2023 (9) TMI 1087 - AT - Central Excise

Rejection of the Refund claim - Scope and validity of the addendum issued to Show Cause Notice - Period of limitation - Retrospective exemption from levy of duty of excise - Henna Powder - Henna Paste - period from 01.10.2007 to 01.03.2013 - to be classified under Chapter 14 or Chapter 33 of the Central Excise Tariff Act, 1985? - HELD THAT - There can be no manner of doubt that the application for refund, pursuant to a Notification issued under section 11C (1) has to be made within six months from the date of the issue of the Notification in the form referred to sub-section (1) of section 11B. In the present case, admittedly the application was not made within six months from the date of issue of the Notification. It is true that the two show cause notices that were issued to the respondent did not state that the refund applications were liable to be rejected for the reason that they were not filed within six months from the date of issue of the notification, but the Addendums that were subsequently issued did specifically allege that the refund applications were time barred because they were filed after the expiry of six months from the date of issue of the Notification. The Addendum, as noticed above, was issued to add something to the already issued show cause notices. The show cause notices did mention the issuance of the Notification and also the date on which the refund applications were filed. In the present case the factual position had not changed and the Addendums had called upon the respondent to explain why the refund application should not be rejected as being barred by time on the facts stated in the show cause notice. The aforesaid two decisions rendered in WIPRO INFORMATION TECHNOLOGY VERSUS COMMR. OF C. EX., BANGALORE 1998 (10) TMI 205 - CEGAT, MADRAS and M/S. JMC PROJECTS (INDIA) LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD 2014 (4) TMI 174 - CESTAT AHMEDABAD would, therefore, not help the respondent. The refund applications filed by the respondent on 15.12.2017 pursuant to the issuance of the Notification dated 24.04.2017 was, therefore, liable to be rejected for the reason that it was not filed within the period of six months from the date of issue of the Notification as specified in the proviso to sub-section (2) of section 11C. The Commissioner (Appeals), therefore, committed an error in granting relief to the respondent. In this view of the matter, it would not be necessary to examine whether the refund application was also hit by the bar of unjust enrichment. The order dated 17.12.2018 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed.

Summary

Issues Involved:
1. Eligibility for refund of excise duty paid on Henna Powder and Henna Paste.
2. Applicability of time limit for filing refund claims under Section 11C and Section 11B of the Central Excise Act, 1944.
3. Concept of unjust enrichment in the context of refund claims.

Summary:

1. Eligibility for Refund of Excise Duty:
The respondent, engaged in the manufacture of Henna Powder and Henna Paste, claimed that their products should attract a nil rate of duty under Chapter 14 of the Central Excise Tariff Act, 1985. However, the department classified these products under Chapter 33, attracting a 12% excise duty. The respondent paid the duty under protest for the period from January 2012 to February 2013. Subsequently, Notification No. 11/2017 C.E. (NT) dated 24.04.2017 provided retrospective exemption from excise duty for the period from 01.10.2007 to 01.03.2013. Based on this notification, the respondent filed a refund claim for the excise duty paid during the period 01.04.2011 to 31.03.2013.

2. Applicability of Time Limit for Filing Refund Claims:
The department issued show cause notices and addendums arguing that the refund claims were time-barred under Section 11C(2) of the Central Excise Act, which mandates that refund claims must be filed within six months from the date of the notification. The Assistant Commissioner rejected the refund claims on this ground. However, the Commissioner (Appeals) allowed the appeals, holding that the refund claims were governed by Section 11B, which provides a one-year time limit from the relevant date. The Commissioner (Appeals) relied on the decision of the Tribunal in Hyderabad Power Installations (P) Ltd. vs. C.C.E., C. & S.T., Hyderabad-II, which held that the time limit under Section 11B would prevail in case of conflict with Section 11C.

3. Concept of Unjust Enrichment:
The department argued that the respondent had passed on the duty incidence to the ultimate consumer, invoking the concept of unjust enrichment. The Commissioner (Appeals) rejected this argument, noting that the respondent had provided invoices and a Chartered Accountant's certificate proving that the duty burden was not passed on to the buyers.

Tribunal's Decision:
The Tribunal held that the refund applications were indeed time-barred as they were not filed within six months from the date of the notification, as required by Section 11C(2). The Tribunal found that the Commissioner (Appeals) erred in applying the one-year time limit under Section 11B, as the refund was claimed based on the notification and not as a consequence of a judgment or order. The Tribunal also noted that the addendums to the show cause notices, which raised the time-bar issue, were valid and did not change the factual basis of the original notices.

Conclusion:
The Tribunal set aside the order of the Commissioner (Appeals) and allowed the department's appeals, holding that the respondent was not entitled to the refund of excise duty as the refund applications were not filed within the prescribed time limit. The cross objections filed by the respondent were rejected, and the stay applications were rendered infructuous.