2018 (10) TMI 953 - AT - Central Excise

Refund claim - whether refund can be denied without challenging those assessment orders of refund claims by way of issuance of show cause notice under Section 11A of the Act or not? - Held that - The issue is decided in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE 2011 (3) TMI 11 - GAUHATI HIGH COURT , where it was held that Section 11A of the Act not applicable since the issue raised did not concern any approval, acceptance or assessment relating to the rate of duty on or valuation of any excisable goods. Thus, 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 charges from assessable value for the period 2007-2011.

Analysis:
The appellant, engaged in manufacturing Zinc Oxide & Zinc Alloys, availed exemption under Notification No. 56/2002-CE as they were located in Jammu & Kashmir. They cleared goods with outward freight charges included, paid duty through PLA after exhausting Cenvat credit, and were allowed re-credit. However, a show cause notice in 2012 was issued to deny self-credit of duty paid on freight charges, leading to an excess refund claim by the appellant. The matter was adjudicated, and demand for erroneous refund was confirmed. The appellant challenged this before the Commissioner (Appeals), who held that the extended period was not applicable, dropping the demand for the period 2007-2011. The appellant then appealed against this decision.

The appellant argued that since the refund claim was initially sanctioned based on outward freight being part of the transaction value, they correctly paid duty and the refund was rightly sanctioned. They cited a Gauhati High Court case to support their position that a show cause notice cannot be issued under Section 11A without challenging the refund claim in appeal.

On the contrary, the AR contended that the appellant deliberately paid duty on transportation charges to avail inadmissible refund, making the extended period of limitation applicable. After hearing both sides, the Tribunal focused on whether a refund claim, once sanctioned, could be challenged without appealing the assessment orders. They referenced the Gauhati High Court case, which emphasized that statutory remedies should be availed as prescribed by law and that circumventing the law through Section 11A was impermissible. Consequently, the Tribunal held that Section 11A was not applicable to the case, rendering the demand against the appellant unsustainable.

In conclusion, based on the analysis and legal precedent, the Tribunal allowed the appeal filed by the appellant, ruling in their favor and setting aside the demand.