2018 (4) TMI 1497 - HC - Central Excise

CENVAT credit - duty paid under protest - Whether the learned CESTAT was correct and justified in ignoring that the amount of ₹ 3,53,171/- besides having paid through PLA was also debited from CENVAT credit? - Whether the learned CESTAT was justified and correct in holding that the payment of the same duty paid out of PLA from the payment of ₹ 4 lac per treasury challan TR-6 under protest is without any indicate of protest from PLA extract?. Held that - pursuant to the order passed by the authority suspending CENVAT Credit on 19-2-2001 (Annexure-4) was period of two months - the amount of ₹ 400000/- which was deposited vide TR-6 Challan (Annexure-5), there cannot be two duplex of payment of tax. The limitation period would start not from the date of deposit but from the date of the decision by Commissioner (Appeals) which was decided on 21-4-2006 (Annexure-3). Even on limitation, the appellant has good case - The appellant will be given CENVAT Credit and if the application is made, immediately effect will be given. Appeal allowed - decided in favor of assessee.

Summary

Issues Involved:

1. Whether the learned CESTAT was correct and justified in ignoring that the amount of ?3,53,171/- besides having paid through PLA was also debited from CENVAT credit?
2. Whether the learned CESTAT was justified and correct in holding that the payment of the same duty paid out of PLA from the payment of ?4 lac per treasury challan TR-6 “under protest” is without any indication of protest from PLA extract?

Detailed Analysis:

Issue 1:

The appellant challenged the judgment of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) which reversed the decision of the Commissioner (Appeals) and allowed the department's appeal. The appellant contended that the amount of ?3,53,171/- was paid through both PLA and CENVAT credit. The Commissioner (Appeals) had previously found that the refund claim was rejected on the grounds of limitation, despite the fact that the amount was paid through both PLA and CENVAT credit. The Commissioner (Appeals) noted that while the appellant mentioned "under protest" when depositing ?4,00,000/- through TR-6 challan in PLA, the same was not mentioned when making the debit entry for ?3,53,171/- in PLA, leading to the rejection of the refund claim on the grounds of limitation. The Commissioner (Appeals) found this rejection unsustainable and set aside the denial of the refund claim. However, the Tribunal did not accept this reasoning and restored the order of the original authority, emphasizing that the payment of ?3,53,171/- was not made under protest as per the PLA extracts, thus making the refund claim erroneous.

Issue 2:

The Tribunal's decision was challenged on the grounds that it incorrectly held that the payment of ?4,00,000/- through TR-6 challan under protest was without any indication of protest from the PLA extract. The appellant argued that the deposit of ?4,00,000/- was explicitly made under protest, and the failure to mention "under protest" while debiting the CENVAT credit was an oversight. The Tribunal observed that the respondents did not dispute the defaults in duty payments and the debarment order issued by the competent authority. The Tribunal noted that the debarment order was valid for two months, after which the credit barred from utilization was available again. The Tribunal directed the respondents to pay the interest as demanded by the original authority, but found no basis for the Commissioner (Appeals) to conclude that there was a double payment. The Tribunal restored the original authority's order, which did not recognize the payment of ?3,53,171/- as made under protest.

Judicial Precedents Cited:

The appellant cited several cases to support their argument:
1. Shree Shyam Filaments v. Commissioner of Central Excise, Jaipur: The court held that merely not mentioning "under protest" should not negate the protest if the intent was clear.
2. Lloyds Steel Industries Ltd. v. Union of India: The court upheld the right to use CENVAT credit during the period of debarment.
3. Indian Farmers Fertilisers Co-op. Ltd. v. Commr. (K-II) Central Excise: The court emphasized that payment under protest does not require hyper-technical compliance with Rule 233B.
4. Synex Pharmaceuticals Pvt. Ltd. v. Commr. of C. Ex., Mumbai-V: The court distinguished cases where the order withdrawing the facility to pay duty on a fortnightly basis was not challenged.

Court's Decision:

The court concluded that the appellant had a valid case even on the grounds of limitation. The amount of ?4,00,000/- deposited under protest could not be considered a double payment of tax. The limitation period for the refund claim should start from the date of the decision by the Commissioner (Appeals) on 21-4-2006, not from the date of the deposit. The court allowed the appeal, directing that the appellant be given CENVAT credit and immediate effect be given to their application.

Conclusion:

The court ruled in favor of the appellant, recognizing the validity of the protest and the timing of the limitation period. The appeal was allowed, and the appellant was entitled to the CENVAT credit as claimed.