2022 (3) TMI 588 - AT - Central Excise

Refund of excess duty paid - rejection on the ground of time limitation and principles of natural justice - Calculation of duty payable as per the provisions of Rule 7 8 of the said Rules or not - HELD THAT - As apparent on the facts of the record and has not been denied by the Department that the refund application of 30th August, 2017 was filed pursuant to the orders of this Tribunal passed on 11.10.2017 and also the another order of this Tribunal dated 03.11.2017, but proposal of rejecting the said refund claim on the ground of being filed beyond the stipulated period in terms of Provisions of section 11B (1) of Central Excise Act, 1944 has been accepted by Order-in-Original dated 30.04.2020. It was held that the period of April, 2012 was not the subject matter of SCN of 2012 rather the claim is barred by period of limitation as the amount prayed to be refunded was deposited as payment of excise duty on 03.04.2012 but the refund thereof has been filed on 18.04.2019. However, in view of the earlier orders of this Tribunal i.e. 11.10.2017 03.11.2017, the said findings are factually incorrect. Time Limitation - HELD THAT - The relevant date as per Explanation B thereof in the given facts and circumstances is sub-clause (ec) thereof (as quoted above). Apparently and admittedly, the refund claim was initially filed on 30.08.2018 pursuant to the CESTAT Order dated 11.10.2017 and 03.11.2017. Relevant date for the refund claim is therefore, the date of aforesaid orders. Hence, it is held that claim of 30.08.2017 is well within the one year of the said relevant date. It is accordingly held that the refund claim has wrongly been held to be barred by time. Rejection thereof is liable to be set aside. The Department is again directed to calculate and compute the duty only on the basis of the days during which each of the machines were working and thus to strictly comply with the directions already given by the earlier orders of this Tribunal. Since admittedly an amount of ₹ 19,00,000/- has already been deposited. The Department has only to verify whether the amount of impugned refund claim of ₹ 9,50,000/- is correctly calculated by the appellant for the period of closure of one of the machines of the appellant during the impugned period of four months i.e. form March, 2012 to July 2012. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Calculation of duty payable under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
2. Compliance with Tribunal's remand orders regarding duty calculation.
3. Timeliness and validity of the refund claim.
4. Application of the principle of unjust enrichment.

Issue-Wise Detailed Analysis:

1. Calculation of Duty Payable:
The appellant, engaged in manufacturing Gutkha, Pan Masala, and Scented Zarda, was required to calculate duty under Rule 7 and 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The Department alleged short payment of duty amounting to ?59,45,966/- and issued a Show Cause Notice (SCN) on 26.12.2012. The initial adjudication confirmed the proposed demand, but upon appeal, the Tribunal remanded the matter for recalculating the duty based on the actual working period of the machines. The Department was directed to refund any excess duty paid within four months.

2. Compliance with Tribunal's Remand Orders:
Despite the Tribunal's clear directions in its orders dated 11.10.2017 and 18.02.2020, the Department failed to accurately compute the duty for the period when the second machine was not operational. The Tribunal reiterated that the appellant was not liable to pay duty for the period when the machine was sealed. The Department's subsequent orders continued to include periods of machine closure in the duty calculation, violating the Tribunal's remand instructions.

3. Timeliness and Validity of the Refund Claim:
The appellant filed a refund claim on 30.07.2018, which was initially returned as premature. A fresh SCN issued on 19.06.2019 proposed rejecting the refund claim as time-barred. The Original Adjudicating Authority confirmed this rejection, which was upheld by the Commissioner (Appeals). However, the Tribunal found that the refund claim was filed within one year of the relevant date, as per Section 11B(1) of the Central Excise Act, 1944. The relevant date was identified as the date of the Tribunal's orders (11.10.2017 and 03.11.2017), making the refund claim timely and valid.

4. Application of the Principle of Unjust Enrichment:
The Department's argument that the refund claim was hit by the principle of 'unjust enrichment' was dismissed by the Tribunal. It was noted that this ground was not raised in the impugned SCN, making the findings on unjust enrichment outside the scope of the SCN and liable to be set aside.

Conclusion:
The Tribunal set aside the orders under challenge, directing the Department to recalculate the duty based on the actual working days of the machines and to refund the excess amount paid by the appellant. The Department was instructed to comply with the Tribunal's directions within fifteen days, ensuring the appellant receives the consequential benefits. The appeal was allowed, and the Tribunal emphasized the need for judicial discipline and adherence to higher forum orders to prevent litigation and maintain order.