2016 (7) TMI 499 - AT - Central Excise

Refund of terminal excise duty (TED) where goods were exempted from duty - Period of limitation - Section 11B - supply of goods under the category of International Competitive Bidding on payment of duty - Though the goods cleared were eligible for exemption, they have paid duty and claimed refund - Held that - The short point for decision is the eligibility of appellants for refund claims in terms of notification no.12/2012-CE read with Section 11 B of the Act. The admitted facts of the case are that the appellants supplied the goods in pursuance of International Competitive Bidding on payment of duty. Since these goods are exempt, they filed claims for refund initially with the office of DGFT. The TED was processed and sanctioned by the office of DGFT. As noted earlier, the policy was changed vide notification dated 18.04.2013 of Ministry of Commerce by taking note that these goods were exempt ab initio and will not be eligible for refund of TED. This policy change resulted in return of their claim. The appellants approached the jurisdictional Excise Officer for refund. These refund claims are to be processed necessarily in terms of Section 11 B. The impugned orders examined the legal issue and allowed the claims, which are within time limit and disallowed those claims filed beyond the period stipulated under the said Section. The exemption available was not availed, which resulted in claim for refund later. Such claims are rightly covered under the provisions of Section 11B. - Refund beyond the prescribed period rejected - However interest on delayed refund to be granted - Decided partly in favor of assessee.

Summary

Issues:
Claim of refund of excise duty under notification no.12/2012-CE dated 17.03.2012.

Analysis:
The case involved two appeals concerning the appellant's claim of refund of excise duty under notification no.12/2012-CE dated 17.03.2012. The appellant, engaged in the manufacture of oil field equipments, supplied dutiable items to specific entities under International Competitive Bidding, paying duty as per prevailing procedures. The appellants later applied for and obtained refund of terminal excise duty (TED) from DGFT in accordance with FTP - 2009-14. However, a change in policy by the Ministry of Commerce in April 2013 declared the goods exempt ab initio, rendering them ineligible for TED refund. This change led to the rejection of pending claims by DGFT, prompting the appellants to seek refund from the jurisdictional Asstt. Commissioner. The Original Authority rejected claims citing time bar and lack of proper certification. On appeal, the Commissioner (Appeals) allowed claims within the time limit under Section 11 B, while rejecting those beyond the stipulated period.

The main grounds argued by the appellant's counsel included the consistent processing and sanctioning of TED refund claims by DGFT, despite goods being eligible for exemption. The sudden change in procedure by the Ministry of Commerce in April 2013 impacted the refund eligibility. The appellant contended that the supplies should be considered as deemed exports, warranting refund as rebate without reference to payment date. Additionally, they sought interest on delayed refunds exceeding three months as per the Commissioner's order.

The respondent's argument emphasized that if duty was paid on goods exempt under the mentioned Notification, refund consideration falls under Section 11 B of the Central Excise Act, 1944. The impugned orders correctly sanctioned claims filed within the time limit, irrespective of the JDGFT's letter or Ministry of Commerce's notification. The respondent rejected the appellant's plea to treat claims as rebates, asserting that the correct procedure for claiming wrong duty payments is under Section 11 B.

Upon hearing both sides and reviewing the records, the Tribunal addressed the eligibility of the appellants for refund claims under notification no.12/2012-CE in conjunction with Section 11 B of the Act. The Tribunal noted that the change in policy led to the return of claims processed by DGFT, prompting the appellants to seek refunds through the Excise Officer, necessitating processing under Section 11 B. The impugned orders correctly allowed claims within the time limit specified under Section 11 B and rejected those exceeding the stipulated period.

The Tribunal found no flaws in the application of Section 11 B to the refund claims, considering the unutilized exemption leading to subsequent refund claims. The appellants' request for interest on delayed refunds was deemed justified, directing the Original Authority to assess and pay applicable interest on sanctioned claims. Consequently, the appeals regarding refund claims barred by time limitations were dismissed.