2016 (4) TMI 148 - HC - Central Excise

Refund claim - CESTAT rejected of claim as time barred - Held that - Department has taken a stand which is too technical in nature. The sum and substance of the letter of protest has to be read as a whole and not in portion. As per the order of the Tribunal, this letter of protest indicates that the appellant had protested against the determination of its annual capacity as per the order of the Commissioner dated 16th of April 1999. The appellant requested for redetermination of the annual capacity and consequently, the duty payable, and contended that hence onwards the duty would be paid under protest till the annual capacity and duty is redetermined. In our opinion, this letter of protest covers the period prior to 14th of June, 1999. Once the department accepts the contention of the appellant and grants refund for the period subsequent to 14th June, 1999, there was no reason why the refund for the period prior to 14th June, 1999 could not have been given.

Summary

Issues:
1. Justification of rejecting refund claim as time-barred by the Tribunal.

Comprehensive Analysis:
The case involved a dispute regarding the rejection of a refund claim as time-barred by the Tribunal. The appellant, engaged in processing grey fabrics, had paid Central Excise duty based on a provisional order by the Commissioner. Subsequently, the appellant contested the determination of annual production capacity, leading to a refund of excess duty paid from a certain date onwards. However, the department refused to refund the amount deposited prior to that date, citing the application was filed after the limitation period of six months as per Section 11-B of the Central Excise Act.

The key contention revolved around whether the appellant had deposited the duty under protest. The appellant had submitted a letter of protest on a specific date, challenging the capacity determination and stating that duty would be paid under protest until redetermination. The department considered this letter as a protest for deposits made after that date only, leading to the rejection of the refund claim for the period preceding it. The Tribunal upheld this decision, prompting the appellant to appeal.

Upon careful consideration, the High Court found the department's stance overly technical. The Court emphasized interpreting the letter of protest holistically rather than in parts. It was noted that the letter clearly protested against the capacity determination, requested redetermination, and stated future payments would be made under protest until the issue was resolved. The Court opined that the letter encompassed the period preceding the specified date and that if the refund was granted for the subsequent period, there was no valid reason to deny the refund for the preceding period.

Consequently, the High Court set aside the Tribunal's order and other departmental decisions. The appeal was allowed, with the substantial question of law answered in favor of the appellant, affirming their entitlement to a refund for the period preceding the specified date. No costs were awarded in the judgment.