2020 (4) TMI 39 - AT - Central Excise

Refund of closing balance of PLA - bar on utilization of deposits in PLA - whether the balance lying in the assessee s PLA, which became non-usable with effect from 1 July, 2017 with the introduction of GST regime, is required to be refunded to them or not? HELD THAT - Admittedly, in the present case such deposits are made by the appellant for utilization in future. In case the same could not be used on account of introduction of GST and there being no transitional provision for transfer of such PLA deposit, the same would be refundable to the appellant. The lower authorities have taken the deposit of the same as the relevant date and since the application stands filed after a period of one year from the date of deposit, they have rejected the same on the ground of limitation. Apart from the fact that limitation provisions are not applicable, it is also seen that such refund becomes admissible only with effect from 1 July, 2017 and not before that - The refund application having been filed on 26 June, 2018 is required to be considered as having been filed before the period of one year as the cause of action arose only on 1 July, 2017. There are no justification for denial of the refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of amount deposited in PLA under Central Excise regime after introduction of GST - Applicability of limitation period for refund application.

Analysis:
The appellant, a Central Excise assessee, deposited an amount in their PLA which became non-usable with the introduction of GST provisions from 1 July, 2017. The issue revolved around the refund of the balance in the PLA, amounting to ?2 lakhs, as the appellant filed a refund application beyond the one-year limitation period from the date of deposit. The original adjudicating authority rejected the refund application on grounds of limitation, a decision upheld by the Commissioner (Appeals) leading to the present appeal.

During the hearing, the Counsel for the appellant argued that the PLA deposit is akin to "duty waiting to be debited" and not a duty under the Act, citing a Tribunal decision. The Counsel contended that if the appellant couldn't utilize the PLA deposit due to GST introduction without any transitional provision for transfer, they were entitled to a refund. The Tribunal noted that the lower authorities considered the date of deposit as relevant for the limitation period, leading to the rejection of the refund application. However, the Tribunal opined that limitation provisions did not apply to such refunds, and the application, filed on 26 June, 2018, should be deemed within the one-year period as the cause of action arose only on 1 July, 2017, when the refund became admissible.

Consequently, the Tribunal found no justification for denying the refund and set aside the impugned order, allowing the appeal with consequential relief to the appellant. The decision was pronounced in open court on 4 March 2020.