2018 (9) TMI 1280 - AT - Service Tax

Refund of Service tax paid - time limitation - Section 11B of the Central Excise Act, 1944 - refund claims rejected on the ground that the refund claims were not filed within the time limit of one year and the claimant has not fulfilled the conditions as prescribed at para 3(III)(e) of N/N. 12/2013-St dt. 01/07/2013 - Principles of Natural Justice. Held that - In the present case, the Commissioner(Appeals) while rejecting the refund claims of the appellant has violated the principles of natural justice and has not afforded opportunity of hearing to the appellant to explain the justifiable reasons for filing refund claims after the periods specified in the notification - Further, the Commissioner(Appeals) has totally ignored the Notification No.12/2013 under which the appellant has filed the refund claims rather the Commissioner(Appeals) has wrongly considered the refund claims of the appellant under Rule 5 of the CENVAT Credit Rules read with Notification No.5/2006-CE(NT) dt. 14/03/2006 which was not the case of the appellant at all. Matter remanded back to the original authority to decide the claims of refund of the appellant within a period of three months from the date of receipt of certified copy of this order - appeal allowed by way of remand.

Issues Involved:

1. Timeliness of refund claims.
2. Application of the correct notification for SEZ units.
3. Violation of principles of natural justice.
4. Authority to condone delays in refund claims.

Issue-wise Detailed Analysis:

1. Timeliness of Refund Claims:

The appellants filed refund claims for various periods as per Notification No.12/2013-ST dated 01/07/2013. The original authority rejected these claims on the grounds that they were not filed within the one-year time limit stipulated under Section 11B of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. The Commissioner(Appeals) upheld this decision, leading to the present appeals.

2. Application of the Correct Notification for SEZ Units:

The appellants, being a unit registered under the SEZ scheme, argued that their refund claims should be regulated by Notification No.12/2013-ST. However, the impugned order wrongly considered the refund claims under Rule 5 of the CENVAT Credit Rules, 2004, read with Notification No.5/2006-CE(NT) dated 14/03/2006 or Notification No.27/2012-CE(NT) dated 18/06/2012. The SEZ Act 2005, which overrides other acts, was not appropriately considered.

3. Violation of Principles of Natural Justice:

The appellants contended that the impugned order was a non-speaking order, drafted hastily without considering the facts or providing an opportunity for a hearing, thus violating the principles of natural justice. The Commissioner(Appeals) passed an ex parte order without affording the appellants an opportunity to explain the delay in filing refund claims. This was contrary to established judicial precedents and binding circulars issued by the CBEC, which mandate that orders must withstand legal scrutiny.

4. Authority to Condon Delays in Refund Claims:

The appellants argued that Notification No.12/2013-ST provides the authority to condone delays in filing refund claims. The adjudicating authority failed to exercise this power, despite the appellants presenting justifiable reasons for the delay. Judicial precedents emphasize a liberal approach in condoning delays for SEZ units. The Tribunal in cases like Woco Motherson Advanced Rubber Tech Ltd. and Synefra Engineering and Construction Ltd. held that delays should be liberally condoned, especially when SEZ units are involved.

Conclusion:

The Tribunal found that the Commissioner(Appeals) violated the principles of natural justice by not providing an opportunity for a hearing. The impugned order ignored Notification No.12/2013-ST and wrongly applied other notifications. The Tribunal emphasized that the SEZ Act overrides other acts and that a liberal approach should be adopted in condoning delays for SEZ units. The case was remanded to the original authority to decide the refund claims within three months, considering the Tribunal's decisions and following the principles of natural justice.

Operative Portion:

The impugned order was set aside, and the case was remanded to the original authority to decide the refund claims within three months, ensuring a liberal approach to condoning delays and following the principles of natural justice. All appeals were allowed by way of remand.

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