2017 (4) TMI 891 - AT - Central Excise

Refund of cenvat credit reversed earlier which was not required to be reversed - period of limitation - refund of an amount equal to 5% of the value of exempted goods reversed in terms of Rule 6 (3) of the CCR, 2004 - Whether the time limitation of one year as provided u/s 11B is applicable? - Held that - There is no dispute that this amount does not represent excise duty. If this amount is not liable to be reversed, the same can be allowed as re-credit similarly in the manner as the Cenvat credit is allowed at the time of receipt of input/input service. Since the amount is not under the head of excise duty, the refund thereof does not fall under the term of Section 11B. Accordingly, limitation provided u/s 11B shall not be applicable in the present case where the respondent sought refund of an amount reversed in terms of Rule 6 (3) of CCR. However, an amount of ₹ 9,34,758/- plus interest of ₹ 3,25,000/- was confirmed as a demand in the adjudication process - The said order was not challenged by the respondent. Therefore, the demand of ₹ 9,34,758/- along with interest of ₹ 3,25,000/- attained finality - the amount of ₹ 9,34,758/- plus ₹ 3,25,000/- cannot be refunded to the respondent. Appeal allowed - decided partly in favor of appellant.

Summary

Issues involved:
1. Admissibility of refund for the amount reversed in terms of Rule 6(3) of the Cenvat Credit Rules, 2004.
2. Applicability of the time limitation under Section 11B for the refund claim.

Analysis:
1. The main issue in this case is whether a refund of an amount equal to 5% of the value of exempted goods reversed under Rule 6(3) of the Cenvat Credit Rules, 2004 is admissible. The appellant reversed an amount of ?19,74,742 representing 5%/6% of the value of bagasse/pressmud cleared during a specific period. The appellant filed a refund claim, which was rejected by the original authorities citing time limitation under Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) allowed the appeal, stating that the reversal under Rule 6(3) is not excise duty payment, hence Section 11B limitation does not apply. The Revenue challenged this decision.

2. The Revenue argued that the refund claim was filed under Section 11B, so all provisions, including the time limitation, should apply. The Revenue also contended that an amount paid in compliance with a previous order should not be refunded. The Tribunal noted that the reversed amount does not constitute excise duty, making Section 11B inapplicable. However, an amount confirmed as a demand in an adjudication process, which was not appealed against, could not be refunded. The Tribunal allowed re-credit for the remaining amount in the Cenvat account but upheld the demand of ?9,34,758 along with interest, as it had attained finality due to non-challenge by the respondent.

In conclusion, the Tribunal partially allowed the appeal, modifying the order to disallow the refund of the confirmed demand amount but allowing re-credit for the remaining sum. The decision clarified that the reversal under Rule 6(3) is not subject to the time limitation under Section 11B, as it does not pertain to excise duty. The judgment was pronounced on 20/03/2017.