2022 (9) TMI 898 - HC - Central Excise

Refund of unutilized CENVAT credit - relevant date for computation of the period of limitation of one year for submission of the refund claim by a manufacturer of goods - Section 11B of the Central Excise Act, 1944, Rule 5 of the CENVAT Credit Rules, 2004 - Interest on delayed refund - HELD THAT - The appellant has filed the refund application for the period of January, 2005 to March, 2006. The application has been submitted on 31.03.2007 - In the case of M/S. SURETEX PROPHYLACTICS INDIA PRIVATE LIMITED, M/S. MACH AERO COMPONENTS PVT. LTD., M/S. CONTINENTAL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX BANGALORE I 2020 (5) TMI 225 - KARNATAKA HIGH COURT , it has been held that limitation is applicable for refund claims - In view of the law laid down in Suretex, the period of limitation will be applicable for refund claims of accumulated CENVAT Credit. Payment of interest - HELD THAT - As held in COMMISSIONER OF CENTRAL TAX, BENGALURU VERSUS NETAPP INDIA PVT. LTD. 2019 (3) TMI 1750 - KARNATAKA HIGH COURT the assessee shall be entitled for the interest. Appeal allowed in part.

Summary

Issues:
1. Whether the Tribunal can prescribe the period of limitation for refund of unutilized CENVAT credit when relevant provisions do not specify the "relevant date" for the limitation period?
2. Whether interest is payable for the delay in refund of CENVAT credit as per Section 11 BB of the Central Excise Act?

Analysis:

Issue 1:
The appellant, engaged in mining and export of Iron Ore, filed a refund application for the period January 2005 to March 2006. The claim was rejected by the Assistant Commissioner and the rejection was confirmed by the Commissioner (Appeals) on grounds of limitation. However, the CESTAT set aside the order, stating that the limitation under Section 11-B of the Central Excise Act applies and remanded the matter for consideration of the last quarter. The Standing Counsel for the Revenue referred to the case of Suretex Prophylactics India Private Limited, where it was held that limitation is applicable for refund claims. The appellant did not dispute this but requested consideration for interest on the last quarter's application. The Court noted the law laid down in Suretex and held that the limitation is applicable to refund claims for accumulated CENVAT Credit. The Court also agreed that interest should be granted, following the precedent set in the case of Netapp India Private Limited.

Issue 2:
Regarding the second issue of interest payment for the delay in refund of CENVAT credit, the Court held in favor of the assessee, stating that interest should be paid as per Section 11 BB of the Central Excise Act. The Court allowed the appeal in part, holding the first substantial question in favor of the Revenue and the second substantial question in favor of the assessee. The original authority was directed to process the appellant's refund application within three months from the date of the order, in accordance with Section 11-B and Section 11-BB of the Central Excise Act, 1944. No costs were awarded in this matter.