2017 (11) TMI 1486 - HC - Central Excise

Refund of duty paid under protest - time limitation - Section 11B of the Central Excise Act, 1944 - Held that - In view of specific finding recorded by the Tribunal that the duty amount has been deposited under protest, limitation of one year to make the claim of refund under Section 11B would not apply at all to such a case and therefore the amount is liable to be refunded to the appellant along with interest excluding the period for which the petitioner had not applied that is upto 2009 from the date it became liable to be refunded - the principal amount is to be refunded but no interest be given from the date writ petition was allowed to the date when the appellant made an application for refund that is 2009 - appeal allowed in part.

Summary

Issues:
1. Refund claim rejection under Section 11B of the Central Excise Act, 1944.
2. Time limitation for filing refund application.
3. Application of the second proviso to Section 11B(1) regarding duty paid under protest.

Issue 1: Refund claim rejection under Section 11B of the Central Excise Act, 1944:
The appeal was filed against the Custom, Excise and Service Tax Appellate Tribunal's order rejecting the appellant's refund claim for a duty amount deposited under protest. The Tribunal invoked Section 11B of the Act, which deals with refund claims. The Tribunal found that the refund application was made beyond the time limit prescribed by this section, leading to the rejection of the claim.

Issue 2: Time limitation for filing refund application:
The disputed period for the demand in question was from 16.11.1997 to 01.06.1998. The appellant deposited the disputed duty amount under protest on 12.04.2004 during the pendency of a writ petition. The writ petition was allowed on 11.03.2005. However, the appellant filed the refund application in 2009, four years after the deposit. The Tribunal considered this delay and rejected the claim based on the limitation period of one year from the relevant date, as per Section 11B.

Issue 3: Application of the second proviso to Section 11B(1) regarding duty paid under protest:
The appellant argued that the duty amount was deposited under protest, which, according to the second proviso to Section 11B(1), would waive the limitation period. Citing the judgment in Mafatlal Industries Ltd. Vs. Union of India, the appellant contended that the payment under protest exempts the claim from the one-year limitation. The Supreme Court's ruling in the mentioned case clarified that when duty is paid under protest, the limitation period does not apply, especially when the duty is paid under court orders pending an appeal or writ petition.

In conclusion, the High Court allowed the appeal to the extent that the duty amount deposited under protest was liable to be refunded to the appellant. The Court held that the limitation of one year under Section 11B did not apply in this case due to the payment being made under protest. The principal amount was to be refunded, excluding interest for the period until the appellant applied for the refund in 2009. Interest beyond that date could be granted.