Allahabad High Court
The Kisan Cooperative Sugar Factory ... vs The Commissioner Of Central Excise on 22 November, 2017
Bench: Bharati Sapru, Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD ?A.F.R. Court No. - 35 Case :- CENTRAL EXCISE APPEAL No. - 525 of 2012 Appellant :- The Kisan Cooperative Sugar Factory Ltd. Respondent :- The Commissioner Of Central Excise Counsel for Appellant :- Shakeel Ahmad Counsel for Respondent :- Anjana Singh Hon'ble Bharati Sapru,J.
Hon'ble Saumitra Dayal Singh,J.
Heard Sri Shakeel Ahmad, learned counsel for the appellant and Ms. Anjana Singh, learned counsel for the respondents.
This appeal has been filed against the order of the Custom, Excise and Service Tax Appellate Tribunal dated 13.09.2011 by which the assessee's appeal for refund of certain duty amount claim to have been deposited under protest has been rejected.
The appeal has been filed on the following questions of law:-
"(i) Whether upon the facts and circumstances of the case, the Tribunal was justified in holding that the refund claim of the appellant is time barred and ought to have been applied within one year from the date of passing order of the Hon'ble High Court at Allahabad ignoring the fact that the amount of service tax was deposited under the Protest, which has not been disputed, and as such the provisions of 11B of the Act are not said to be barred by limitation?
(ii) When upon the facts and circumstances of the case, the Tribunal was justified in not considering the vital aspect that in the cases where duty is paid and the case is finally decided by the order and decrees or judgments of the Court then the limitation provided under Section 11B would not apply?
(iii) Whether upon the facts and circumstances of the case the Tribunal has failed to consider the ratio of the judgment of the Apex Court in the case of Mafat Lal Industries Ltd. Vs. Union of India reported in 1997 (89) ELT 247 (SC)"
The disputed period for which the demand was raised is 16.11.1997 to 01.06.1998. On 12.04.2004, the assessee deposited Rs. 50,000/- by way of disputed demand of duty, under protest. This deposit was made during the pendency of writ petition filed by the assessee against the aforesaid disputed demand. Admittedly, the writ petition came to be allowed by this Court vide its judgment dated 11.03.2005.
Apparently, the assessee filed his refund application after four years in the year 2009. The claim for refund has been rejected by invoking the provisions of Section 11B of the Central Excise Act, 1944. For ready reference provisions of Section 11B(1) is quoted below:-
"Section [11B. Claim for refund of duty and interest, if any, paid on such duty] - (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person:
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act.
Provided further that the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest."
(emphasis supplied) On facts, the Tribunal has found that the assessee had made the deposit of the disputed demand of duty amount under protest. The Tribunal has however rejected the refund application on the ground of limitation because according to it the assessee made the refund application belatedly after expiry of one year from date of judgment by this Court noted above.
Learned counsel for the assessee has relied on a judgment of the Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India reported in 1997 (89) ELT 247 (SC).
Learned counsel for the assessee submits, that once the Tribunal had found that the disputed amount of duty was deposited under protest, the period of limitation stood waived in view of the second proviso to Section 11B(1) which is quoted above.
Learned counsel for the respondents on the other hand submits that because the refund application was clearly made beyond time period of one year from the date of decision of the writ petition, the claim for refund of the year 2009 was wholly time barred.
We find the Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India (supra) has held as below:-
"83... The second proviso to Section 11B (as amended in 1991) expressly provides that "the limitation of six months shall not apply where any duty has been paid under protest". Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests the levy of duty, its rate, classification or any other aspect. If one reads the second proviso to Sub-section (1) of Section 11B along with the definition of "relevant date", there is no room for any apprehension of the kind expressed by the learned counsel.
84. ...
85. The rule no doubt requires the assessee to mention the "grounds for payment of the duty under protest" but it does not empower the proper officer, to whom the letter of protest is given, to sit in judgment over the grounds. The assessee need not particularise the grounds of protest. It is open to him to say that according to him, the duty is not exigible according to law. All that the proper officer is empowered to do is to acknowledge the letter of protest when delivered to him and that acknowledgement shall be the proof that the duty has been paid under protest. A reading of the rule shows that the procedure prescribed therein is evolved only with a view to keep a record of the payment of duty under protest. It is meant to obviate any dispute whether the payment is made under protest or not. Any person paying the duty under protest has to follow the procedure prescribed by the Rule and once he does so, it shall be taken that he has paid the duty under protest. The period of limitation of six months will then have no application to him.
86. We may clarify at this stage that when the duty is paid under the orders of Court (whether by way of an order granting stay, suspension, injunction or otherwise) pending an appeal/reference/writ petition, it will certainly be a payment under protest; in such a case, it is obvious, it would not be necessary to lodge the protest as provided by Rule 233B..."
In view of specific finding recorded by the Tribunal that the duty amount has been deposited under protest, limitation of one year to make the claim of refund under Section 11B would not apply at all to such a case and therefore the amount is liable to be refunded to the appellant along with interest excluding the period for which the petitioner had not applied that is upto 2009 from the date it became liable to be refunded. Thus the principal amount is to be refunded but no interest be given from the date writ petition was allowed to the date when the appellant made an application for refund that is 2009. The interest beyond that time may be given.
In view of the above, the instant appeal is allowed to the above extent.
Order Date :- 22.11.2017 A. Singh