2019 (7) TMI 1139 - AT - Central Excise

Refund claim - amount paid on reversal of credit alongwith interest and penalty - amount was paid without any protest - only reason for rejection of the claim is that the appellant had opted for the provision made under sub-Section 6 7 of Section 11A - HELD THAT - It is not only the payment of amount, interest and 25% penalty but the appellant needs to give an intimation to the department accepting their liability which the appellant had not given, in such case if at all the Revenue is of the view that the amount is legally payable, it was incumbent on the Revenue to issue a SCN which they failed to do so. Therefore, in these circumstances, the appellant is rightly entitled for refund of the amount of Cenvat Credit, interest and penalty paid by them. The adjudicating authority shall process the refund in accordance with law - appeal allowed - decided in favor of appellant.

Summary

Issues: Refund claim rejection based on Section 11A(6&7) of Central Excise Act.

Analysis:

Issue 1: Refund Claim Rejection
The appellant, engaged in manufacturing cranes and hoists, paid service tax on activities related to Erection, Commissioning, and Installation. The audit raised objections, leading to the reversal of credit, payment of interest, and a 25% penalty. A refund claim was filed within a year of payment, which was rejected by the Commissioner (Appeals) citing Section 11A(6&7) of the Central Excise Act. The appellant argued that they had not opted for the benefits under this section and had not given any intimation regarding the payment. The appellant relied on previous judgments to support their claim. The revenue, represented by the Assistant Commissioner, supported the impugned order's findings.

Issue 2: Interpretation of Section 11A(6&7)
The Tribunal analyzed the provisions of Section 11A(6&7) of the Central Excise Act, which require a person chargeable with duty to pay the duty, interest, and penalty before the service of a show cause notice, and inform the Central Excise Officer in writing. The Officer, upon receipt of such information, should not issue any notice if the payment is found to be in order. The Tribunal noted that the appellant had paid the required amount but had not given the necessary intimation to the department. As per the Tribunal's interpretation, the Revenue should have issued a show cause notice if they believed the payment was legally due, which they failed to do. Therefore, the Tribunal held that the appellant was entitled to a refund of the Cenvat Credit, interest, and penalty paid.

Conclusion:
The Tribunal, after considering the submissions and provisions of Section 11A(6&7), concluded that the appellant's refund claim was valid. The impugned order was set aside, and the appeal was allowed. The adjudicating authority was directed to process the refund in accordance with the law. This judgment clarifies the importance of complying with procedural requirements, such as giving intimation to the department, in claiming refunds under the Central Excise Act.