2024 (10) TMI 1054 - AT - Central Excise

Admissibility of refund claim in terms of Section 11B of the Central Excise Act, 1944 - deposit made during the investigation under protest - time limitation - HELD THAT - Reliance placeed by the Lower Authorities on the definition for relevant date as per Explanation B (ec) to Section 11B and seeking to reject on the ground of limitation by relying on the date of the order of adjudicating authority for determining period of limitation of one year from the date of that order of the Additional Commissioner dropping the demand is totally miss placed. This clause is applicable only if at any point of time this amount was appropriated as duty and had arisen as refund on account of any judicial order. This is also evident from the ER1 Return formats. There are no merits in rejection of the refund claim on the ground of limitation. Reliance placed in the impugned order on various decisions do not support the case of the revenue as these are the case where refund has arisen as a consequence of decision in the appeal etc. As per proviso to Section 11B (2) the amount of unspent deposit lying as balance in the Appellant s account current is to be refunded to the Appellant without being credited to the consumer welfare fund. Thus such an amount can never be hit by the provisions of unjust-enrichment in terms of specific exemption provided in respect of such claims. There are no merits in the impugned order - appeal allowed.

Summary

Issues Involved:

1. Applicability of the limitation period under Section 11B of the Central Excise Act, 1944.
2. Nature of the deposit made during the investigation and its refund eligibility.
3. Application of the doctrine of unjust enrichment to the refund claim.

Issue-wise Detailed Analysis:

1. Applicability of the Limitation Period under Section 11B:

The primary issue in this case is whether the refund claim filed by the appellant on 31.01.2020 is barred by the limitation period prescribed under Section 11B of the Central Excise Act, 1944. The appellant argued that the limitation period should not apply to their case. However, the order from the Commissioner (Appeals) highlighted that the Hon'ble Supreme Court in Dena Snuff (P) Ltd. v. CCE, Chandigarh, has established that even when duty is paid under protest, the limitation period commences from the date of the final decision in the assessee's own case. The Additional Commissioner's order dated 19.06.2017, which dropped the demand, was not challenged, and thus, the relevant date for computing the one-year limitation period was 19.06.2017. Since the refund claim was filed beyond this period, it was deemed time-barred.

2. Nature of the Deposit and Refund Eligibility:

The appellant deposited Rs. 5 lakhs during the investigation, which was not appropriated as duty since the proceedings were dropped. The tribunal examined whether such deposits, which remained unutilized, could be claimed as a refund under Section 11B. The tribunal referred to various judgments, including Deccan Shoppe Pvt. Ltd., which clarified that unspent advance deposits lying in balance are covered by Section 11B. However, the relevant date for reckoning the time limit in such cases would be the date of payment of duty, which had not yet begun since the amount was not utilized as duty. Therefore, the tribunal concluded that the refund claim was within the time limit and should be sanctioned.

3. Application of the Doctrine of Unjust Enrichment:

The tribunal also addressed the issue of unjust enrichment. As per the proviso to Section 11B(2), the amount of unspent deposit lying as balance in the appellant's account is to be refunded without being credited to the consumer welfare fund. The tribunal emphasized that such an amount is exempt from the provisions of unjust enrichment due to the specific exemption provided in the statute. The tribunal found that the lower authorities' reliance on the limitation clause and unjust enrichment was misplaced, as the amount was never appropriated as duty and was merely an unutilized deposit.

In conclusion, the tribunal held that the refund claim was not barred by limitation, and the provisions of unjust enrichment did not apply to the unutilized deposit. Consequently, the appeal was allowed, and the order rejecting the refund claim was set aside.