Rajasthan High Court - Jaipur
Commissioner Central Excise &Service; ... vs Shri Ram Castings Dholpur on 6 December, 2017
Author: K.S. Jhaveri
Bench: K.S. Jhaveri
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Central/Excise Appeal No. 65 / 2016
Commissioner, Central Excise & Service Tax, Commissionerate, A-
Block, Surya Nagar, Alwar (Raj.)
----Appellant
Versus
Shri Ram Castings, B-182A, Growth Centre, Dholpur (Raj.).
----Respondent
_____________________________________________________ For Appellant(s) : Mr. Sandeep Pathak For Respondent(s) : Mr. Sameer Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 06/12/2017
1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department.
2. This court while admitting the appeal on 28.03.2017 framed the following question of law:-
"Whether the learned CESTAT has erred in allowing the refund claim of CENVAT Credit in respect of unutilized CENVAT Credit of inputs in respect of the Goods sold by a Domestic Tariff Area (DTA) Unit to a 100% Export Oriented Unit (EOU) contrary to the provisions of Rule 5 of Cenvat Credit Rules, 2004?"
3. The issue is now covered by the decision of this court in D. B. Central/Excise Appeal No. 51/2015 (The Commissioner of Central Excise & Service Tax V/s M/s Gulshan Chemicals Ltd, A 595, Industrial Area,) decided on 01.11.2017, where while (2 of 10) [EXCIA-65/2016] deciding the issue, this court held as under:-
"1. This appeal is preferred against the order of Tribunal whereby Tribunal has decided two appeals together wherein appeal No. E/2549/2009-Ex (SM), [Arising out of order in appeal No. 10/2009 (ST) dated 03.06.2009 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur-I] and Appeal No.ST/214/2009-EX(SM) [Arising out of Order-In-Appeal No.206 (DK)ST/JPR-I/2008 dated 16.10.2008 by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Jaipur-I] 1.1 This Court while admitting the appeal on 31.05.2017 framed following substantial questions of law:-
"(i) Whether the ld. Tribunal was justified in holding that the assessee was entitled for refund of Rs.8,26,637/- on the ground that the bar of limitation as provided under Section 11B of the Act will not apply.?
(ii) Whether the ld. Tribunal was justified in holding that the assessee was entitled for refund of Rs.7,94,490/- on the ground that once an order has already been passed by the ld.
Commissioner (Appeals) thereafter the order passed by the ld. Commissioner in Review is not sustainable and that the assessee has satisfactorily provided the necessary evidences for proving its claim of unjust enrichment before the ld. Adjudicating Authority?"
2. The brief facts of the case are that the respondent-M/s Gulshan Chemicals Limited, A-595, Industrial Area, Bhiwadi (hereinafter referred to as the assessee) are engaged in the maunfacture of Sodium Hydro Sulphite falling under Sub Heading No. 28.31 of the schedule to Central Excise Tariff Act, 1985. Filed three refund claims of Rs. 4,98,498 & 5,18,900 & 6,3,729 as they paid service Tax on the whole value of the service instead of 25% value of Service, envisaged in the notification no. 32/2004
- ST dated 3-12-2014 on inward goods transportation. The Adjudication Authority found that out of the claimed refund amount Rs. 7,94,490/- did not come under the limitation clause and Rs. 8,26,637/- was deposited prior to 16-06-2006. 2.1 The Commissioner of Central Excise (Appeals), Jaipur, Against rejection of their refund claim of Rs. 8,26,637/- on limitation clause, as it was not submitted within prescribed time limit under section 11AB of the Central Excise Act 1994. But the Commissioner (Appeals) did not find infirmity in the (3 of 10) [EXCIA-65/2016] impugned order in original and rejected the appeal of assessee vide order in appeal no. 206 (DK) CE/JPR 1/2008 dated 16.10.2008 and uphold the order in original passed by the Asst. Commissioner, Central Excise Division, Bhiwadi. 2.2 The Commissioner, Central Excise, Jaipur-1 observed that the adjudicating authority erred in sanction of refund claim of service Tax Rs. 7,94,490/- vide the OIO no. 479-481/2007-08 (Refd) dated 3-3-2008. Therefore, the commissioner issued the revision order no. 10/2009 (ST dated 3-6-
2009 under section 84 of the Finance Act, 1994 and held that in this case invoice should also be corroborated from books of accounts as well as annual balance sheet, which contained complete and true picture of the transaction.
2.3 The Hon'ble Tribunal while deciding the appeal of the respondent- appellant, set aside the impugned orders and allowed the appeals of the assessee with consequent relief vide CESTAT Final Order. The Hon'ble Tribunal held that rejection of refund claim on the ground of unjust enrichment is not sustainable in view of the ruling given in the case of Union of India V/s Inani Builders 2011 (22) STR 230 (RAJ) and Commissioner Central Excise V/s Shive Builders 2011 (22) STR 513 (P&H). The Hon'ble CESTAT held that order passed by the Commissioner is not sustainable on the merits as the adjudicating authority had considered the facts that amount of Service Tax paid by the Appellant shown receivable from the Excise Department if the same would have been considered there was no question reviewing by the Commissioner.
3. Counsel for appellant relied upon the decision in Shravan Banarasilal Jejani vs. Commissioner of C. Ex. Nagpur, 2014 (35) STR 587 (Tri.-Mumbai), wherein it has been observed as under:
" The appellants are in appeals against the impugned orders wherein their refund claims were rejected by the learned Commissioner (Appeals) on the Ground that the refund claim is hit by the limitation prescribed in Section 11B of the Central Excise Act, 1944.
2. Brief facts of the case are that the appellants are ultimate owner of the residential flats sold to them by the builder who paid the service tax on the residential flats. As per the Circular No.108/2/2009-ST, dated 29.1.2009, there was no service tax liability on sale of the residential flats to the appellants. Admittedly, when no service tax was payable by the appellant therefore, they have filed a refund claim. The adjudicating authority sanctioned the refund (4 of 10) [EXCIA-65/2016] claim but on appeal by the Revenue, the claim for refund was rejected. Aggrieved by the said order, the appellants are before me.
3. The contention of the appellants is that as they were not required to pay the service tax therefore, the provisions of Section 11B of the Central Excise Act 1944, are not applicable to them. To support his contentions the learned Advocate placed reliance on the decision of the Hon'ble High Court of Karnataka in the case of CCE v. KVR Construction - 2012 (26) S.T.R. 195 (Kar.).
4. On the other hand, the learned A.R. reiterated the findings of the impugned order.
5. Heard both sides and considered the submissions.
6. It is an admitted fact that the appellants were not required to pay service tax but the appellants have paid the service tax erroneously and the same has not been disputed y the department. In that circumstances, as per the Circular 108/2/2009-S.T., dated 29.1.2009, the department is not legally allowed to calculate the service tax and if they do so, the same is unconstitutional. Merely a payment made by the appellant erroneously, does not authorize the department to retain the same. Therefore, the provisions of Section 11B of the Central Excise Act, 1944 are not applicable as held by the Hon'ble High Court of Karnataka in the case of KVR construction (supra).
7. With these observations, I hold that in this matter, the provisions of Section 11B of Central Excise Act, 1944 are not applicable. Therefore, the impugned orders are set aside and the appeals are allowed with consequential relief, if any."
and also relied upon in case Andrew Telecom (I) Pvt. Ltd. vs. Commissioner of Cus. & C. Ex. GOA, 2014 (34) STR 562 (Bom.), wherein it has been observed as under:-
"10. A perusal thereof would indicate that 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 Authorities specified 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 certain documents referred to in Section 12A (5 of 10) [EXCIA-65/2016] to establish that the amount of duty of excise in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty had not been passed on by him to any other person. Thus, the application for refund has to be made before expiry of one year from the relevant date. In the facts and circumstances before us, the case is covered by Explanation (B)(f) meaning thereby, the application for refund should have been made in the present case within one year from the date of payment of duty.
13. The Revenue, therefore, approached the Tribunal and the Tribunal in upholding the order of the Assistant Commissioner came to a conclusion that the Challans which have been filed along with the refund application show that the Service Tax payments were made during the period 2006-2007 and 2007-2008 and last such challan was dated 1-12-2007. The Tribunal also noticed that the Service Tax liability for the period May, 2004 to March, 2006 was discharged in May, 2006. If the refund claim was submitted in the office of the Assistant Commissioner on 28-4-2010, then, it was clearly beyond the period of one year prescribed under Section 11B(1) of the Central Excise Act, 1944.
15. Mr. Desai would submit that an unconstitutional levy is also illegal. If the levy is unconstitutional meaning thereby it is null and void ab initio, then, the judgment in Mafatlal Industries (supra) would permit consideration of an application for refund filed belatedly. Mr. Desai submits that all that the judgment of the Nine Judge Bench holds is that unconstitutional and illegal levies cannot be upheld. In his submission, the predominant consideration while giving relief to the petitioners and applicants who seek refund of the amounts paid pursuant to such levies is that they should not be unjustly enriched. We are of the opinion that the Hon'ble Supreme Court may be considering the issue of validity of the provisions like Section 11B(1) introduced in the Central Excise Act, 1944, but the judgment cannot be applied to such an extent as would enable us to totally override and brush aside a provision like Section 11B with the rule of limitation carved out therein. The distinction as pointed out by Mr. Desai from the judgment in the case of Mafatlal Industries (supra) between unconstitutional (6 of 10) [EXCIA-65/2016] and illegal levy or in his submission both being treated as par, will not enable us to hold that in the facts and circumstances of the present case the Assistant Commissioner and the Tribunal committed any grave error of law or perversity in rejecting the refund claim. The wider question or controversy need not be gone into in the facts of the present case. Suffice it to hold that once the application for refund was made in terms of the Central Excise Act, 1944, it has to be considered in accordance therewith and not otherwise. If the provision of the Central Excise Act, 1944 has been invoked, then, the same must apply with full force. One cannot agree with the Assessee that the provision may have been invoked, but the claim for refund should be considered by not applying the Rule of Limitation prescribed therein. As has been held by the Hon'ble Supreme court in numerous cases and decisions that the Rule of Limitation is provided in order to uphold a larger public interest. The statutes and Rules of limitation are statutes and prescriptions of repose and peace. They give finality to certain proceedings and orders. The reopening thereof is not permissible beyond a particular limit. In these circumstances we do not see how the Tribunal erred in applying the Rule of Limitation and reversing the order passed by the Commissioner (Appeals). The order of the Assistant Commissioner and that of the Tribunal in the given facts and circumstances cannot be said to be perverse. Both have rejected the claim as in their opinion it was stale and time barred. We do not see how such view can raise a substantial question of law. The view taken is imminently possible. We are, therefore, of the view that the Appeal fails and it is, accordingly, dismissed. "19. Before us, the undisputed position is that the amount was paid by the Appellant as Service Tax. That tax was not imposable or leviable on export of services was a clarification made by the Department and relying on that clarification, the refund of duty or Service Tax was claimed. This was squarely a case falling within the provisions of the Central Excise Act, 1944 and therefore, the rule of limitation under Section 11B was applied. That was applied when the application for refund was made invoking Section 11B of the Central Excise Act, 1944. We have no manner of doubt that when this was the (7 of 10) [EXCIA-65/2016] provision invoked, same applies with full force including the rule of limitation prescribed therein. For these reasons, we are of the opinion that the decisions relied upon cannot be of any assistance."
and also relied upon in case Jubilant Enterprises P. Ltd. vs. Commissioner of C. Ex. Mumbai, 2014 (35) STR 430 (Tri.- Mumbai), wherein it has been observed as under:-
"1. The appellant is in appeal against the impugned order wherein the refund claim has been rejected by the lower authorities holding that same is barred by limitation.
2. The brief facts of the case are that the appellant rented their premises to CESTAT, Mumbai and during the period June 2007 to July 2008, they paid service tax on the rent received under the category of renting of immovable property service. As CESTAT, Mumbai did not pay the service tax to the appellant on the premise that they are seeking clarification from C.B.E. & C. whether they are liable to pay service tax during this period or not. After clarification from the C.B.E. & C. that CESTAT is not required to pay service tax during the impugned period, the appellant claimed refund of the service tax paid during the impugned period on 26-12-2008. The refund claim which was within one year was sanctioned but rest of the refund claim was rejected as time-barred as per Section 11B of the Central Excise Act. Aggrieved from the said order, appellant is before me.
2. The ld. counsel on behalf of the appellant submits that as per the clarification issued by the C.B.E. & C. that the appellant is not required to pay service tax, therefore the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case. Therefore, their claim is not barred by limitation. To support this contention she relied on CCE v. Shankar Ramchandra Auctioneers- 2010 (19) S.T.R. 222 (T).
3. On the other hand, ld. AR relied on the decision of Mafatlal Inds.- 1997 (89) E.L.T. 247 (S.C.) wherein it was held that all the refund are governed by Section 11B of the Central Excise Act, 1944.
4. Heard both sides. Considered the submissions.
5. In this case, the appellant has paid service tax during the impugned period for which they are (8 of 10) [EXCIA-65/2016] not required to pay service tax at all as clarified by C.B.E. & C. As the payment made by the appellant is not of service tax, therefore, as held by this Tribunal in the case of Shankar Ramchandra Auctioneers (supra) the provisions of Section 11B of the Central Excise Act are not applicable. Therefore, the refund claim filed by the appellant is not time-barred. The case law relied upon by the ld. AR in Mafatlal Inds. (supra) is not relevant to the facts of this case. In these circumstances, I hold that the appellant are entitled for refund claim as filed in time and the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case. Accordingly, impugned order is set aside.
Appeal is allowed with consequential relief. The Adjudicating Authority is directed to implement the order within 30 days of the communication of the same."
4. However, with a view to avoid the circular limit the common appeal is filed. He has relied upon in the decision of Supreme Court in Suchitra Components Ltd. vs. Commissioner of Central Excise, Guntur, 2007 (208) ELT 321 (SC), wherein it has been observed as under:-
"1. This appeal is directed against the final order No. 204/05- NB-A dated 14th January, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi in Appeal No. E/3422/93-NB-A.
2. We have heard Mr. A.R. Madhav Rao, learned Counsel for the appellant and Mr. K. Radhakrishna, learned Senior Counsel for the respondent. We have perused the orders passed by the lower Authorities and also of the Tribunal. The point raised by the learned Counsel for the appellant is covered by the recent judgment of this Court in Civil Appeal No. 4488 of 2005, Commissioner of Central Excise, Bangalore v. Mysore Electricals Industries Ltd. reported in MANU/SC/8687/2006 : 2006(204)ELT517(SC) . In the said Judgment, this Court held that a beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. Thus, when the circular is against the assessee, they have right to claim enforcement of the same prospectively.
3. In view of the submission made by the learned Counsel for the appellant and also of the judgment of this Court in C.A. No. 4484/05 (supra), the appellant is liable to pay the duty (9 of 10) [EXCIA-65/2016] from 29.8.1990 i.e. from the date of issue of the show cause notice and not from 1.3.1990 as ordered by the Tribunal.
4. The Civil Appeal stands allowed on the above terms. No costs."
5. In our considered opinion, the appeal is of less than Rs.20,00,000/- tax effect and covered by latest circular which reads as under :-
" In view of the circular dated 30 th December, 2016 which reads as under:-
"F.No.390/Misc./163/2010-JC/Pt Government of India Ministry of Finance Central Board of Excise & Customs New Delhi , 30th December ,2016 INSTRUCTION To,
1. All Principal Chief Commissioners / Chief Commissioners and Directors General under the Central Board of Excise and Customs.
2. Chief Commissioner (AR), All Commissioners (AR), Customs, Excise & Service Tax Appellate Tribunal.
3. All Principal Commissioners /Commissioners of Customs/Central Excise/Service Tax/ Commissioner, Directorate of Legal Affairs.
Sir/ Madam,
Sub:- Reduction of Government
litigation - providing monetary limits for filing appeals by the Department before CESTAT -- regarding In exercise of the powers conferred by Section 35R of the Central Excise Act,1944 made applicable to Service Tax vide Section83 of the Finance Act,1994 and Section 131BA of the Customs Act,1962 and in partial modification of earlier instruction issued from F.No. 390/Misc./163/2010- JC dated 17.12.2015, Central Board of Excise & Customs fixes the monetary limit below which appeal shall not be filed in the High Court as Rs.20,00,000/-.
2. Except for the above all other terms and conditions of earlier instructions dated 17.8.2011 & 17.12.2015 stands.
(Anuj Agarwal) Officer in Special Duty-Judicial Cell In view of the above, the appeal is disposed of. "
6. The appeal stands disposed of."
4. The issue is also now covered by the decision of this court in (10 of 10) [EXCIA-65/2016] D. B. Central /Excise Appeal No. 5/2012 D. B. Cental/Excise Appeal No. 5/2012 ( Commissioner of Central Excise Jaipur-1 Versus M/S National Engineering Ltd) decided on 01.02.2017, where while deciding the issue, this court held as under:-
"6. Taking note of the CBEC Circular dt.17/12/2015 & 01/01/2016, the monetary limits which indisputably in the present appeal is less than Rs.15 lacs, much less than what has been prescribed for filing appeal before the High Courts, deserve to be dismissed as not pressed. However, it is made clear that the substantial questions of law raised in the present appeal, if any, is left open to be examined in an appropriate proceeding, if arises in future. At the same time we consider it appropriate to observe that if the appeal falls in any of the exceptions as referred to in the Circular dt.17/12/2015, the Revenue will be at liberty to move an application for recalling of the order, if so advised. We also observe that though the above circular only specifies appeal but in our view, the reference filed earlier, will also be covered by the circular (supra).
7. In view of the aforesaid circular, though Mr. Jain, counsel for the appellant has contended that it is recurring issue, in our opinion, after 5 years, it will not be appropriate to revive the issue which is already concluded by circular.
8. Accordingly, in the light of the CBEC Circular dt. 17/12/2015 & 01/01/2016 the present appeal stands dismissed."
5. The appeal stands dismissed.
(VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J.
B.M.G/Gourav/37