2021 (7) TMI 1218 - AT - Central Excise

Refund of CENVAT Credit - pre-deposit made under protest - invoices issued fraudulently - rejection on the ground of time limitation - Section 11B (5) (ec) of Central Excise Act, 1944 - HELD THAT - There is no denial for the fact that ₹ 10,30,000/- was deposited by the appellant at the stage of investigation itself. Any deposit made at the time of investigation is settled to be an amount to be called as pre-deposit under protest. The second proviso to section 11B of CEA is sufficient to hold that the adjudicating authority below has wrongly invoked Section 11B ofCentral Excise Act to hold the impugned refund as barred by time. The relevant date in terms of 11 B (ec) shall be the date of the final order which is 10 November, 2017. The application for refund in question has been filed on 9 July, 2018 as is apparent from the documents annexed with the written synopsis and has also been noted by Adjudicating Authority - the document submitted by the appellant which apparently bears the acknowledgment of receipt by the Department as well has to be considered as the date of application of refund which is 9 July, 2018. Seen from this angle, the application is held within one year from the date of Final decision in favour of the appellant. The cumulative finding of the entire discussion is that Section 11 B has wrongly been invoked by adjudicating authority below. Otherwise also the refund claim has been made well within the reasonable period - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim filed beyond the period allowed by Section 11B of the Central Excise Act, 1944.

Analysis:
The case involved a refund claim of &8377; 7,77,058/- filed by the appellants based on a Final Order of the Tribunal. The deposit of &8377; 10,30,000/- was made under protest following a search conducted on the appellant's premises. The appellant was alleged to have taken cenvat credit based on fraudulently issued invoices and was found to be engaged in manufacturing activities without paying duty. The demand was confirmed by the Department, but the Tribunal set aside most of the demand except for &8377; 252,942. The refund claim was proposed to be rejected due to being filed beyond the one-year period as per Section 11B of the Act.

The appellant argued that since the deposit was made under protest, Section 11B should not be applicable. The Department, however, presented a chronology of events showing that the appellant was aware of the duty liability amounting to &8377; 7,77,058/- in March 2014. The Department contended that the refund claim should have been filed within one year of the Show Cause Notice or the Tribunal's final order, both of which were before the actual filing date of 10th July 2019. The Department argued that the refund claim was time-barred.

The Tribunal held that the deposit made under protest is not subject to the one-year limitation under Section 11B of the Act. Citing a High Court decision, the Tribunal determined that the appellant's entitlement to claim the refund was finalized after the Tribunal's order on 10th November 2017. The Tribunal noted that the refund application was filed on 9th July 2018, within one year of the Tribunal's final decision. The Tribunal found that the Adjudicating Authority wrongly invoked Section 11B and that the refund claim was made within a reasonable period. Consequently, the Tribunal set aside the Adjudicating Authority's order and allowed the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the refund claim was not time-barred under Section 11B and that the Adjudicating Authority had erred in rejecting the claim on that basis.