2018 (8) TMI 1750 - AT - Central Excise

Refund claim - whether without challenging those assessment orders of refund claims sanctioning thereof, can be challenged by way of issuance of show cause notice under Section 11A of the Act or not? - Held that - The said issue is exempted by the Hon ble High Court of Gauhati in the case of Jellalpur Tea Estate 2011 (3) TMI 11 - GAUHATI HIGH COURT , where it was held that Section 11A of the Act not applicable since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. Thus, provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to show cause notice under Section 11A regarding refund claims sanctioned without appeal. Extended period of limitation invokable for duty on transportation charges forming part of assessable value.

Analysis:
The appellants manufactured Mosquito Repellant Coils availing exemption under Notification No. 56/2002-CE due to their location in Jammu & Kashmir. They cleared goods inclusive of outward freight charges, paid duty through PLA after exhausting Cenvat credit, and received re-credit for duty paid on freight for November & December 2012. Subsequently, show cause notices were issued invoking extended limitation to deny self-credit of duty on freight from assessable value, leading to recoverable excess refund claims. The matter was adjudicated, confirming demand for erroneous refund, which was challenged before the Commissioner (Appeals) who dropped the demand for the relevant period due to non-invocation of the extended period. The appellants appealed against this decision.

The appellants argued that as their refund claims were sanctioned based on outward freight being part of the transaction value, they correctly paid duty and the refund claims were rightly sanctioned. They cited a ruling by the Hon'ble High Court of Gauhati in CCE, Shillong vs. Jellalpore Tea Estate, stating that without challenging the refund claim in appeal, a show cause notice under Section 11A cannot be issued. Therefore, they contended that the demand for the sanctioned refund cannot be challenged.

On the contrary, the Revenue argued that the appellants intentionally paid duty on transportation charges, forming part of the assessable value, to obtain an inadmissible refund, justifying the invokement of the extended period of limitation.

After considering both sides, the Tribunal analyzed whether refund claims sanctioned to the appellants could be challenged through a show cause notice under Section 11A without appealing the assessment orders. Referring to the case of Jellalpur Tea Estate, where the Hon'ble High Court of Gauhati emphasized the need to follow the prescribed legal procedures, the Tribunal held that Section 11A of the Act was not applicable in this case. Consequently, the demands against the appellants were deemed unsustainable, leading to the allowance of the appeals filed by the appellants.