2017 (9) TMI 1441 - AT - Service Tax

Refund of Revenue Deposit - time limitation - whether the appellant who had deposited the tax, as their claim for being exempt under N/N.74/93-CE dated 28/02/1993, was not accepted by the Department and subsequently when the matter came to be settled by the Hon ble Supreme Court and the appellant applied for refund, whether the same has been rightly rejected on the ground of limitation? Held that - the appellant have deposited the duty under protest - in view of the exemption notification being held applicable in favor of the appellant, subsequently by Hon ble Supreme Court order, the amount of duty deposited acquired the character of revenue deposit - there is no limitation for refund of Revenue deposit - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the rejection of the appellant's refund claim on the ground of limitation under the Central Excise Act, 1944 was justified.

Analysis:
The appellant, a unit of U. P. State Electricity Board, manufactured Electricity Poles for their own use. Initially, the Department demanded tax payment due to a dispute regarding the appellant's exemption claim under Notification No. 74/93-CE. The appellant paid the tax under protest for the period of November 2005 to March 2006. Subsequently, the Hon'ble Supreme Court ruled in favor of the appellant's eligibility for full exemption under the said notification. Following this, the appellant filed a refund claim for the tax paid. However, the claim was rejected on grounds of limitation as per Section 11B of the Central Excise Act, 1944.

The appellant contended that the duty was paid under protest as the Department did not accept their exemption declaration. They argued that the duty paid acquired the character of a revenue deposit, and hence, there should be no limitation for refund. The appellant relied on a previous ruling of the Hon'ble Allahabad High Court in a similar case, where it was held that the limitation under Section 11B(1) does not apply to goods entitled to exemption, emphasizing that any delay was attributable to the revenue authority.

After considering the arguments, the Tribunal held that the duty was indeed deposited under protest and that the duty paid acquired the nature of a revenue deposit following the Supreme Court's order. The Tribunal agreed with the appellant's contention that there should be no limitation for refund of a revenue deposit. Consequently, the appeal was allowed, the impugned order was set aside, and the Adjudicating Authority was directed to grant the refund to the appellant within 45 days from the date of the order, along with applicable interest.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the nature of the duty paid as a revenue deposit and the absence of any limitation for its refund in such circumstances.