2023 (10) TMI 881 - AT - Service Tax

Refund of amount paid under protest - Reversal of cenvat credit - Part of the demand was confirmed - amount under section 35F of Central Excise Act, 1944 - period of limitation. Whether the amount has rightly been denied to be an amount under section 35F of Central Excise Act, 1944 wrongly (CEA)? - HELD THAT - Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has held that amount paid during pendency of investigation/adjudication shall be treated as the amount paid under protest akin to the amount of pre-deposit under section 35F (CEA) - it is observed that there is no denial to the fact that Rs.8,49,545/- was deposited under section 35F in addition to impugned amount has already been refunded to the appellant. Hence irrespective the amount in question being the amount paid under protest has acquired the character of amount pre-deposit, but the said amount cannot be called as amount deposited under section 35F. Hence the question of applicability of section 35FF does not arise. Whether the period of limitation has wrongly been applied? - HELD THAT - Once it is and held that the refund is under section 11B of the Act, the time limit of one year is applicable to the said refund. The relevant date in the given circumstance is held to be the date of Order-in-Original dated 23.10.2020. The refund claim was filed on 03.09.2021. It becomes clear that the refund claim was well within the limit prescribed by the Statute. Hence, the refund claim has wrongly been barred by limitation. Admittedly an amount of Rs.5,25,141/- alongwith amount of interest (Rs.2,45,515/-) was already deposited with the department. After appropriating the same to the extent of demand confirmed, the balance amount of Rs.4,22,832/- plus Rs.2,45,515/- i.e.Rs.6,65,347/-, is to be refunded. The department cannot retain the same for want of any authority with them to retain. Hence they are held liable to refund the same alongwith the interest @ 6% from the date of order dated 23.10.2020 till the date of payment thereof. Appeal allowed.

Summary

Issues involved:
The judgment involves the rejection of a refund claim by the Appellant, based on a show cause notice alleging non-payment of a specific amount during a certain period in contravention of Cenvat Credit Rules, 2004. The key issues in the judgment are whether the amount qualifies as a pre-deposit under section 35F of the Central Excise Act, 1944, and whether the refund claim is within the prescribed period of limitation.

Issue 1: Whether the amount qualifies as a pre-deposit under section 35F of the Central Excise Act, 1944:
The Appellant had deposited a certain amount pending adjudication of a proposed demand. The Appellant argued that the deposited amount acquired the character of a pre-deposit and should be refunded. The Department contended that the deposited amount was towards the duty liability of the Appellant and was voluntarily paid. The Tribunal noted that the deposited amount, in addition to an impugned amount, had already been refunded to the Appellant. The Tribunal held that the amount in question, though paid under protest, could not be termed as a deposit under section 35F, and the refund would fall under section 11B.

Issue 2: Whether the refund claim is within the prescribed period of limitation:
The Tribunal analyzed the time limit for refund under section 11B of the Act. It was observed that the refund claim, filed after the final order confirming the duty demand for a specific amount, was within the prescribed time limit. The Tribunal concluded that the refund claim was wrongly barred by limitation and directed the Department to refund the balance amount along with interest from the date of the relevant order.

Conclusion:
The Tribunal set aside the order rejecting the refund claim, allowing the appeal and directing the Department to refund the balance amount to the Appellant along with interest. The Tribunal clarified that the deposited amount did not qualify as a pre-deposit under section 35F and that the refund claim was within the statutory time limit, warranting the refund to be processed.

(Order dictated in open court)