2024 (5) TMI 63 - AT - Central Excise

Undue delay in processing refund - Duty was paid under protest - returning the claim application for refund holding to be pre-mature - applicability of time limitation - HELD THAT - The delay of more than 10 years in finalizing the matter is shocking. No seriousness has been shown in the matter by the Divisional Authorities even though they were aware of the matter being pursued by the Appellant before higher Appellate forums. This being so the refund claim is restored back to the files of the learned Original Authority for proper disposal. In case the claim is sought to be rejected partially or in full, notice may be given to the Appellant following the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter disposing of the refund claim. Considering the huge delay and hardship already faced by the Appellant, it is desirable that the jurisdictional Commissioner monitor the timely disposal of the matter in terms of departmental instructions and the directions given herein to the Original Authority, for which a copy of this order is being marked to him. Appeal allowed.

Summary

Issues involved: Refund claim under section 11B of Central Excise Act, 1944 returned as premature, delay in finalizing refund claim, applicability of Circular No. 670/61/2002-CX regarding disposal of refund/rebate claims.

Refund Claim under Section 11B:
The appellant imported 'Mould Release Agent' and diluted it with demineralized water, paying central excise duty under protest despite feeling the activity did not amount to manufacture. The refund claim for the duty paid under protest was returned as premature by the Deputy Commissioner of Central Excise, a decision upheld by the Commissioner (Appeals). The appellant argued that as per section 11B of the Central Excise Act, the authority must pass a speaking order on refund claims and not return them. Citing a judgment of the Hon'ble High Court of Kerala, the appellant contended that the department cannot hold back the matter for years based on mere suspicion of tax liability.

Delay in Finalizing Refund Claim:
The Tribunal noted a delay of over 10 years in finalizing the refund claim, criticizing the lack of seriousness shown by the Divisional Authorities despite the appellant's pursuit of the matter before higher forums. Referring to Circular No. 670/61/2002-CX, the Tribunal emphasized the automatic applicability of Section 11BB of the Act for any refund sanctioned beyond three months. The Tribunal found the return of the refund application as not a recognized mode of disposal under the Central Excise Act, directing the restoration of the refund claim to the Original Authority for proper disposal.

Applicability of Circular No. 670/61/2002-CX:
The Tribunal highlighted Circular No. 670/61/2002-CX, which directs fixing responsibility for not disposing of refund claims within three months and stresses the automatic applicability of Section 11BB of the Act for refunds sanctioned beyond that period. The Tribunal deemed the instructions in the circular applicable to Central Excise cases as well, emphasizing the importance of timely disposal of refund claims and directing the jurisdictional Commissioner to monitor the process to ensure compliance with departmental instructions and the Tribunal's directions.

Conclusion:
The Tribunal allowed the appeal, restoring the refund claim to the Original Authority for proper disposal. It directed that if the claim is to be rejected partially or in full, the appellant must be given a reasonable and time-bound opportunity to present their case before a speaking order is issued. Emphasizing the need for expeditious processing, the Tribunal mandated completion within ninety days of its order, with monitoring by the jurisdictional Commissioner to ensure compliance.