2018 (9) TMI 1435 - HC - Central Excise

Time Limitation for filing refund claim - Section 11B of CEA - whether the Revenue could have denied the claim made by the assessee as being barred by limitation? - Held that - The Court granted a declaratory relief in favour of the assessee holding that the assessee is not liable to pay excise duty for the betel nut powder known as supari . The assessee also sought for a consequential relief before the Writ Court to forbear the respondents from demanding any excise duty from them - So far as the consequential relief is concerned, the Court remanded the matter to the authorities to consider whether or not the duty paid by the assessee had been passed on to the consumers. If the assessee had passed on the duty to the consumers, they are not entitled for refund. However, it was left to the authorities to take an appropriate decision in the matter. The proper manner of interpreting the direction issued by the Court is to give relief to the order and not to render the order passed by the Court unworkable. The Writ Court has granted declaratory relief holding that the assessee is not liable to pay excise duty on betel nut powder. The necessary consequence that has to follow from it is as to what would be the relief that the assessee is entitled to after it has been declared that they are not liable to pay excise duty. There is no need for interpretation or speculation in this regard, since the High Court itself has issued appropriate direction with regard to the consequential relief. The Writ Court, for such purpose, has remanded the matter to the authorities to consider whether or not the duty paid by the assessee had been passed on to the consumers and if the assessee had passed on the duty to the consumers, they are not entitled for the refund. Thus, the scope of remand is the directions as pointed above and what the authority has to look into for the purposes of the consequential relief has also been clearly circumscribed. The authorities of the appellant-Department cannot sit in judgment over the orders passed by the Writ Court. The scope of remand cannot be altered by the Department. There is no requirement for the assessee to file an application for refund on the matter being remanded to the Assessing Officer. All that is required to be done is to issue a notice to the assessee calling upon him to establish that they have not passed on the duty to the consumers. Thus, the Department mis-directed itself in agitating the case as a fresh case. The substantial questions of law, which have been framed for consideration in this appeal, does not arise for consideration - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Whether the refund claim was filed within the statutory period of six months as per Section 11B of the Central Excise Act, 1944.
2. Whether the Tribunal was correct in holding that the claim was not hit by limitation.
3. Whether the Tribunal correctly interpreted the applicability of the limitation period for buyers of duty-paid packed supari under Section 11B of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Statutory Period of Six Months for Refund Claim:
The primary issue in this case is whether the refund claim filed by the assessee was within the statutory period of six months as mandated by Section 11B of the Central Excise Act, 1944. The assessee had filed a writ petition challenging the levy of central excise duty on "scented supari," which was declared non-excisable by the High Court. The High Court remanded the matter to the authorities to determine if the duty paid by the assessee had been passed on to consumers. The assessee filed a refund application on 24.11.1999, which was deemed time-barred by the adjudicating authority as it was filed beyond six months from the relevant date.

2. Tribunal's Decision on Limitation:
The Tribunal held that the refund claim was not hit by limitation, considering the High Court's order remanding the matter for consequential relief. The Tribunal's decision was based on the interpretation that the High Court's order implicitly provided an exemption from the limitation period under Section 11B(3) of the Act. The Revenue, however, contended that the claim was time-barred and referred to the Supreme Court's decision in the case of Commissioner of Central Excise, Mumbai II vs. Allied Photographic India Ltd., which stated that the six-month limitation period applies unless the duty was paid under protest.

3. Applicability of Limitation Period for Buyers of Duty-Paid Packed Supari:
The Tribunal's interpretation of the limitation period for buyers of duty-paid packed supari was also challenged. The Revenue argued that the limitation period for filing a refund claim under Section 11B of the Act should be six months from the date of purchase, and since the assessee was a buyer and not a manufacturer, the benefit of the exclusion of the six-month limitation period applicable to manufacturers paying duty under protest did not apply. The Tribunal, however, held that the claim was not hit by limitation, aligning with the High Court's order that remanded the matter for a consequential decision without explicitly addressing the limitation issue.

Conclusion:
The High Court, in its judgment, emphasized that the declaratory relief granted to the assessee, which stated that the assessee was not liable to pay excise duty on betel nut powder (scented supari), necessitated a consequential relief. The remand order directed the authorities to determine if the duty had been passed on to consumers, and if not, the assessee would be entitled to a refund. The High Court criticized the Revenue's attempt to overstep the remand order and held that the authorities could not reinterpret the High Court's directive, which implicitly allowed for the refund claim despite the limitation period. Consequently, the appeal filed by the Revenue was dismissed, and the Tribunal's decision that the refund claim was not barred by limitation was upheld.