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2025 (4) TMI 1286 - AT - Central ExciseEntitlement for refund claim - amount inadvertently paid towards National Calamity Contingent Duty (NCCD) by utilisation of CENVAT credit of basic excise duty the utilisation of which stood expressly prohibited by virtue of amendment Notification 13/2016 CE/NT dated 01.03.2016 - bar of time limitation u/s 11B of the Central Excise Act 1944 - principles of unjust enrichment. Time limitation - HELD THAT - The period of dispute is March 2016 to June 2017. The Show cause notice proposing to recover the NCCD is issued on 04.04.2018 in response to which the appellant remitted the payments on 13.06.2018 and 14.06.2018. Vide the letter dated 10.07.2018 the appellant filed Form-R seeking refund of the debit made erroneously towards NCCD for the period March 2016 to June 2017. From the above it is clear that the said application for refund is made after the expiry of one year from the relevant date and therefore going by the land mark judgement of the Constitution Bench of Hon ble Apex Court in the case of Mafatlal Industries Ltd. Vs Union of India 1996 (12) TMI 50 - SUPREME COURT any application for refund which could only be under Section 11B has to be filed within the timeframe provided under the said section which is not the case here and hence the rejection of refund as barred by limitation cannot be found fault with. Principles of unjust enrichment - HELD THAT - The Original Authority has tabulated the sample invoices which reflects the passing on of the duty (NCCD) on their customers which only reflects that the appellant had in fact collected the same from their customers in cash. This fact is based on the analysis of invoices issued and the appellant has not disputed these facts - The appellant s claim that passing on the duty burden was irrelevant is rejected. Conclusion - i) The refund claim is barred by limitation under Section 11B as it was filed beyond the prescribed one-year period. ii) The appellant is not entitled to refund as it had passed on the burden of NCCD to its customers resulting in unjust enrichment if refund was allowed. Appeal dismissed.
The core legal questions considered by the Tribunal in this case are:
1. Whether the appellant was entitled to the refund claim made under Section 11B of the Central Excise Act, 1944 for the amount of National Calamity Contingent Duty (NCCD) allegedly paid by utilizing CENVAT credit, contrary to the amended provisions effective from 01.03.2016. 2. Whether the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944. 3. Whether the appellant was unjustly enriched by passing on the burden of NCCD to its customers, thereby disentitling it from refund. 4. The legal effect of payment of NCCD by utilization of CENVAT credit in light of the amendment Notification 13/2016 - CE/NT dated 01.03.2016. Issue-wise Detailed Analysis Issue 1: Entitlement to Refund of NCCD Paid by Utilizing CENVAT Credit The relevant legal framework includes Section 11B of the Central Excise Act, 1944, which governs refund claims, and the CENVAT Credit Rules, specifically Rule 3(4) as amended by Notification 13/2016 - CE/NT dated 01.03.2016. This amendment introduced the 5th proviso to Rule 3(4), expressly prohibiting payment of NCCD by utilization of CENVAT credit, mandating payment in cash. The appellant admitted that it inadvertently utilized CENVAT credit of basic excise duty and service tax to discharge NCCD liability on motorcycles and scooters cleared from its factory during March 2016 to June 2017, despite the amendment. This discrepancy was detected by the Revenue, which issued a Show Cause Notice (SCN) dated 04.04.2018 proposing recovery of the amount paid erroneously through CENVAT credit. Subsequently, the appellant paid the NCCD liability in cash through GAR-7 Challans dated 13.06.2018 and 14.06.2018, contending that the debit made in the CENVAT credit account was an erroneous deposit and thus refundable. The appellant filed Form-R claiming refund of the amount debited erroneously. The appellant argued that since the payment by CENVAT credit was unauthorized, it did not constitute valid duty payment, and the amount was effectively a deposit, not subject to limitation under Section 11B. They further contended that passing on the duty burden to customers was irrelevant to refund entitlement. The Revenue countered that the payment of NCCD by utilization of CENVAT credit was invalid and not a deposit; hence, refund was not permissible. The Revenue also emphasized that the claim was governed by the statutory limitation under Section 11B, which was not met. The Tribunal noted that the amendment clearly prohibited payment of NCCD through CENVAT credit, implying that such payment could not be considered valid duty payment. The Revenue's retention of the amount paid via CENVAT credit was not justified; instead, the Revenue was entitled to demand proper payment in cash. However, the Tribunal also observed that the appellant had paid the NCCD in cash after detection, and the refund claim related to the amount debited erroneously in the CENVAT credit account. Issue 2: Limitation Bar under Section 11B Section 11B prescribes a one-year limitation period for filing refund claims. The relevant date for limitation calculation is the date when the amount was paid or when the cause of action arose. The appellant filed the refund claim on 10.07.2018 for the period March 2016 to June 2017. The SCN for recovery was issued on 04.04.2018, and cash payment was made in June 2018. The Tribunal found that the refund claim was filed after the expiry of one year from the relevant dates for the earliest disputed period (March 2016), thus exceeding the limitation period prescribed under Section 11B. The appellant's contention that the Limitation Act, Section 17 (which allows for extended limitation in certain cases) applied was rejected. The Tribunal held that Section 11B provides a clear statutory limitation, and the Limitation Act is invoked only when the statute is silent or unclear on limitation, which was not the case here. The Tribunal relied on the binding precedent of the Constitution Bench which held that refund claims under Section 11B must be filed within the prescribed period, failing which they are liable to be rejected as barred by limitation. Issue 3: Passing on of Duty Burden and Unjust Enrichment The Original Authority found that the appellant had passed on the burden of NCCD to its customers by raising invoices reflecting the duty amount, which was collected in cash. This was evidenced by sample invoices tabulated in the Order-in-Original, which the appellant did not dispute. The Tribunal upheld this finding, reasoning that since the appellant had recovered the amount of NCCD from customers in cash, refunding the amount would result in unjust enrichment. The appellant's claim that passing on the duty burden was irrelevant was rejected on this basis. Issue 4: Legal Effect of Payment of NCCD by Utilization of CENVAT Credit The amendment Notification 13/2016 - CE/NT dated 01.03.2016 explicitly prohibited payment of NCCD through CENVAT credit, requiring payment only in cash. The Tribunal interpreted this to mean that any payment made through CENVAT credit during the disputed period was invalid and could not be considered a valid discharge of duty liability. Accordingly, the Revenue was entitled to demand proper payment in cash, which the appellant subsequently made. The amount debited via CENVAT credit was thus an erroneous debit and not a valid duty payment. However, the Tribunal emphasized that the refund claim for this erroneous debit must still comply with the statutory limitation and other conditions under Section 11B. Treatment of Competing Arguments The appellant's arguments centered on the characterization of the amount debited via CENVAT credit as a deposit, the applicability of extended limitation under the Limitation Act, and irrelevance of passing on of duty burden. The Tribunal rejected these contentions based on statutory provisions, binding precedents, and factual findings. The Revenue's arguments emphasizing statutory limitation, invalidity of CENVAT credit utilization for NCCD, and unjust enrichment principles were accepted by the Tribunal. Conclusions The Tribunal concluded that:
Significant Holdings The Tribunal held verbatim:
The core principles established include the strict application of limitation under Section 11B for refund claims, the invalidity of utilizing CENVAT credit for NCCD post-amendment, and the principle against unjust enrichment where duty burden is passed on to customers. Accordingly, the Tribunal dismissed the appeal, upholding the rejection of the refund claim on grounds of limitation and unjust enrichment.
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