2019 (6) TMI 195 - AT - Central Excise

Refund of CENVAT Credit - there is an ongoing controversy that credit in respect of inputs used in manufacture of goods exported under DFIA Scheme is not available - time limitation - HELD THAT - In the present case the Appellant had reversed credit as the similar asessees were facing issues from the department and therefore even though not agreeing to such view taken by the revenue, being law abiding assessee, the reversal was made. Hence it is not the case that the Appellant without any reason debited the credit amount. Further only when the position became clear they applied for refund. The claim of the Appellant is not time barred and they are entitled for the refund. However as the Appellate Commissioner has not given his findings on eligibility of refund on merits i.e whether the Appellant are otherwise eligible for the credit in the light of the FTP Scheme, we consider it appropriate to remand back the matter to the Appellate authority for deciding this limited aspect. Appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection on the ground of time bar.

Analysis:
The appeal was filed against the rejection of a refund claim of ?98,10,988/- along with interest by M/s BASF. The claim was rejected on the basis of being time-barred under section 11B of the Central Excise Act, 1944. The Appellant had voluntarily reversed credit due to ongoing controversy regarding the availability of credit for inputs used in goods exported under the DFIA Scheme. They reserved their right to claim back the reversed credit. The Assistant Commissioner held that the claim was time-barred as it was filed after one year of the debit entry. The Commissioner (Appeals) affirmed this decision, stating that the reversal was not made "Under Protest." The Appellant contended that the reversal was indeed made under protest, citing relevant case laws and arguing that section 11B was not applicable as the reversal was in compliance with a Customs notification, not the Central Excise Act.

The Appellate Tribunal found that the Appellant's reversal of credit was indeed made under protest, as they had reserved their right to claim back the reversed amount. The Tribunal emphasized that the absence of the phrase "Under Protest" did not negate the protest element. Various legal precedents were cited to support this interpretation, highlighting that any contest or reservation made during the reversal process should be considered a protest. The Tribunal differentiated the present case from previous rulings cited by the revenue, noting that the Appellant's reversal was done in response to departmental actions against similar assessees and was not arbitrary. Consequently, the Tribunal held that the Appellant's claim for refund was permissible and not time-barred. However, since the Appellate Commissioner did not assess the eligibility of the refund on merits, the matter was remanded back for further consideration on this specific aspect. The Appellate Commissioner was directed to decide the eligibility of the refund after providing the Appellant with an opportunity to be heard.

In conclusion, the appeal was allowed by way of remand to the Commissioner (Appeals) for a determination on the eligibility of the refund claim on its merits in the context of the FTP Scheme.