The application for refund does not become barred by time. Tribunal committed a manifest error in non-suiting the appellant s claim on the sole ground that the appellant was only a buyer and, therefore, was not entitled to claim a refund of the duty. This finding is patently perverse. Section 11-B of the Act provides that any person can make an application for refund of duty. Further, in the instant case, the appellant is not only a purchaser but is also a manufacturer of fertilizer and was entitled to purchase Naphtha under the notification issued under the Central Excise Act, 1944 at a concessional rate of duty. Since, the appellant was denied the requisite forms/ certificate and deposited the duty under protest, he was entitled to claim a refund. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Refund of excise duty paid under protest.
2. Applicability of the limitation period for claiming a refund.
3. Entitlement of a buyer to claim a refund under Section 11-B of the Act.
4. Interpretation of the relevant date for filing a refund application.

Analysis:

Issue 1: Refund of excise duty paid under protest
The appellant, a fertilizer manufacturer, purchased Naphtha for production at a concessional rate but was denied the concessional rate for a specific period. Despite protesting and depositing the duty under protest, the refund claim was rejected on the grounds of exceeding the six-month limitation period. The Tribunal's judgment in favor of the appellant established that the duty was paid under protest, making the appellant eligible for a refund under the second proviso to Section 11-B of the Act.

Issue 2: Applicability of the limitation period
The Court affirmed that the duty was indeed paid under protest, as evidenced by the appellant's actions and the first appellate authority's findings. The Supreme Court's decision in Mafatlal Industries Limited vs. Union of India clarified that when duty is paid under protest, the limitation period of six months for claiming a refund does not apply. Therefore, the appellant's refund application, filed within seven months, was within a reasonable time frame and not barred by limitation.

Issue 3: Entitlement of a buyer to claim a refund
The Tribunal erred in denying the appellant's refund claim solely based on the appellant being a buyer. Section 11-B allows any person to apply for a refund of duty paid, and in this case, the appellant, being both a purchaser and a manufacturer entitled to concessional rates under the Act, had the right to seek a refund after depositing the duty under protest.

Issue 4: Interpretation of the relevant date
The Court clarified that the period of limitation for filing a refund application starts from the date of the Tribunal's judgment. Even if the appellant was required to file within six months from the Tribunal's order, the provisions of the Limitation Act would exclude the time spent in obtaining the order. The appellant's application was deemed within the limitation period, considering the date of receipt of the Tribunal's judgment.

In conclusion, the Court allowed the appeal, answering the substantial questions of law in favor of the appellant. The appellant was held entitled to a refund of excise duty and interest, overturning the decisions of the Tribunal and other authorities that denied the refund claim.