2016 (11) TMI 152 - AT - Central Excise

Compounded levy scheme - manufacture of chewing tobacco - abatement - refund of duty - limitation bar - section 11 B of the Central Excise Act 1944 - whether the provisions of section 11B of the Central Excise and Salt Act can be adopted for deciding the refund claim arising in terms of the compounded levy scheme for the purpose of determining the limitation? - Held that - reliance placed on the decision of Hans Steel Rolling Mill vs. CCE Chandigarh 2011 (3) TMI 2 - SUPREME COURT OF INDIA where it was held that the importing one scheme of tax administration to a different scheme is not appropriate and would disturb the smooth functioning of such unique scheme. Time limit prescribed under one scheme could be unwarranted for another scheme - the compounded levy scheme is a separate scheme from the normal scheme for determination of excise duty of goods manufactured. Rules under compounded levy scheme stipulate method time and manner of payment of duty interest and penalty and same being a comprehensive scheme in itself the general provisions of Central Excise Act and Rules stand excluded. It is not open to the Revenue to reject the refund claim under section 11 B of the Central Excise Act - appeal allowed - decided in favor of appellant.

Summary

Issues Involved: Refund claim under Pan Masala Packing Machine Rules, 2008 - Applicability of section 11B of the Central Excise Act for refund claims arising from compounded levy scheme.

Analysis:

1. The appellant, engaged in the manufacture of chewing tobacco under the Pan Masala Packing Machine Rules, 2008, filed a refund claim of ?7 lakhs due to the closure of a machine during a specific period. The authorities did not dispute the entitlement to abatement but rejected the claim based on the limitation period under section 11B of the Central Excise Act, 1944.

2. The appellant argued that section 11B should not apply to refund claims under the compounded levy scheme as it is a comprehensive scheme with its own provisions. The lower authorities disagreed, leading to the rejection of the refund claim.

3. The key issue was whether the provisions of section 11B could be applied to refund claims arising from the compounded levy scheme. Citing the decision in Hans Steel Rolling Mill vs. CCE, Chandigarh, the Tribunal noted that the compounded levy scheme operates independently from the general excise duty scheme. The Supreme Court's ruling emphasized that applying general tax administration provisions to a unique scheme could disrupt its functioning.

4. Previous Tribunal decisions, such as CCE, Ahmedabad vs. National Ceramic Works and CCE, Mumbai vs. Shree Ram Textile, supported the view that section 11B does not apply to refund claims under the compounded levy scheme. Even though some decisions were appealed, without a stay order, the Tribunal maintained that section 11B was not applicable to such refunds.

5. Considering the consistent legal precedents and the Supreme Court's ruling, the Tribunal set aside the impugned order and allowed the appeal, providing relief to the assessee. This decision reaffirmed that the provisions of section 11B of the Central Excise Act do not govern refund claims arising from the compounded levy scheme.

By aligning with established legal interpretations and precedents, the Tribunal clarified the non-applicability of section 11B to refund claims under the compounded levy scheme, ensuring consistency and adherence to the unique provisions of such schemes.