2018 (5) TMI 1343 - AT - Central Excise

Recovery of erroneous refund - Gibberillic acid - appellant had claimed refund on the ground that benefit of N/N. 56/02-CE dated 14.11.2002 has been erroneously allowed to them - recovery u/s 11A of the Central Excise Act, 1944 - extended period of limitation - Held that - the process and the product manufactured by the appellant were known to the department by way of periodical returns filed by the appellant wherein the process of manufacture was shown and the product was shown. Moreover, periodically audit also took place and refunds were sanctioned to the appellant. Therefore, it cannot be said that the appellant has suppressed material fact from the department - the extended period is not invokable in the facts and circumstances of the case. The refunds sanctioned to the appellant have already attained finality as the same have not been challenged - in the light of the decision of the Hon ble Apex Court in the case of Priya Blue Industries 2004 (9) TMI 105 - SUPREME COURT OF INDIA , when the Hon ble Apex Court has observed that The words in pursuance of an Order of Assessment only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an Order of Assessment to claim refund. These words do not lead to the conclusion that without the Order of Assessment having been modified in Appeal or reviewed a claim for refund can be maintained. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of manufactured goods under Central Excise Tariff Act
2. Application of extended period of limitation for demand of duty
3. Validity of refund claims and finality of refunds sanctioned

Analysis:

Issue 1: Classification of manufactured goods under Central Excise Tariff Act
The appellant, located in Jammu, purchased specific chemicals to produce plant growth regulators and paid excise duty on the final product. The Revenue contended that the manufactured product remained the same chemical and should be classified under an exempt category. The appellant claimed refund under Notification No. 56/2002-CE, dated 14-11-2002, which was considered erroneous. The Tribunal examined the classification issue and observed that the appellant's goods fell under the exempt category as plant growth regulators. The appellant's classification under heading 3808 9340 was deemed correct, and the duty refund was justified.

Issue 2: Application of extended period of limitation for demand of duty
The appellant argued against the application of the extended period of limitation for the demand of duty. It was contended that the Revenue was aware of the manufacturing process, as evidenced by periodic audits and refund claims that were entertained. The appellant maintained that since they had been compliant with filing returns and had central excise registration, the extended period of limitation should not be invoked. The Tribunal agreed with the appellant, ruling that the extended period was not applicable, and the demand for duty was barred by limitation.

Issue 3: Validity of refund claims and finality of refunds sanctioned
The Tribunal considered the validity of the refund claims and the finality of the refunds sanctioned to the appellant. It was noted that the refunds had already attained finality as they were not challenged. Citing precedent from the Hon'ble Supreme Court, the Tribunal emphasized that once an order of assessment is passed, duty is payable as per that order unless reviewed or modified. Refund claims were deemed separate from appeal proceedings, and the officer considering a refund claim could not review an assessment order. Thus, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, affirming the finality of the refunds sanctioned to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant on all issues, affirming the correct classification of goods, rejecting the application of extended period of limitation, and upholding the finality of refunds sanctioned. The judgment provided detailed analysis and legal interpretations to support the decisions rendered.