2024 (9) TMI 778 - AT - Service Tax

Refund along with interest on delayed payment of refund under Section 11BB of Central Excise Act, 1944 - principles of unjust enrichment - Section 11B(1) of the Central Excise Act, 1944 - HELD THAT - The Ld. Commissioner (Appeals) after analyzing Rules 6(3) of the CCR Rules and Rule 6(6A) has held that Rule 6(3) does not refer to the duty of excise or service tax. The word used is 'amount' and not 'duty' or tax and further the amount so payable is not available as input tax credit to the recipient and therefore, the amount payable under Rule 6(3) CCR Rules is not Service tax payable under Section 66 of the Finance Act and further the Ld. Commissioner has held that the doctrine of unjust enrichment is not applicable in availing the Cenvat Credit or in case of refund of Cenvat credit as mandated under Section 11B(2)(c) of CE Act. The denial of refund claim of the amount wrongly paid is in violation of Article 265 of Indian Constitution. As regards the claim of unjust enrichment, the respondent has proved that no tax has been charged from SEZ unit. The invoices issued to SEZ units along with sample copies of tax invoice shows that no service tax was charged from SEZ unit. The respondent has proved that the amount of refund claim has actually been borne by them and sanctioning of the refund would not amount to unjust enrichment. The erroneous payment of the duty/tax under mistake of law would not attract provisions of unjust enrichment as provided in Section 11B of Central Excise Act. There are no infirmity in the impugned order which is upheld by dismissing the appeal of the Revenue - appeal dismissed.

Summary

Issues Involved:
1. Refund of Rs. 2,52,31,030/- along with interest on delayed payment.
2. Applicability of Rule 6(3) and Rule 6(6A) of the CCR Rules, 2004.
3. Unjust enrichment under Section 11B of the Central Excise Act, 1944.
4. Limitation period for refund claims.

Issue-wise Detailed Analysis:

1. Refund of Rs. 2,52,31,030/- along with interest on delayed payment:
The appeal by the Revenue contests the refund granted by the Commissioner (Appeals) of Rs. 2,52,31,030/- along with interest under Section 11BB of the Central Excise Act, 1944. The respondent had paid this amount under Rule 6(3)(i) of the CCR Rules for services provided to SEZ units during the disputed period (October 2011 to March 2012). The respondent later filed for a refund, claiming the payment was made erroneously.

2. Applicability of Rule 6(3) and Rule 6(6A) of the CCR Rules, 2004:
The respondent argued that Rule 6(3) of the CCR Rules was not applicable to services provided to SEZ units without payment of service tax, as per Rule 6(6A). The Commissioner (Appeals) agreed, noting that Rule 6(3) refers to an 'amount' and not 'duty' or 'tax', and the amount payable under Rule 6(3) is not available as input tax credit to the recipient.

3. Unjust enrichment under Section 11B of the Central Excise Act, 1944:
The adjudicating authority rejected the refund on grounds of unjust enrichment, asserting that the respondent must have passed on the cost to their clients. However, the Commissioner (Appeals) and the Tribunal found that the doctrine of unjust enrichment is not applicable in cases of refund of Cenvat credit. The respondent provided evidence, including invoices and a Chartered Accountant's affidavit, showing no service tax was charged to SEZ units.

4. Limitation period for refund claims:
The Tribunal referred to various High Court decisions, including M/s 3e Infotech and Abdul Samad, which held that claims for refunds due to payments made by mistake cannot be barred by the limitation period under Section 11B. The Tribunal emphasized that retaining excess service tax paid by mistake would violate Article 265 of the Constitution of India.

Conclusion:
The Tribunal upheld the Commissioner (Appeals) order, stating that the erroneous payment of duty/tax under a mistake of law does not attract the provisions of unjust enrichment under Section 11B of the Central Excise Act. The appeal by the Revenue was dismissed, affirming the refund to the respondent.

Order Pronounced:
(Order pronounced in the open court on 13.09.2024)