2023 (2) TMI 65 - AT - Central Excise

Refund - Amount deposited during proceedings before the Settlement Commission - Period of time limitation - Valuation - non-inclusion of value of freight between factory and the buyer s premises while paying central excise duty - The issue was decided in favor of appellant - HELD THAT - Of the total amount claimed in the appeal only an amount of Rs 4,22,85,418 paid through four challans is being pressed by the appellant. Undisputedly, these amounts were not paid in the normal course of self-assessment and were not reflected in the ER-1 returns but were paid as differential duty of excise through those challans after being pointed out by the department. If any duty is not levied, not paid, short paid, or short paid or erroneously refunded, the procedure to recover the amount is prescribed under Section 11A of the Central Excise Act which requires a notice to be issued to the assessee within the time limits prescribed. If the non-payment of duty is due to fraud, collision or willful misstatement or suppression of facts or violation of Act or Rules with an intent to evade payment of duty such notice can be issued within an extended period of limitation of 5 years. In this case the amounts have not been appropriated and therefore they can only be considered as deposits and cannot be considered as duty. Since, no show-cause notice was issued to recover the differential duty, the amounts in dispute can only be considered as deposits. For this reason, the limitation prescribed under Section 11B for refund does not apply to this case. Keeping in view the judgement of Tribunal in MY HOME INDUSTRIES PVT LTD. VERSUS COMMISSIONER OF CENTRAL TAX, VISHAKHAPATNAM 2022 (12) TMI 133 - CESTAT HYDERABAD in appellant s own case holding that amount of freight to buyer s premises is not includible in the assessable value. The amount of Rs 6,35,36,825/- as paid by the appellants was not their duty liability. However, the amount of Rs 2,12,51,407/- has been accede to have been settled before settlement commission. The impugned order needs to be modified and the appeal is allowed partially to the extent of sanction of refund of Rs 4,22,85,418/- to the appellant.

Summary

Issues:
Application for refund of excise duty on freight charges paid by the appellant during a specific period. Interpretation of assessable value in relation to transportation costs. Claim for refund beyond the prescribed time limit. Applicability of Section 11B for refund claims. Treatment of payments made by the appellant as deposits or excise duty. Consideration of judgments related to refund claims and finality of assessments.

Analysis:

1. Application for Refund of Excise Duty on Freight Charges:
The appellant, a cement manufacturer, filed an appeal seeking a refund of Rs 4,22,85,418 for excise duty paid on freight charges between their factory and the buyer's premises. The dispute arose due to the inclusion of transportation costs in the assessable value, as per the Department's interpretation based on a Supreme Court judgment. The appellant argued that subsequent judgments supported their position that the buyer's premises cannot be considered the place of removal for valuation purposes.

2. Claim for Refund Beyond Prescribed Time Limit:
The Assistant Commissioner rejected the refund claim on grounds of both merit and limitation, stating that the claim was filed for the second time and was time-barred. The Commissioner (Appeals) upheld this decision. However, the appellant contended that the amounts paid were deposits, not duty, as they were not appropriated by the Department under Section 11A. Therefore, the limitation under Section 11B for refund claims did not apply.

3. Treatment of Payments as Deposits or Excise Duty:
The Revenue argued that the refund claim was filed beyond the one-year limit from the date of payment of duty, emphasizing that the amounts paid were considered duty and not deposits. They highlighted the necessity for a refund to be in line with reassessment orders or modifications following an appeal. The appellant, supported by case laws, maintained that the payments were deposits as they were not appropriated by the Department and were not reflected in the ER-1 returns.

4. Interpretation of Assessable Value and Finality of Assessments:
The Tribunal analyzed the nature of the payments made by the appellant, concluding that they were deposits since no show-cause notice was issued to recover the differential duty. The Tribunal distinguished the present case from the judgment in ITC Ltd, emphasizing that the payments were not part of the assessment process. The Tribunal also referred to a previous order in the appellant's favor regarding the inclusion of freight charges in the assessable value, leading to the partial allowance of the refund claim.

In conclusion, the Tribunal allowed a partial refund of Rs 4,22,85,418 to the appellant, considering the nature of the payments made and the absence of appropriation by the Department towards duty liability. The judgment clarified the distinction between deposits and duty payments, emphasizing the procedural requirements for refund claims and the interpretation of assessable value in excise duty matters.