Custom, Excise & Service Tax Tribunal
Rachna Art Prints Pvt Ltd vs Surat-I on 3 March, 2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH- COURT NO.3
Excise Appeal No. 10197 of 2018-SM
(Arising out of OIA-CCESA-SRT-APPEAL-PS-98-2017-18 Dated-16/10/2017 passed by
Commissioner (Appeals ) Commissioner of Central Excise, Customs and Service Tax-SURAT-
I)
M/s. Rachna Art Prints Pvt Ltd .........Appellant
243/1, 244/B, Gidc, Pandesara,
Surat, Gujarat
VERSUS
C.C.E. & S.T.-Surat-i .........Respondent
New Building...Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat-395001 APPEARANCE:
Shril. K.I.Vyas, Advocate for the Appellant Shri. L. Patra, Authorised Representative for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR Final Order No. A/ 10729 /2020 DATE OF HEARING: 08.11.2019 DATE OF DECISION:03.03.2020 RAMESH NAIR The fact of the case in brief are that a show cause notice was issued to the appellant for wrong availment of cenvat credit amounting to Rs, 33,90,576/- on the various invoices which were found issued by fake/fictitious and non existing dealers as per alert circular dated 22.09.2005 issued by the Commissioner, Central Excise & Customs, Surat I. The Appellant had paid the amount of Rs 27,57,221/- against the amount of cenvat credit availed wrongly and Rs. 3,93,139/- as interest on such amount voluntarily. The adjudicating authority confirmed the demand and
2|Page E/10197/2018-SM appropriated the amount of Rs. 27,57,221/- already paid. Being aggrieved by the said demand order in original, the appellant filed the appeal before the Commissioner (Appeal), who vide OIA No. RKA/514/515/SRT/511/2010 DATED 6.9.2010 partially allowed the appeal under which only an amount of Rs. 1,49,030/- was confirmed and demand of balance amount of Rs.
2,75,7221/- was set aside. Aggrieved with the OIA, the appellant filed an appeal before CESTAT Ahmedabad, who vide Order No. A/1926/@ZB/AHD/2011 and S/1432/WZB/AHD/2011 date-17.10.2011, remanded the matter back to adjudicating authority. Consequent to the said CESTAT Order 17.10.2011, the appellant filed the refund claim for Rs. 27,57,221/- on 22.8.2016 which has been rejected by the adjudicating authority. Being aggrieved by the order of the adjudicating authority by which the refund of the appellant rejected, the appellant filed appeal before Commissioner (Appeal) which was rejected by upholding the order-in- original. Therefore, the present appeal.
2. Both the lower authorities rejected the refund claim on the ground of time bar for the reason that the period for filing refund is 1 year from date of tribunals remand order that was passed on 17.10.2011, whereas the refund claim was filed on 22.08.2016.
3. Shri K.I Vyas, learned counsel appeared on behalf of the Appellant and argued the case in length. He submits that in the present case though the appellant has reversed the cenvat credit, however, while dealing with the stay application by the Tribunal this amount was considered as pre deposit in terms of 35F, therefore, the refund of any amount which was paid as deposit under section 35F is refundable without any bar of limitation as provided under section 11B. He submits that the pre-deposit amount is not a duty, the time limit of one year as prescribed under section 11B of Central Excuse Act, 1944 shall apply in a case of refund of duty, however, this time limit will not apply in case of refund of deposit. He alternatively submits that the appellants payment of cenvat credit has been made on the insistence of the department as per it's letter dated 22.9.2005, therefore such payment must be treated under protest therefore time limit is not applicable. In support of his submission, he placed reliance on the following judgments.
1) CESTAT Order No. A/11964/2019 dated 04.10.2019 in case of Span Intermediates P.Ltd.
2) Ashok Shetty & Associates CA Vs. Commr. Of C.Ex Mangalore- 2017 (4) GSTL 53 (Tri-Bang)
3|Page E/10197/2018-SM
3) Commr. Of C.Ex & Customs Vs. JM Baxi & Co. - 2011 (271) ELT 19 (Guj)
4) Suvidhe Ltd. Vs. Union of India - 1996 (82) ELT 177 (Bom)
5) UOI V Suvidhe Ltd - 1997 (94) ELT A1589 (SC)
4. Shri L. Patra Ld. Assistant Commissioner (Authorized representative) appearing on behalf of the revenue reiterates the findings of the impugned order, he submits that at the time of payment of cenvat amount the same was paid as duty therefore, refund of said duty is governed by the provision of Section of 11B, hence, both the lower authorities have rightly denied the refund on the ground of time bar. He placed reliance on the following judgments -
1) CESTAT Order No. A/11614/ 2018 dated 01.08.2018 in case of Petronet LNG Limited
2) CESTAT Order No. A/13327/17 Dt. 10.10.2017 - Citizen Metalloys Ltd. Vs. CCE Ahmedabad-III
3) 2009 (240) ELT 239 (Tri-Del) - CCE, Jaipur-II Vs. Evershine Marbles & Exporters P.Ltd.
4) 2011 (269) ELT 233 (Tri-Chennai) -Redington India Ltd. Vs CC, Chennai
5) 2003 (157) ELT 500 (SC) - Dena Snuff Pvt.Ltd. Vs. CCE, Chandigarh
6) 2015 (317) ELT 379 (Tri-Mum)- Hindustan Petroleum Corporation Ltd.
Vs. CCE, Mumbai - II.
5. I heard both the sides and perused the record. I find that the limited issue in the present case involved is that whether the refund of cenvat amount and interest thereon paid by the appellant, before issuance of show cause notice proposing demand of said amount, should be treated as deposit and not duty and consequently whether time limit prescribed under section 11B shall apply or otherwise. 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 Ld. Counsel emphasized tribunal's remand order dated 17.10.2011 whereby he submits that the amount of cenvat paid by the appellant was considered as deposit to hear the appeal, therefore, the
4|Page E/10197/2018-SM said payment is a deposit under section 35F and for the refund of the said amount time limit will not apply. In this regard I would like to refer to para 4 of tribunal's order dated 17.10.2011 which is re-produced below -
"4. On perusal of the records, we find that the appellant had claimed that they have deposited an amount of Rs. 27,57,221/- during the investigation against the liability as has been indicated herein above. In view of the fact that the appellant had deposited the entire amount of the Cenvat Credit confirmed by the adjudicating authority, we consider this amount as enough deposit to hear and dispose the appeal. In view of this, application for waiver of pre-deposit of the balance amount involved is allowed and recovery thereof is stayed."
5.1 From the reading of above para, it is clear that appellant themselves had claimed that they have deposited an amount of Rs. 27,57,221/- against the liability as has been indicated above. The tribunal also viewed the fact that the appellant has deposited the entire amount of cenvat credit confirmed by the adjudicating authority. With this finding of the tribunal it makes i clear that the amount was voluntarily paid along with interest by the appellant against the liability of confirmed demand of cenvat credit. Moreover, the said amount was appropriated by thre adjudicating authority in the adjudication order against the confirmed demand , therefore, firstly the amount paid by the appellant was clearly towards the liability of cenvat credit demand, secondly when the said payment was appropriated against the demand there is no doubt that the said payment has taken colour of duty. As regard the appellant's plea that the tribunal remand order considered the said amount as deposit for hearing the appeal, I find that 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. As regard the submission of the Ld. Counsel that since the payment was made on insistence of the department such payment should be treated under protest. I agree with this submission of the appellant. However, the protest continued till the date of remand order. The refund itself has arisen after the tribunal has passed remand order dated 17.10.2011, which is relevant date for the refund under section 11B. After this date of remand order ‗‖under protest' if any, stand vacated, therefore, time limit of one year
5|Page E/10197/2018-SM shall be reckoned from 17.10.2011 whereas refund claim was filed after almost more than four years hence, the same is clearly time-bar. As regard judgment relied upon the Ld. Counsel for the appellant, after going through the said judgments in detail, I find that in the case of Spam Intermediates (supra) there was not the issue of limitation, the case was only on the issue of procedure for claiming refund therefore the said judgment is not applicable. As regard the judgment in the case of Ashok Shetty Associates CA supra, I find that the said judgment was passed by single member bench. Whereas a division bench considering the identical issue in the case of Petronet LNG Ltd. (supra) after analysing various supreme court judgments held as under -
―4. We have carefully considered the submissions made by both the sides and perused the record. We find that the limited issue to be decided by us is, whether refund claim filed by the appellant is governed by Section 27 of the Customs Act, 1962 and consequently it is time- barred or otherwise. We find that though the amount of refund claim is related to duty paid and the said amount is customs duty including the duty on the actual receipt quantity. Therefore, the entire amount paid by the appellant is nothing but customs duty only irrespective to the fact that certain portion of the duty was not payable. Under the Customs Act, any amount which is refundable has to pass the test provided under Section 27 of the Customs Act, 1962. In the said Act, there is no other provisions made for refund of any amount which was paid either without authority of law or was not payable for any reason. Therefore, all the refund claims under the Customs Act has to be dealt with under the provisions of Section 27. The departmental authority has no legal authority to process and sanction the refunds going out of Section 27 of the Customs Act, 1962. Therefore, the Customs authorities have to process and dispose the refunds only and only under Section 27 of the Customs Act, 1962. Though in the identical facts, the Hon'ble Bombay High Court in the judgment cited by ld. Counsel, in case of refund, in respect of duty paid on short imported goods held that limitation under Section 27 is not applicable. However, the Hon'ble Supreme Court in various judgments held that all the refund claims of customs and excise has to be governed by Section 27 of the Customs Act or Section 11B of the Central Excise Act, 1944. In the case of Collector of Central Excise, Chandigarh vs. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 (S.C.), the Hon'ble Apex Court held as under:-
"6. It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund.
6|Page E/10197/2018-SM This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefore in the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law, the party might seek recourse to such alternative remedy as it might be advised. See the observations of this Court in Miles India Ltd. v. The Assistant Collector of Customs [1987(30) E.L.T.641 (S.C.) = 1985 E.C.R. 289]. 7. In the aforesaid view of the matter the Tribunal was right. The appeal, therefore, has no merits and it is accordingly not entertained and dismissed. There is no order as to costs."
From the above judgment, it is clear that even if there is refund of duty which was recovered without authority of law, the refund made before the departmental authority, limitation provided under Customs/Central Excise Act shall be applicable. The Hon'ble Supreme Court has held that authorities functioning under an Act is bound by its provisions and any refund proceedings beyond the limitation provided under the Customs/ Central Excise Act, the same can be initiated in the Civil Court. Accordingly, the time limit under the Customs Act is applicable. We are also of the view that the Tribunal being creature of the statue and under Customs Act have to deal with any refund case within four corners of the Customs Act, since the provisions for refund is only provided under Section 27 of the Customs Act, 1962. This Tribunal also cannot by-pass the same and decide the refund claims under general law. The Hon'ble Supreme Court in a land mark judgment in the case of Mafatlal Industries Limited vs. UOI - 1997 (89) ELT 247 (SC) has endorsed the aforesaid judgment in the case of Doaba Co-operative Sugar Mills (supra). In the case of UOI vs. Namdang Tea Estate - 2004 (164) ELT 132 (SC), the Hon'ble Supreme Court held that claim filed beyond the stipulated time is not admissible. In the case of UOI vs. VIP Industries Limited - 1998 (101) ELT 8 (SC) the Hon'ble Supreme Court in the facts of the case held that assessee filing refund claim for past four years following a favourable decision on classification in the case of a manufacturer of similar goods, set-aside the Hon'ble High Court order which directed the Assistant Commissioner to consider the claim for beyond limitation period without taking into consideration the question of limitation. Accordingly, the High Court judgment was set-aside. In the case of Porcelain Electrical Manufacturing Company vs. Collector of Central Excise, New Delhi - 1998 (98) ELT 583 (SC), the Hon'ble Supreme Court held that refund claim filed before the departmental authorities to be governed by the time limit provided under the statute, general law of limitation not available. The decisions where assessee has invoked extraordinary jurisdiction of the High Courts and the Courts have applied the period of limitation of three years, the same is inapplicable to cases where the refund application has been moved before the Revenue authority. The decision in the case Escorts Limited vs. UOI - 1998 (97)ELT 211 (SC), the Hon'ble Apex Court has held that application for refund is presented before the Customs authority under Section 27 of Customs Act, 1962, the said authority must necessarily operate within the four corners of the said Act and cannot have recourse to Section 72 of the Indian Contract Act, 1872 and the delayed application rightly rejected as time barred. The Hon'ble Supreme Court in the case of UOI vs. Amines and Plasticizers Limited held that refund claims filed beyond the period prescribed under Customs Act, 1962, the High Court order directing the Revenue to ignore the period of limitation and dispose of the refund claim stands set aside in the light of law declared in Mafatlal's case and the refund claim was held to be dismissed as barred by time. The Hon'ble Supreme Court in the case of UOI vs. Kirloskar Pneumatic Company - 1996 (84) ELT 401 (SC) held that the High Courts under writ jurisdiction cannot direct the Customs authorities to ignore the time limit prescribed under Section 27 of the Customs Act, even though High Court itself may not be bound by the time limit of the said Section, Articles 226
7|Page E/10197/2018-SM and 227 of the Constitution of India. In view of the above judgment, only the High Court, under writ jurisdiction, can exercise the inherent power provided in it but the said power cannot be enjoyed by the Tribunal. In the case of Paros Electronics Pvt. Limited vs. UOI - 1996 (83) ELT 261 (SC), the Hon'ble Supreme Court held that customs authorities cannot grant refund, being a creation of statute they are bound by limitation of Section 27 of the Customs Act. 5. On the analysis of above judgments of Hon'ble Supreme Court, the gist is that any refund filed before the Customs/ Central Excise authorities can only process the claim under Customs/ Central Excise Acts and the departmental authorities have no jurisdiction to go beyond the provisions made under the Act and limitations provided under Section 27/Section 11B. 6. As regards the alternative submissions made by ld. Counsel that refund claim was filed within time limit from the date of receipt of Tribunal order, we find that the issue on merits was already decided in favour of the appellant by the Commissioner (Appeal) vide order dated 04.12.2013, thereafter, the appellant became eligible for refund. Even though the department had filed appeal against the Commissioner (Appeal) order before the Tribunal but since no stay was granted, the departmental authority was bound to sanction the refund claim in terms of CBEC Circular 572/9/2001-CX dated 22.02.2001. The relevant para of the Circular is reproduced as under:-
"(3) The cases where refund arises due to order of Commissioner (Appeals) or Commissioner of Central Excise/Customs and decision is taken to contest them before CEGAT.
In such cases appeal/stay application should be filed expeditiously well before the expiry of stipulated period of three months (and not waiting for the last date of filing of appeal). However, no refund/rebate claim should be withheld on the ground that an appeal has been filed against the order giving the relief, unless stay order has been obtained. It would be the responsibility of the concerned Commissioner to obtain stay order expeditiously where the orders passed by Commissioner (Appeals) suffer from serious infirmities and it involves grant of heavy refunds.‖ Therefore, the period of one year shall be reckoned from the date of receipt of Commissioner (Appeal) order and not from the date of receipt of Tribunal's order.
7. For the refund claims arising out of order settling the dispute, there is specific provision made under Section 27(1B) which is reproduced below:-
―Section 27 - Claim of refund of duty: -
(1B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely:--
(a) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 25, the limitation of one year shall be computed from the date of issue of such order;
(b) where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction;
As per clause (b) of sub Section (1B) of Section 27, where the duty became refundable as a consequence of any judgment, decree, order or direction of the appellate authority, the limitation of one year shall be computed from the date of such judgment, decree, order or direction. In the present case, the demand of duty on short imported goods stands setaside as per the order of Commissioner (Appeal) and as a consequence, the appellant become eligible for refund of the said amount. Therefore, in terms of clause (b) of sub-Section (1B) of Section 27, the period of one year shall be computed from the date of
8|Page E/10197/2018-SM Commissioner (Appeal) order. Accordingly, the refund application filed beyond one year from that date is clearly time barred.
8. The Hon'ble Supreme Court in the case of Dena Snuff Pvt. Limited vs. CCE, Chandigarh - 2003 (157) ELT 500 (SC) has held that in case of any dispute on merits, the period of limitation would start to run from the date of final decision in assessee's own case. In view of the above judgment also it is clear that appellant could have filed the refund claim within one year from the date of Commissioner (Appeal) order by which the dispute on demand of duty was settled.
In view of the above discussions, we are of the view that the departmental authority has no legal authority to sanction the refund filed beyond limitation. Accordingly, the impugned order is upheld and the appeal is dismissed.
5.2 In view of the above judgment which was passed after consideration of various Supreme Court judgments, no different view can be made. With regard to the judgment of JM Bakshi & co. (supra) relied upon by the Ld. Counsel , I find that in the said judgment the issue involved was of unjust enrichment, whereas the present case is on time bar, hence the ratio of the said judgment does not apply in the present case.
6. As per my above discussion and finding, I am of the view that both the lower authorities have rightly held, the refund is time bar. Accordingly the impugned order is upheld appeal is dismissed.
(Pronounced in the open court on 03.03.2020) (RAMESH NAIR) MEMBER (JUDICIAL) Prachi