2018 (3) TMI 1857 - AT - Central Excise

Refund of amount lying unutilised in PLA account - rejection on the ground of bar of limitation by observing that, inasmuch as the same amount is due waiting to be debited , the limitation as provided under Section 11B of Central Excise Act, 1944 would apply - HELD THAT - The limitation prescribed under Section 11B applies to the refund of duty amount. Inasmuch as the lower authorities themselves observed that the amount in question is duty waiting to be debited , this clearly shows that the same is not duty, in which case, the provision of Section 11B would not apply. Otherwise also, it is found that the PLA deposits are mere deposit for the purposes of their utilisation in the future and if the same is not in a position to be utilised, the depositor has to be held as owner of the said amount which is required to be refunded to them, in the absence of any limitation prescribed under the Act for such refund. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Transfer of unutilized amount in PLA account after merger with another company.
2. Rejection of refund application based on limitation under Section 11B of Central Excise Act, 1944.

Analysis:

Issue 1: The appellant merged with another company as per the Hon'ble Bombay High Court order and sought transfer of the unutilized amount in their PLA account. The departmental officers did not act on this request, leading the appellant to apply for a refund of the amount.

Issue 2: The department rejected the refund application citing the bar of limitation under Section 11B of the Central Excise Act, 1944. The contention was that since the amount was "due waiting to be debited," the limitation period applied.

The Tribunal found that the amount in question, which the appellant sought as a refund, was originally deposited in their PLA account for future utilization towards duty payment. Due to the merger, this amount could not be utilized for duty payment, leading to the refund request. The Tribunal clarified that the limitation under Section 11B applies to duty refunds, but in this case, the amount was not considered duty as it was labeled as "duty waiting to be debited." Therefore, Section 11B did not apply, and the Tribunal held that the PLA deposits were meant for future utilization and should be refunded to the depositor if unutilized, without any specific limitation under the Act.

Consequently, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. The decision was made after considering the specific circumstances of the merger and the nature of the amount in the PLA account, distinguishing it from duty subject to Section 11B limitations.

This judgment clarifies the application of Section 11B in cases of refund requests involving amounts in PLA accounts post-merger, emphasizing the distinction between duty amounts and unutilized deposits meant for future duty payments.