2021 (10) TMI 1172 - AT - Service Tax

Refund of service tax paid - appellant had exported goods during the said period without payment of duty but they were also not in a position to use the CENVAT credit of service tax liability - N/N. 27/2012-CE (NT) dated 18.06.2012 - period October 2016 to December 2016 - HELD THAT - The jurisdictional Hon ble High Court of Karnataka in one of its decisions in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION 2012 (7) TMI 22 - KARNATAKA HIGH COURT where it was held that once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11B. Therefore, it is outside the purview of Section 11B of the Act. There are no justification in the reasons adopted for rejection of the refund claim by the lower authorities and hence the impugned order is not sustainable in the eye of law - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to Order-in-Appeal rejecting refund claim under Notification No.27/2012-CE (NT) dated 18.06.2012 on grounds of being time-barred.

Analysis:
The appellant challenged the rejection of their refund claim by the Commissioner (Appeals), Kochi, based on the grounds of being time-barred. The appellant filed a refund claim of &8377; 22,16,229/- for service tax paid from October 2016 to December 2016 under Notification No.27/2012-CE (NT). The appellant exported goods during this period without duty payment but couldn't utilize CENVAT credit, leading to the refund application under Rule 5 of CENVAT Credit Rules, 2004.

The Adjudicating Authority rejected the claim citing non-fulfillment of limitation conditions under Notification No.27. The Commissioner (Appeals) upheld this rejection, stating the claim was time-barred. The appellant then appealed to the Appellate Tribunal CESTAT Bangalore, challenging this decision.

During the proceedings, the Tribunal referred to legal precedents. In one case, the Hon'ble High Court of Karnataka ruled that a payment made under a mistaken notion, not legally required, does not fall under duty or service tax payable, hence not subject to Section 11B. The Supreme Court dismissed the SLP against this order. Another case involving excess customs duty payment highlighted that when duty is paid in excess, the department is liable to refund it, and the limitation under Section 27 of the Customs Act does not apply.

Considering the legal precedents and the specific circumstances of the case, the Tribunal found no justification for the rejection of the refund claim by the lower authorities. The impugned order was deemed unsustainable in the eyes of the law. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential benefits as per law.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the legal position that when customs duty or service tax is paid in excess or under a mistaken notion, the concerned department is obligated to refund the amount, and limitations under specific sections may not apply in such cases.