2020 (4) TMI 600 - AT - Central Excise

Refund of duty paid during investigation - Applicability of Section 11B of Central Excise Act 1944 - HELD THAT - Section 11B of Central Excise Act 1944 comes into application only in the case of refund of excise duty. In the present case when the amount is paid during investigation it does not attain the character of duty. A deposit is made to safeguard the interest of Revenue pending adjudication whereas the duty is paid for discharging a statutory obligation - It has been held in various decisions that amount paid as pre-deposit or the amount paid during investigation cannot be considered as duty. For refund of such pre-deposit a mere letter to the department is sufficient. The refund of pre-deposit does not require to take recourse of Section 11B at all. The rejection of refund is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of pre-deposit amount, application of Section 11B of Central Excise Act, 1944.

Analysis:
The case involved a dispute regarding a refund claim of an amount deposited by the appellant during an investigation process, which was alleged to be a duty evasion. The appellant deposited ?9 lakhs towards the alleged duty evasion, and after adjudication, the original authority confirmed the duty, interest, and penalties. However, the Commissioner (Appeals) set aside the order-in-original in favor of the appellant. The department then filed an appeal, which was later withdrawn as per the litigation policy due to the amount involved being less than ?20 lakhs. Subsequently, the appellant filed a refund claim of the deposited amount, which was rejected by the adjudicating authority and upheld by the Commissioner (Appeals), leading to the current appeal before the Tribunal.

The appellant argued that the deposited amount was not a duty, as confirmed by the Commissioner (Appeals), and thus, the refund claim was valid. The appellant contended that the refund claim was made promptly after the finality of the litigation on the issue, and the time limitation under Section 11B should not apply to the refund of a pre-deposit. The appellant relied on a precedent where it was held that the limitation under Section 11B does not apply to amounts paid during an investigation.

On the other hand, the department argued that the refund claim was filed after the Tribunal dismissed their appeal, and hence, the claim was rightly rejected by the authorities below, citing the provisions of Section 11B of the Central Excise Act, 1944.

The Tribunal held that the amount paid during the investigation did not acquire the character of duty unless confirmed as duty and attaining finality. Since the issue was decided in favor of the appellant by the Commissioner (Appeals) and the department's appeal was withdrawn, the matter had attained finality in favor of the appellant. The Tribunal emphasized that the amount paid as a pre-deposit during an investigation does not require the application of Section 11B for a refund, as it is not considered duty. Refund of pre-deposit can be sought through a mere letter to the department, as established by various legal precedents. The Tribunal referred to a specific case law to support the position that the limitation under Section 11B does not apply to amounts paid during an investigation. Therefore, the Tribunal found the rejection of the refund claim unjustified, set aside the impugned order, and allowed the appeal with consequential relief, if any, as per law.