2018 (8) TMI 1751 - 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 denial of self credit of duty paid on freight portion from assessable value under extended period of limitation.

Analysis:
The appellant, engaged in the manufacture of various chemicals falling under Chapter 38, availed exemption benefits under Notification No. 56/2002-CE. They cleared goods inclusive of outward freight charges, paid duty through PLA after exhausting Cenvat credit, and re-credited the same for a specific period. A show cause notice was issued to deny self credit of duty paid on freight portion from the assessable value, claiming it was not payable by the appellant. The matter was adjudicated, and demand on account of erroneous refund was confirmed, which was challenged before the Commissioner (Appeals). The Commissioner held that the extended period was not invokable, dropping the demand for a specific period. The appellant appealed against this decision.

The appellant argued that the refund claim was initially sanctioned to them as outward freight formed a part of the transaction value, and they correctly paid the duty. They cited a judgment by the Hon'ble High Court of Gauhati in support, stating that without challenging the refund claim in appeal, a show cause notice cannot be issued under Section 11A of the Act. They contended that the demand for the sanctioned refund claim cannot be challenged.

On the contrary, the AR submitted that the appellant intentionally paid duty on transportation charges, which formed a part of the assessable value, to avail inadmissible refund, justifying the invokability of the extended period of limitation.

After considering the submissions, the Tribunal analyzed the issue of whether a refund claim sanctioned to the appellant could be challenged without challenging the assessment orders of the refund claims. Citing the judgment of the Hon'ble High Court of Gauhati in the case of Jellalpore Tea Estate, the Tribunal held that the provisions of Section 11A of the Act were not applicable to the facts of the case. Consequently, the demand against the appellant was deemed unsustainable, leading to the allowance of the appeal filed by the appellant.