2020 (1) TMI 364 - AT - Central Excise

Refund of deposit made - refund rejected on the ground that the deposit made is payment of duty and not deposit under Section 35F, therefore, the refund should have been filed under Section 11B - HELD THAT - The full amount of duty and additional amount of 50,00/- deposited by the appellant was considered as sufficient for the purpose of pre-deposit required under Section 35F of Central Excise Act, 1944 and the balance amount was waived. With this clear findings in the stay order there is no doubt that the amount of duty and additional amount of ₹ 50,000/- paid by the appellant is under Section 35F. Board has clarified in Board Circular F.No. 275/37/2J-Cx. 8A dated 02.01.2002 that Any amount which is paid under Section 35F no formal refund application under Section 11B is required, merely a letter claiming the refund is sufficient which the appellant has admittedly submitted within the time after the Tribunal s order dropping the demand. Thus, whatever amount has been deposited by the appellant since has been considered by the Tribunal as a deposit under Section 35F for granting the stay, the same needs to be refunded without following the procedure of Section 11B - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of the deposit made during the appeal stage as pre-deposit under Section 35F.
2. Applicability of Section 11B for refund of the pre-deposit.
3. Compliance with procedural requirements for refund claims.

Issue-wise Detailed Analysis:

1. Classification of the deposit made during the appeal stage as pre-deposit under Section 35F:

The appellant deposited duty during the appeal stage, which the Tribunal considered as a pre-deposit required under Section 35F of the Central Excise Act, 1944. The Tribunal's stay order explicitly stated that the amount deposited by the appellant was sufficient for the purpose of pre-deposit under Section 35F. The Tribunal noted, “Taking note of the fact that the appellant has deposited full amount of duty demanded and additional amount of ?50,000/- has also been deposited, I consider the same as sufficient for the purpose of pre-deposit required under Section 35F of Central Excise Act, 1944.” This classification was crucial as it determined the procedural requirements for refund.

2. Applicability of Section 11B for refund of the pre-deposit:

The Commissioner (Appeals) upheld the rejection of the refund claim on the ground that the deposit was a payment of duty and not a pre-deposit under Section 35F, hence the refund should have been filed under Section 11B. However, the appellant argued that since the Tribunal considered the deposit as a pre-deposit under Section 35F, the procedure under Section 11B was not applicable. The appellant relied on various judgments, including Suvidhe Ltd. vs UOI and JM Baxi & Co., which supported the view that a deposit under Section 35F is not a payment of duty but a pre-deposit for availing the right of appeal, and thus, Section 11B does not apply.

3. Compliance with procedural requirements for refund claims:

The Board Circular F.No. 275/37/2J-Cx. 8A dated 02.01.2002 clarified that for refunds of pre-deposits made under Section 35F, a formal application under Section 11B is not required. A simple letter requesting the return of the amount, along with necessary documents, suffices. The Tribunal reiterated this, stating, “From the above clarification, it is clear that any amount which is paid under Section 35F no formal refund application under Section 11B is required, merely a letter claiming the refund is sufficient which the appellant has admittedly submitted within the time after the Tribunal’s order dropping the demand.”

Judgment:

The Tribunal concluded that the amount deposited by the appellant was indeed a pre-deposit under Section 35F. Consequently, the procedural requirements of Section 11B were not applicable. The appellant had complied with the necessary procedure by submitting a letter for refund. The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the appellant was entitled to the refund without following the procedure of Section 11B. The Tribunal cited supporting judgments from the Bombay High Court in Suvidhe Ltd. and the Gujarat High Court in JM Baxi & Co., reinforcing the decision.

Conclusion:

The Tribunal's judgment clarified that deposits made during the appeal stage, considered as pre-deposits under Section 35F, are not subject to the refund procedures under Section 11B. The appellant's compliance with the simplified refund procedure, as outlined in the Board Circular, was deemed sufficient, and the refund was granted accordingly.