2020 (2) TMI 1164 - HC - Central Excise

Refund of Excise Duty - payment made under protest - applicability of time limitation u/s 11B of the Central Excise Act - HELD THAT - The exemption in the present case was granted to the specific Assessee, in the specific facts and for specific quantity of the Coin Blanks manufactured and supplied by the Assessee. This was done for the purpose of maintaining the value of Coin Blanks itself - The payment of excise duty at the time of clearance of goods in anticipation of exemption right from the day one was therefore with the ardent hope of real and effective exemption and the refund of duty paid by the Assessee under compulsion for clearance of the goods. Such a payment even though not labelled by the Assessee to have been paid 'under protest', could very well be treated as payment made by the Assessee 'under protest' only as per the provisions of Section 11B of the Act paving the way for the rightful refund of excise duty in consonance with Article 265 of Constitution of India which does not permit the State to collect the tax or duty without authority of law. The refund is for clearances of goods in question pertains to period from 1994. Already 26 years have passed due to one mistake in the decision taken by the Assessing Authority. The intention of Adhoc exemption itself was a glaring fact available before the Assessing Authority. Particularly the clarification issued on 30.06.1995 makes it clear that exemption was applicable for the entire quantity of goods supplied but ignoring this fact, the Asseesing Authority passed an order denying the refund partially, invoking the technical plea of limitation ignoring the exemption under the Second Proviso of Section 11B of the Act, whereby no limitation would apply when payment of Duty is treated as payment made 'under protest'. The present Writ Petition filed by Assessee Steel Authority of India Ltd., deserves to be allowed - Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Rejection of refund claim on the ground of limitation under Section 11B of the Central Excise Act.
2. Applicability of exemption notification to the entire quantity of goods supplied.
3. Whether the payment of excise duty can be treated as made 'under protest'.

Issue-wise Detailed Analysis:

1. Rejection of refund claim on the ground of limitation under Section 11B of the Central Excise Act:

The Assessee, a Government of India undertaking, filed a writ petition under Article 226 of the Constitution of India, challenging the order of the Customs, Central Excise & Service Tax Appellate Tribunal (CESTAT), which upheld the rejection of a refund claim for excise duty on the ground of limitation under Section 11B of the Central Excise Act. The Tribunal distinguished the case from the Calcutta High Court's decision in Assistant Collector of Central Excise, Calcutta Vs. Bata Shoe Co. (P) Ltd., where the payment of duty was made under protest. The Tribunal noted that in the present case, the duty was not paid under protest, and the ad-hoc exemption order issued by the Central Government operated differently. The Tribunal followed its earlier view in the case of Ion Exchange, which supported the Revenue's stance that the refund claim was time-barred under Section 11B.

2. Applicability of exemption notification to the entire quantity of goods supplied:

The Assessee was granted an ad-hoc exemption by the Central Board of Excise and Customs (CBEC) for the entire quantity of 2640 Metric Tons of Stainless Steel Coin Blanks supplied to the Department of Economic Affairs. The exemption was clarified to apply to all clearances made by the Assessee. However, the Assessee initially paid the excise duty and later claimed a refund. The Adjudicating Authority allowed a partial refund but disallowed the remaining claim on the ground of limitation. The learned counsel for the petitioner argued that the exemption granted should apply to the entire quantity and that the duty paid should be refunded, treating it as paid 'under protest'.

3. Whether the payment of excise duty can be treated as made 'under protest':

The learned counsel for the petitioner emphasized that the payment of excise duty should be considered as made 'under protest' due to the specific circumstances and the ad-hoc exemption granted. The court observed that the exemption was granted for a specific quantity and purpose, and the payment of excise duty was made under compulsion for clearance of goods. The court held that such payment could be treated as made 'under protest' under Section 11B of the Act, paving the way for the rightful refund of excise duty in consonance with Article 265 of the Constitution of India, which prohibits the collection of tax or duty without authority of law.

Conclusion:

The court criticized the narrow and pedantic view of the Assessing Authority and the Tribunal's pro-revenue approach, which led to unnecessary litigation and loss of public resources. The court set aside the orders of the Tribunal and the authorities below, directing the Assessing Authority to refund the entire eligible amount with interest according to law. The writ petition was allowed, and no order as to costs was made.