2018 (9) TMI 1126 - AT - Central Excise

Refund claim - assessment orders not challenged - Section 11A of Central Excise Act - area based exemption availed - N/N. 56/2002-CE dated 14.11.2002 - Held that - The issue emerges before us is that, as refund claim was sanctioned to the appellant, and without challenging those assessment orders of refund claims sanctioning thereof, can be challenged by way of issuance of show cause notice under Section 11A of the Act or not - the provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Challenge to denial of self credit of duty paid on freight portion from assessable value.
- Invocability of extended period of limitation for demanding excess refund claim.
- Applicability of Section 11A of the Act to challenge refund claims sanctioned without appeal.

Analysis:
1. The appellant, engaged in manufacturing Lead Ingots & Lead Oxide, availed exemption under Notification No. 56/2002-CE as they were located in Jammu & Kashmir. They cleared goods with outward freight charges, paid duty through PLA after exhausting Cenvat credit, and were allowed re-credit for the period April 2007 to January 2010. A show cause notice was issued in 2011 to deny self credit of duty paid on freight portion from assessable value, claiming excess refund as recoverable. The matter was adjudicated, and while the extended period was invoked, the demand for the period was dropped by the Commissioner (Appeals), leading to the appellant's appeal.

2. The appellant argued that the refund claim was correctly sanctioned as outward freight constituted a part of the transaction value, and they paid duty accordingly. They contended that without challenging the refund claim in appeal, a show cause notice under Section 11A of the Act could not be issued, citing a Gauhati High Court case. They maintained that the demand for the sanctioned refund claim should not be open for challenge.

3. On the contrary, the Revenue argued that the appellant intentionally paid duty on transportation charges, forming part of the assessable value, to obtain an inadmissible refund, justifying the invocability of the extended period of limitation.

4. The Tribunal, after considering both parties' submissions, focused on the issue of whether refund claims sanctioned to the appellant could be challenged through a show cause notice under Section 11A of the Act without contesting the assessment orders of the refund claims. Citing the Gauhati High Court case of Jellalpur Tea Estate, the Tribunal concluded that Section 11A was not applicable in this scenario, as statutory remedies should be availed as prescribed by law. Consequently, the demand against the appellant was deemed unsustainable.

5. Ultimately, based on the analysis and legal principles discussed, the Tribunal allowed the appeal filed by the appellant, ruling in their favor and setting aside the demand made against them.