2023 (10) TMI 588 - AT - Central Excise

Recovery of the erroneous refund of education cess or higher education cess - appellants are located in the state of Sikkim - N/N. 20/2007-CE dated 25.04.2007 - HELD THAT - The refund claims were sanctioned in the light of the decision of the Hon ble Apex Court in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT and thereafter the decision of SRD Nutrients was over-ruled by the Hon ble Apex Court in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS 2019 (12) TMI 286 - SUPREME COURT it does not mean that at the time of sanctioning of refund claim the decision of the Hon ble Apex Court in the case of SRD Nutrients was valid. As the decision of Hon ble Apex Court in the case of SRD Nutrients during the relevant period holding the field in that circumstances the refund claims were rightly sanctioned to the appellants as held by the Hon ble High Courts in the above-cited decisions namely TRIPURA ISPAT (A UNIT OF LOHIA GROUP) VERSUS UNION OF INDIA COMMISSIONER CENTRAL GOODS SERVICE TAX ASSISTANT COMMISSIONER CENTRAL GOODS SERVICE TAX 2021 (1) TMI 753 - TRIPURA HIGH COURT therefore the show cause notice issued to the appellant are not sustainable. The impugned orders are bad in law - Appeal allowed.

Summary

Issues involved:
The issue in this case revolves around the entitlement of the appellants to claim a refund of education cess or higher education cess paid by them under Notification No.20/2007-CE dated 25.04.2007.

Comprehensive Details:

Issue 1 - Entitlement to claim refund of education cess or higher education cess:
The appellants, engaged in manufacturing pharmaceutical products in Sikkim, registered with the central excise department, sought refund of education cess and higher education cess under Notification No.20/2007-CE. Initially, the Hon'ble Apex Court allowed the refund claim, but later in the case of Unicorn Industries, it held that such refunds were not permissible. Subsequently, protective show cause notices were issued to the appellants for recovery of the erroneously sanctioned refunds. The appellants challenged this decision before the Appellate Tribunal.

Judgment:
After considering the facts and legal precedents, the Tribunal found that the refund claims were sanctioned based on the decision in SRD Nutrients, which was later overruled by the Unicorn Industries case. However, since the refunds were granted when the SRD Nutrients decision was valid, the show cause notices for recovery were deemed unsustainable. Citing the Tripura Ispat case, the Tribunal held that the impugned orders were bad in law and set them aside, allowing the appeals with consequential relief.

Key Points:
- The Tribunal distinguished between cases of duty erroneously refunded due to fraud, collusion, or misstatement, and cases where such elements were absent.
- Section 11A of the Central Excise Act was invoked to address the recovery of duties erroneously refunded.
- The Tribunal emphasized that legal proceedings are governed by the law prevailing at the time of the decision, even if subsequent legal positions change.
- The decision in SRD Nutrients was considered valid during the relevant period, justifying the sanctioning of refund claims to the appellants.

This judgment clarifies the application of legal principles regarding refund claims in excise matters and highlights the importance of considering the legal landscape at the time of the decision.