2023 (10) TMI 351 - HC - Central Excise

Refund claim - unspent amount lying in the current account (PLA) of an assessee - amount is merely an advance amount for payment of excise duty or is actually or shall be deemed to be Excise Duty for the purpose of claim of refund - HELD THAT - As is evident from bare reading of Section 3 of CEA, in particular sub-section 1 thereof, duty of excise is leviable on all excisable goods which are produced or manufactured in India in the manner prescribed and at the rates set forth in Fourth Schedule. It is, thus, crystal clear that event of levy and collection of duty of excise is the production and manufacture of the excisable goods though, as prescribed, the duty is actually paid by the manufacturer at the stage of removal of excisable goods from the manufacturing unit or production house as the case may be. The amount credited into the current account (PLA) by an assessee is, in a way, prospective excise duty to be utilized by the assessee at the stage of removal of excisable goods from his manufacturing unit from time to time. From careful perusal of sub-Section 2 along with proviso thereof, it clearly comes out that the refund of duty of excise claimed by an assessee may be credited to the welfare fund except when such refund is relatable inter alia to unspent advance deposits lying in balance in applicant s current account maintained with the Principal Commissioner of Central Excise or Commissioner of Central Excise - The term unspent advance deposit would mean, unspent advance deposit of excise duty refund whereof can be claimed by an assessee under Section 11B read with Rule 173G. Such refund in terms of proviso to Section 11B (2) is required to be made by tendering payment directly to the applicant-assessee. Hon ble Supreme Court in the case of Modipon 2017 (11) TMI 1429 - SUPREME COURT answered the question in the context of provisions of Section 43-B of the Income Tax Act, nonetheless, what was held qua the amount lying in PLA is binding here - From the judgment of Supreme Court, it is now beyond any pale of discussion or debate that the amount credited by the asseessee in the account current is duty of excise paid in advance in respect of excisable goods manufactured to be paid by debit to such account at the stage of actual removal of excisable goods from the manufacturing unit. Once it is held that the unspent amount in PLA is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid. The respondents to pay to the petitioner interest at the rate of 6% per annum from the date of application till the order of refund within a period of two months from today - Petition allowed.

Summary

Issues Involved:
1. Whether unspent amount in the current account (PLA) of an assessee is an advance amount for payment of excise duty or "Excise Duty" for the purpose of refund and interest under Section 11B and 11BB of the Central Excise Act, 1944.

Summary:

Factual Matrix:
The petitioner, a manufacturer of coffee and tea premixes, was availing exemption by refund of excise duty under Notification No. 56/2002-CE. With the withdrawal of excise duty on the goods from 01-03-2008, an unspent amount of Rs. 75,01,664/- was lying in the petitioner's Current Account (PLA). The petitioner filed for a refund of this amount on 04.04.2008. The jurisdictional Commissioner sanctioned the refund on 27-07-2010. The petitioner claimed interest under Section 11BB for the delayed refund, which was rejected by the Assistant Commissioner, stating that the refund under Notification No. 56/2002-CE is not on account of excess payment of duty but to operationalize exemption.

Submissions of the Petitioner:
The petitioner argued that the unspent amount in PLA is "advance duty" paid and should be considered excise duty for the purpose of Sections 11B and 11BB. They urged the court to declare the unspent amount in PLA as duty of excise for refund purposes under Section 11B.

Submissions of the Respondents:
The respondents argued that the unspent amount in PLA is not "duty" but an amount kept for future excise duty payments. They emphasized the distinction between "the amount for payment of duty" and "the amount of duty actually paid" upon removal of goods. They contended that the refund claim for the unspent amount in PLA is not covered under Sections 11B and 11BB.

Discussion and Analysis:
The court examined the relevant provisions of the Central Excise Act and Rules. It was established that the amount credited into the current account (PLA) by an assessee is prospective excise duty to be utilized at the stage of removal of excisable goods. The court referred to Rule 173-G, which mandates that each assessee must keep a current account (PLA) with sufficient balance to cover the duty due on goods intended to be removed. The court concluded that the unspent amount in PLA is "duty of excise" for the purpose of Sections 11B and 11BB.

Conclusion:
The court held that the unspent amount in PLA is indeed excise duty, and Sections 11B and 11BB are applicable. Therefore, if the refund claimed on account of the unspent amount in PLA is not paid within three months, it shall become payable with interest. The court directed the respondents to pay the petitioner interest at the rate of 6% per annum from the date of application till the order of refund within two months.

Judgment:
The writ petition was allowed, directing the respondents to pay the petitioner interest at the rate of 6% per annum from the date of application till the order of refund within a period of two months.