2019 (4) TMI 2121 - AT - Central Excise

Recovery of refund on account of excess payment of duty through PLA - appellant have not claimed credit on certain inputs which resulted in excess payment of duty in cash - HELD THAT - Admittedly the duty paid through PLA was not required to be paid by the appellant therefore the same is refundable. Similar issue has been examined by this Tribunal in the case of Shree Nath Industries 2018 (5) TMI 195 - CESTAT CHANDIGARH wherein this Tribunal has observed In this case it is the case of the Revenue itself that they were not required to pay duty therefore the excess amount paid by the appellant is merely a deposit not a duty. Hence the provisions of Section 11A of the Act is not applicable to the case. In that circumstances the appellant is not required to pay the excess refund claimed by them. The demand confirmed against the appellant is not sustainable. Accordingly the impugned order is set aside and the appeal is allowed.

Summary

Issues:
Appeal against confirmed demand due to erroneous refund.

Analysis:
The appellant, based in Jammu & Kashmir, availed exemption under Notification No. 56/02-CE and manufactured pesticides. They filed a refund claim for duty paid in cash after utilizing credit, which was later alleged to be in excess due to not claiming credit on certain inputs. The demand on excess refund was confirmed, leading to the current appeal. The appellant argued that since the order sanctioning refund was not challenged by the Revenue, a show cause notice for recovery of excess refund could not be issued. They cited a decision by the Gauhati High Court and a previous Tribunal case to support their stance. The Revenue contended the findings of the Commissioner (Appeals).

The Revenue's case was that the appellant claimed excess refund on duty paid through PLA, which was not required to be paid by them. A previous Tribunal case, Shree Nath Industries, was referenced where it was observed that duty paid in cash was refundable under the relevant notification. As the appellant did not claim refund of available Cenvat credit, it was deemed a revenue-neutral situation, and the excess amount paid was considered a deposit, not duty. Since the order sanctioning refund was unchallenged by the Revenue, following the decision of the Gauhati High Court, it was concluded that the show cause notice for excess refund recovery could not be issued. Consequently, the demand against the appellant was deemed unsustainable, leading to the impugned order being set aside, and the appeal was allowed with any consequential relief.