2020 (3) TMI 150 - AT - Central Excise

Refund of CENVAT amount and interest - the payment made during investigation or before issuance of show cause notice is in the nature of pre-deposit or not - applicability of time limitation - HELD THAT - As per the fact of the present case the appellant have paid consciously and knowingly that the said payment is towards alleged wrong availment of cenvat credit and also paid interest thereon which is payable in terms of rule 14 of Cenvat Credit Rules, 2004. Therefore at the time of payment the nature of payment was clearly as of duty and not the deposit. The payment of cenvat credit was considered by the tribunal as sufficient for hearing the appeal. It is obvious that once the appellant paid the substantial duty amount there cannot be further direction of separate deposit for hearing the appeal but that itself does not change the character of payment at the time when it was made. I am of the view that if the similar payment is considered as pre-deposit then in no case of refund section 11B will apply. Both the lower authorities have rightly held, the refund is time bar - Appeal dismissed - decided against appellant.

Issues Involved:
1. Wrong availment of Cenvat credit.
2. Refund claim rejection on the ground of time bar.
3. Whether the payment should be treated as deposit or duty.
4. Applicability of the time limit prescribed under Section 11B of the Central Excise Act, 1944.

Detailed Analysis:

1. Wrong Availment of Cenvat Credit:
The appellant was issued a show cause notice for the wrong availment of Cenvat credit amounting to ?33,90,576/- based on invoices from fake/non-existing dealers as per an alert circular dated 22.09.2005 by the Commissioner, Central Excise & Customs, Surat I. The appellant paid ?27,57,221/- against the wrongly availed Cenvat credit and ?3,93,139/- as interest voluntarily. The adjudicating authority confirmed the demand and appropriated the amount already paid. On appeal, the Commissioner (Appeal) partially allowed the appeal, confirming only ?1,49,030/- and setting aside the balance amount. The appellant then filed an appeal before CESTAT Ahmedabad, which remanded the matter back to the adjudicating authority.

2. Refund Claim Rejection on the Ground of Time Bar:
The appellant filed a refund claim for ?27,57,221/- on 22.08.2016, which was rejected by the adjudicating authority on the ground of time bar, stating that the period for filing a refund is one year from the date of the tribunal's remand order (17.10.2011). Both lower authorities upheld the rejection on this ground.

3. Whether the Payment Should be Treated as Deposit or Duty:
The appellant argued that the amount paid should be treated as a pre-deposit under Section 35F, which is refundable without any limitation period under Section 11B. The appellant also contended that the payment was made on the department's insistence and should be treated as made under protest, thus not subject to the time limit. The tribunal, however, found that the appellant had paid the amount consciously and knowingly towards the alleged wrong availment of Cenvat credit and interest, making it a payment of duty and not a deposit. The tribunal's remand order considered the amount as sufficient for hearing the appeal, but this did not change the nature of the payment at the time it was made.

4. Applicability of the Time Limit Prescribed Under Section 11B of the Central Excise Act, 1944:
The tribunal emphasized that the payment made by the appellant was towards the liability of Cenvat credit demand and was appropriated against the confirmed demand, thus taking the character of duty. The tribunal also noted that if the payment was considered under protest, the protest would have been vacated after the remand order, making the relevant date for the refund claim 17.10.2011. Since the refund claim was filed more than four years after this date, it was clearly time-barred. The tribunal referred to various judgments, including the Supreme Court's ruling in Doaba Co-operative Sugar Mills, which held that refund claims must adhere to the limitation period prescribed under the relevant statutes. The tribunal concluded that departmental authorities have no legal authority to sanction refunds filed beyond the statutory limitation period, and the appellant's refund claim was rightly rejected as time-barred.

Conclusion:
The tribunal upheld the rejection of the refund claim on the ground of time bar, affirming that the payment made by the appellant was towards the duty and not a deposit, and thus subject to the limitation period under Section 11B of the Central Excise Act, 1944. The appeal was dismissed.

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