2023 (5) TMI 933 - HC - Central Excise

Refund of central excise duty paid - refund claimed on behalf of the appellant under the exemption notification dated 25.04.2007 for the period from July, 2010 to February, 2012 - Rejection on the ground of being time barred - whether the appellant, who is unquestionably entitled for excise duty exemption under the Notification dated 25.04.2007 was required to file any formal application for claiming such refund? HELD THAT - Bare perusal of the language of the clause 3 of Notification dated 25.04.2007, makes it clear that all that is required from a manufacturer eligible for exemption under the Notification to get duty refund is that the statement of duty paid for each month, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2004 should be submitted to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central excise, as the case may be, by the 7th of the next month for which the duty has been paid. As per Clause 3(b), once the duty paid statement is received, the burden then shifts to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central excise, as the case may be, to make the required verification and refund the amount of duty paid, by 15th of the next month - The Notification dated 25.04.2007 does not stipulate that the manufacturer entitled to exemption would be required to file a formal application for refund. Identical controversy arose in the case of Vernerpur Tea Estate 2018 (2) TMI 1883 - GAUHATI HIGH COURT , wherein challenge given to rejection of claim for duty refund under an analogous Notification dated 08.07.1999 was examined by the Division Bench of this Court, where it was held that statements of duty paid submitted in RT-12 returns by the appellant was substantial compliance of Clause 2(a) of the Notification and there was no need for it to submit a separate statement of the duty paid and claim refund. The language of the notification dated 08.07.1999 under consideration in the said case is pari materia to the notification dated 25.04.2007. The Division Bench of this Court held in unequivocal terms that the only requirement for a manufacturer to claim benefit of exemption of excise duty under the notification was to prove its eligibility for such claim and to submit statement of duty paid, to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central excise, as the case may be, by the 7th of the next month for which the duty had been paid. The Division Bench held that once the appellant was found to be eligible for exemptions and refund of duty paid, denial of benefit of exemptions and refund on the ground of delay cannot be permitted. Merely because the assessee submitted the application for eligibility on 08.01.2012, the claim for duty refund could not be defeated as being time barred. At best, the assessee could be denied the interest, if any accrued on the excise duty paid for the period from July, 2010 to December, 2011. As observed by Hon ble Division Bench in the case of Vernerpur Tea Estate, non-following of procedural requirement cannot deny the substantive benefit otherwise available to the assessee. Exemptions made with a beneficient object like growth of industry in an otherwise difficult region have to be liberally construed and a narrow construction of the notification which defeats the object thereof cannot be accepted. The substantial questions of law framed by this Court, while admitting the appeal, deserve to be decided in favour of the assessee/appellant.

Summary

Issues Involved:
1. Whether the excise duty refund claimed under the exemption notification dated 25.04.2007 for the period from July 2010 to February 2012 was time-barred.
2. Whether a formal application for refund was necessary under the exemption notification.

Summary:

Issue 1: Time-Barred Refund Claim
The appellant challenged the rejection of their excise duty refund claim for the period from July 2010 to December 2011, which was denied by the adjudicating authority as time-barred under Clause 3(a) of Notification No.20/2007-Central Excise dated 25.04.2007. The adjudicating authority allowed the refund only for January and February 2012. The appellant argued that the refund claim was unjustly curtailed and that the duty paid statements were submitted timely each month, which was verified by the jurisdictional authority.

Issue 2: Necessity of Formal Application for Refund
The court examined whether a formal application was required under the exemption notification. Clause 3 of the notification stipulates that the manufacturer must submit a statement of duty paid by the 7th of the next month, and the Assistant Commissioner or Deputy Commissioner of Central Excise must refund the amount by the 15th of the next month. The court found that the notification does not mandate a formal refund application, and the duty refund should be automatic upon submission of the duty paid statement.

Court's Analysis and Decision:
The court referred to the Division Bench judgment in Vernerpur Tea Estate, which held that the submission of duty paid statements in RT-12 returns was substantial compliance and that denial of refund on the ground of delay was unjustified. The court distinguished this case from Lukwah Tea Estate, noting that the latter involved issues of res judicata and lack of evidence, which were not present in the current case.

The court concluded that the appellant's eligibility for duty refund was not disputed, and the delay in acquiring the eligibility certificate should not defeat the refund claim. The court emphasized that procedural non-compliance should not deny substantive benefits and that exemptions aimed at promoting industry growth should be liberally construed.

Conclusion:
The court quashed the CESTAT's order dated 12.01.2018 and reversed the orders of the appellate and adjudicating authorities to the extent they denied the refund claim for July 2010 to December 2011. The appellant was entitled to a refund of the excise duty paid during this period, with interest if applicable, to be processed within 60 days. The appeal was disposed of with no order as to costs.