2024 (4) TMI 6 - AT - Central Excise

Refund of amount paid as pre-deposit - time limitation - rejection of refund on the ground that as per Section 11B(5))ec) of Central Excise Act, 1944, appellant is legally obliged to submit a refund application within 1 year from the relevant date - HELD THAT - In the matter of AJNI INTERIORS VERSUS UNION OF INDIA AND 1 OTHER (S) 2019 (9) TMI 529 - GUJARAT HIGH COURT , there is no such order issued by Tribunal considering the amount deposited by the appellant as pre-deposit as held by this Tribunal while considering the stay petition submitted by the appellant. Further submitted that the judgment of the Hon ble High Court in the matter of M/s Ajni Enterprises was distinguished by Hon ble High Court of Madras in the case of M/s Daily Tamthi 2021 (2) TMI 94 - MADRAS HIGH COURT wherein it has been clearly held that the decision of the Gujrat High court is contradictory to the law laid down in UOI Vs Suvidha 1996 (8) TMI 521 - SC ORDER . Similarly, Tribunal in the matter of M/s Industrial Equipment Co Ltd 2021 (9) TMI 493 - CESTAT CHANDIGARH also considered the issue and following the following view taken by Hon ble High court of Karnataka in the matter of KVR Construction 2012 (7) TMI 22 - KARNATAKA HIGH COURT , distinguished the judgement of Ajni interiors held that refund claim is not barred by limitation. The provisions of Section 11B(5) (ec) of Central Excise Act, 1944 will apply only in respect of excise duty paid by the appellant and not applicable for refund of Rs. 26,38,300/- including Rs.24,27,751/- being credit and interest of Rs. 2,10,549/- deposited by appellant during investigation to cover the alleged wrong claim of CENVAT Credit which was held unsustainable by this Tribunal in appeal. Appeal allowed.

Summary

Issues Involved:

1. Whether the amount paid during the investigation is to be treated as a "deposit" or "duty".
2. Whether the refund claim is barred by limitation u/s 11B of the Central Excise Act, 1944.

Summary of Judgment:

1. Treatment of Amount Paid During Investigation:

The appellant, a cement manufacturer, paid an amount of Rs. 26,38,300/- during an investigation, which included Rs. 24,27,751/- as credit and Rs. 2,10,549/- as interest. The appellant contended that this payment was made under compulsion and should be treated as a pre-deposit, not as duty. The Tribunal referenced multiple judgments, including the Hon'ble High Court of Karnataka in Suretex Prophylactics (India) Private Limited and the Hon'ble Supreme Court in M/s Mafatlal Industries Ltd, which supported the view that payments made under protest or compulsion should be treated as deposits. The Tribunal concluded that the amount paid by the appellant was a "deposit" and not a payment of duty.

2. Limitation for Refund Claim u/s 11B:

The appellant did not file a refund application within one year from the relevant date, as required u/s 11B(5)(ec) of the Central Excise Act, 1944. The appellant argued that the limitation period should not apply to amounts paid under protest. The Tribunal noted that the second proviso to Section 11B exempts the limitation period for duties paid under protest. The Tribunal also referenced various case laws, including M/s GS Radiators Ltd and M/s Shree Ram Food Industries, which held that payments made under protest are not subject to the limitation period. The Tribunal concluded that the refund claim was not barred by limitation as the amount was paid under protest.

Conclusion:

The Tribunal held that the amount paid by the appellant during the investigation was a "deposit" and not a duty. Consequently, the limitation period u/s 11B did not apply to the refund claim. The appeal was allowed with consequential relief in accordance with the law.

(Order pronounced in open court on 22.03.2024.)