2018 (12) TMI 1471 - AT - Central Excise

Refund of MODVAT Credit - refund rejected on the ground of time limitation - Whether the Commissioner (Appeals) was right in rejecting the refund claim on merits also when the Assistant Commissioner has not done so? - difference of opinion. Held that - There is a difference of opinion - the difference of opinion is on the point Whether the appeal has to be rejected in toto as held by the learned Member (Technical) or the matter has to be remanded to the original adjudicating authority for fresh decision as observed by the learned Member (Judicial).

Issues Involved:
1. Whether the refund claim was barred by limitation.
2. Whether the Commissioner (Appeals) was right in rejecting the refund claim on merits also when the Assistant Commissioner had not done so.

Detailed Analysis:

1. Limitation of Refund Claim:
The appellants filed a refund claim for the MODVAT Credit balance and PLA balance after surrendering their registration. The Assistant Commissioner rejected the claim on the basis of time bar, and the Commissioner (Appeals) upheld this rejection on both merits and limitation. The appellants argued that they were advised by the range officer to wait until the closure of proceedings before filing the refund claim, which should exempt them from the limitation period. However, the tribunal found no evidence that the appellants were prevented from filing the claim immediately after surrendering their registration. The tribunal upheld the rejection of the refund claim on the grounds of limitation, emphasizing that the law of limitation does not permit delays beyond the prescribed period.

2. Merits of the Refund Claim:
The appellants contended that the Assistant Commissioner did not record any findings on the merits and that the Commissioner (Appeals) overstepped by rejecting the claim on merits. The tribunal referenced the larger bench decision in Gauri Plasticulture (P) Ltd., which held that refund claims for unutilized MODVAT Credit are not admissible in cash unless the credit was used for duty payment at the department's insistence. The tribunal concluded that since the appellants were not barred from utilizing the MODVAT Credit, their refund claim lacked merit.

3. Commissioner (Appeals) Authority:
The appellants argued that the Commissioner (Appeals) should not have rejected the refund claim on merits when the Assistant Commissioner had not addressed this aspect. The tribunal clarified that under Section 11B, the claimant must justify the refund claim on all grounds, including merits, limitation, and unjust enrichment. The Commissioner (Appeals) is authorized to consider all aspects of the claim, even if the Assistant Commissioner rejected it solely on limitation. The tribunal upheld the Commissioner (Appeals)'s authority to reject the claim on merits.

4. Refund of PLA Balance:
The tribunal distinguished the refund of the PLA balance from the MODVAT Credit. Since the PLA balance is the appellant's money, it is not subject to the same limitation rules. The tribunal upheld the refund of the PLA balance, as it was not barred by limitation.

Separate Judgment by Member (Judicial):
The Member (Judicial) agreed on the refund of the PLA amount but differed on the refund of unutilized Cenvat Credit. The Member (Judicial) emphasized that the original adjudicating authority did not express any opinion on the merits of the case, and the Commissioner (Appeals) should not have decided on merits. The Member (Judicial) argued that the limitation period should start from the acceptance of the surrender of registration, not the date of surrender application, and suggested remanding the matter for fresh consideration on both limitation and merits.

Conclusion:
The tribunal upheld the rejection of the refund claim for unutilized MODVAT Credit on the grounds of limitation and lack of merit. However, the refund of the PLA balance was allowed. The Member (Judicial) proposed remanding the case for a fresh decision on limitation and merits, highlighting the need to await the Larger Bench decision of the Bombay High Court on similar issues.

← Previous Next →