2019 (2) TMI 1243 - SC - Central Excise

Refund of central excise duty - duty was paid under protest - applicability of time limitation - Section 11B of the Central Excise Act, 1944 - whether the period of limitation of six months shall apply where the refund of central excise duty has been claimed by the buyer and paid by the manufacturer(M/s. Fenner (India) Ltd.) under protest? Held that - Section 11B deals with the claim of refund of duty as paid on his own accord by any person for refund of such duty to the competent authority before the expiry of six months from the relevant date as prescribed but where the duty was paid under protest in terms of the 2nd proviso to Section 11B(1), the period of limitation may not apply. Although the buyer can also apply for refund provided the duty of excise is borne by the buyer and he had not passed on the incidence of such duty to any other person as referred to under Section 11B(2)(e) and the application has been moved within the period of six months from the relevant date of purchase of the goods by such person in terms of Section 11B(5)(B)(e) of the Act - The scheme of Section 11B makes a distinction between right of the manufacturer to claim refund from right of the buyer to claim refund treating them separate and distinct for making an application for refund exercising their right under Section 11B of the Act. In the instant case, indisputedly the application was filed by the appellant as a buyer of the goods(conveyor belts) from M/s. Fenner (India) Ltd. who paid the duty under protest much after a period of limitation(six months) as prescribed under the mandate of law disentitles the claim of refund to the appellant - appeal dismissed - decided against appellant.

Summary

Issues:
- Refund of central excise duty paid under protest by the manufacturer.
- Applicability of the limitation period of six months to refund claims by the buyer.
- Distinction between the rights of the manufacturer and the buyer in claiming refunds under Section 11B of the Central Excise Act, 1944.

Analysis:

Issue 1: Refund of central excise duty paid under protest by the manufacturer
The judgment involves appeals against a Tribunal's order rejecting a buyer's claim for a refund of central excise duty paid by the manufacturer under protest. The manufacturer, M/s. Fenner (India) Ltd., paid the duty under protest due to a classification dispute, which was later resolved by a court decision. The buyer, a Public Sector Undertaking engaged in coal mining, filed a refund claim after the classification issue was settled, arguing that the duty collected should be refunded. The Tribunal rejected the refund application based on limitation and unjust enrichment grounds.

Issue 2: Applicability of the limitation period of six months
The main point of contention is whether the limitation period of six months applies to refund claims by the buyer when the duty has been paid by the manufacturer under protest. The buyer argued that the limitation should not apply in such cases, emphasizing that the protest made by the manufacturer should be considered in determining the timeliness of the buyer's refund claim. However, the respondent contended that the buyer must file the refund claim within six months from the date of purchase, which the buyer failed to do in this case.

Issue 3: Distinction between the rights of the manufacturer and the buyer
The judgment clarifies that Section 11B of the Act distinguishes between the rights of the manufacturer and the buyer in claiming refunds. The buyer can claim a refund if the duty is borne by them and has not been passed on to another person. The Court emphasized that the rights of the manufacturer and the buyer are separate and distinct when it comes to refund claims, as highlighted in the case law Commissioner of Central Excise, MumbaiII Vs. Allied Photographics India Ltd. The judgment also overturned a previous decision in National Winder Vs. Commissioner of Central Excise, Allahabad, holding it to be per incuriam.

In conclusion, the appeals were dismissed as the buyer's refund claims were filed after the six-month limitation period, as prescribed by Section 11B of the Act. The judgment reaffirmed the distinction between the rights of the manufacturer and the buyer in claiming refunds and upheld the Tribunal's decision based on legal precedents and the statutory provisions of the Central Excise Act, 1944.