2019 (3) TMI 110 - AT - Central Excise

Demand of duty short paid - time limitation - intent to evade or not - Held that - The arguments of the appellant that the entire demand is barred by limitation is not sustainable because the irregularity was detected during the audit. Therefore, the demand is not barred by limitation and extended period has been rightly invoked. Adjustment of excess duty paid with the short payment of duty - Held that - This issue is no more res integra and has been settled by various decisions of the Tribunal which has allowed the adjustment of duty. It is a fact that the appellant has paid the entire short paid duty of ₹ 19,36,869/- along with interest and he wanted to adjust the excess paid duty amounting to ₹ 10,52,311/- - the adjustment of duty is permitted under law and the benefit of the same ought to have been allowed to the appellant but the same was not allowed by the Commissioner(Appeals) - thus, appellants are entitled to the adjustment of excess duty paid by them to the tune of ₹ 10,52,311/- against the short paid duty. Demand of Interest - Held that - The appellants are liable for interest on the short paid duty which is to be determined after adjusting the excess duty paid. Unjust enrichment - Held that - The refund has been wrongly rejected on the ground of unjust enrichment whereas in the facts and circumstances, unjust enrichment is not applicable. For the purpose of quantification of duty liability after adjustment and for quantification of interest liability, the case remanded back to the original authority for adjustment of duties and also for determination of interest payable by the appellant - appeal allowed by way of remand.

Summary

Issues:
- Appeal against impugned orders confirming demand, interest, and penalties under Central Excise Act.
- Appellant's contention of demand being barred by limitation.
- Adjustment of excess duty paid against short payment.
- Refund claim rejected on the ground of unjust enrichment.
- Applicability of time limit under Section 11B of the Act.

Analysis:

Issue 1: Appeal against Impugned Orders
The appeals challenged two orders confirming demand, interest, and penalties under the Central Excise Act. The Commissioner(Appeals) confirmed the demand of &8377; 19,36,869/- under Section 11(A)(10) of the Act, interest of &8377; 5,37,727/- under Section 11AA, and imposed penalties. The appellant sought refund in one appeal, which was rejected, leading to both appeals being taken up together for discussion and disposal.

Issue 2: Demand Barred by Limitation
The appellant argued that the demand was time-barred, citing the absence of intention to evade taxes and the excess duty paid, which was not allowed to be adjusted. The appellant relied on various decisions supporting the limitation defense. However, the Tribunal found that the irregularity was detected during an audit, negating the limitation defense, and the extended period was rightly invoked.

Issue 3: Adjustment of Excess Duty
The appellant requested to adjust the excess duty paid against the short payment, supported by legal precedents allowing such adjustments. The Tribunal agreed, holding that the adjustment of duty was permitted under the law, and the appellant was entitled to adjust the excess duty paid against the short paid duty. The case was remanded for the quantification of duty and interest liabilities after adjustment.

Issue 4: Refund Claim and Unjust Enrichment
The refund claim was rejected partly on the ground of unjust enrichment. However, the Tribunal found that unjust enrichment was not applicable due to the complexity of the SAP software causing errors in duty computation. Legal precedents were cited to support the appellant's position, leading to the Tribunal allowing the appeals and setting aside the penalties imposed.

Issue 5: Applicability of Time Limit under Section 11B
The appellant argued that the time limit under Section 11B was not applicable for an amount collected without authority of law. However, the Tribunal's decision did not explicitly address this argument in the judgment.

In conclusion, the Tribunal allowed the appeals, holding that the appellant was entitled to adjust the excess duty paid against the short paid duty. The case was remanded for the quantification of duty and interest liabilities, and the penalties imposed were set aside.