2017 (11) TMI 84 - AT - Central Excise

Refund claim - deposit made by the respondent during the investigation stage - Time Limitation - Held that - once an amount has been reversed on the direction of investigation authorities, the same should have been refunded back to the assessee without any delay, when it is noticed that the assessee is not required to discharge the same - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Refund of deposit made during investigation stage; Timeliness of refund claim; Applicability of Section 11B of Central Excise Act, 1944; Eligibility for refund without adjusting penalties.

Analysis:

Issue 1: Refund of deposit made during investigation stage
The appeal pertains to the refund claim of an amount deposited by the respondent during an investigation. The respondent's premises were visited, and a deposit was directed to be made due to alleged irregular Cenvat credit availed. A subsequent show cause notice was issued, demands confirmed, and penalties imposed. The respondent sought a refund for the balance amount after the demands were confirmed and the deposited amount was appropriated against it. The first appellate authority allowed the refund, noting that the deposit was made over protest during the investigation process, and the refund claim was within the limitation period. The Tribunal upheld the authority's decision, emphasizing that the deposit made under protest is refundable without delay when not required to be discharged by the assessee.

Issue 2: Timeliness of refund claim
The first appellate authority found the respondent's refund claim to be within the limitation period, as the demand was determined on a specific date, and the claim was filed well within the prescribed time limit. The authority cited precedents to support the argument that the deposit made during investigation, even if not paid as duty, does not fall under the purview of Section 11B of the Central Excise Act, 1944, regarding limitation. The Tribunal concurred with this view, holding that the refund claim was timely and not subject to limitation.

Issue 3: Eligibility for refund without adjusting penalties
The revenue contested the first appellate authority's decision, arguing that the penalties imposed on the respondent should be adjusted against the refund amount. However, the Tribunal dismissed this argument, stating that the respondent had successfully challenged the demand separately, and penalties should not affect the refund claim related to the deposit made during the investigation. The Tribunal emphasized that the instructions from the Board to refund such amounts without delay are often disregarded by revenue officers.

In conclusion, the Tribunal upheld the decision of the first appellate authority, ruling in favor of the respondent's entitlement to a refund of the balance amount deposited during the investigation stage. The Tribunal found no merit in the revenue's arguments regarding the payment under protest, limitation, and adjustment of penalties, affirming the legality and correctness of the impugned order.