2017 (1) TMI 162 - AT - Central Excise

Rejection of refund claim - section 11B of Central Excise Act, 1944 - denial on the ground that since demand matter was remanded by the Tribunal for the fresh adjudication, refund is pre-mature - time bar - Held that - I find that refund was admittedly submitted on 9-2-2002 in respect of amount deposited in March, 2001 though the appellant subsequently again filed the refund claim on 29-7-2005 but the refund claim filed first time should be considered as filing of refund which is well within the prescribed time limit of one year. In view of these facts I hold that refund is not time bar. Premature refund - Held that - I find that show cause notice as well as adjudication order was only on the ground of time bar. The Commissioner(Appeals) was not suppose to address any other issue for this reason order of the Ld. Commissioner(Appeals) is not reasonable - it was also not brought on record that what is the status of demand case. The sanctioning authority should also decide the refund claim taking into consideration the status of demand case - appeal allowed by way of remand.

Summary

Issues:
1. Rejection of refund claim as time-barred.
2. Rejection of appeal by Commissioner (Appeals) on the ground of prematurity.

Analysis:
1. The case involved a refund claim filed under Section 11B of the Central Excise Act, 1944. The appellant had deposited an amount of ?16 lacs in March 2001 and filed a refund claim on 9-2-2002. The department rejected the refund claim on 3-5-2002 citing an ongoing investigation. Subsequently, a demand show cause notice was issued proposing a demand of ?40,55,519/- and appropriation of the ?16 lacs deposited. The demand was confirmed on 20-7-2004, and the ?16 lacs were appropriated. An appeal was filed before CESTAT, which remanded the matter for fresh disposal. The appellant again requested a refund on 11-6-2005. However, the Asstt. Commissioner rejected the refund claim on 27-10-2005 as time-barred, stating that the refund claim filed on 29-7-2005 was beyond the prescribed time limit. The Commissioner (Appeals) upheld this rejection, citing prematurity due to the remanded demand case.

2. The appellant argued that the refund claim filed on 9-2-2002 was within the one-year period as per Section 11B, and the subsequent claim on 29-7-2005 should not affect the original claim's validity. The Commissioner (Appeals) was criticized for exceeding jurisdiction by rejecting the appeal on prematurity, which was not the ground for rejection in the show cause notice or the original order. The Tribunal found that the original claim filed in 2002 was within the prescribed time limit and should be considered valid. The rejection based solely on time-bar was deemed unreasonable, as the Commissioner (Appeals) did not address other issues like merit or unjust enrichment. The Tribunal remanded the matter to the adjudicating authority to pass a fresh order after considering the status of the demand case and giving a personal hearing to the appellant. The adjudicating authority was instructed to dispose of the matter within three months to expedite the resolution of the case.