2006 (9) TMI 27 - AT - Central Excise

Refund Alleged that appellants has wrongly availed exemption Demand for reversal by department- In a decision of court it stated to be right and assessee further entitle for interest alongwith money paid by him

Summary

Issues:
1. Exemption claimed under Notification No. 48/91-C.E.
2. Time bar for refund claim under Section 11B of the Central Excise Act.
3. Applicability of duty paid under protest.
4. Refund claim and interest entitlement.

Issue 1: The appellants claimed exemption under Notification No. 48/91-C.E. for the period June, 1992 to January, 1994, and effected clearances at NIL rate of duty. The Commissioner of Central Excise, Mumbai-III, dropped the demand as hit by time bar but imposed a penalty for non-maintenance of records under Rule 173Q of the Central Excise Rule.

Issue 2: The appellants applied for a refund of Rs. 7.92 lakhs, which was rejected on grounds of limitation under Section 11B of the Central Excise Act. The claim was considered time-barred as the duty was not paid under protest, as per the order dated 30-6-1998.

Issue 3: The appellants contended that the amount deposited was not duty but a deposit, citing the case of Parle International Ltd. The appellants argued that the duty was paid under protest, as per the second proviso to Section 11B of the Act, supported by the observations in the case of Mafatlal Industries. The Tribunal held that the amount deposited during the investigation should be deemed as paid under protest, making the time limit under Section 11B(1) inapplicable to the refund claim.

Issue 4: The Tribunal referred to various judgments, including Marmo Classic v. Union of India, Bhagwati International v. Union of India, and Arti Steel Ltd. v. CCE, Chandigarh, which held that the Department is liable to pay interest on pre-deposit and from the date of expiry of three months after the refund application till the payment date. The Tribunal set aside the Commissioner's order, ruling that the refund was not barred by limitation and that the appellants were entitled to interest under Section 11BB of the Central Excise Act. The appeal was allowed, and the refund was sanctioned with interest.