Whether limitation applicable for amount mistakenly paid by way of credit?

PJ/CASE LAW/2016-17/3186

Case:- SPACETECH EQUIPMENTS AND STRUCTURALS PVT LTD VS COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Citation:-2016-TIOL-1299-CESTAT-MUM

Brief Facts:-The appellants were constrained to claim the refund of the stated amounts but the same was not necessary. The appellants had paid the requisite amount of duty on the inputs cleared by them under Rule 57(1)(ii) through their RG 23C, Part-II account. This was considered to be erroneous by the Departmental authorities and therefore, they made payment of the same amount through their PLA and filed the refund claims for the amounts earlier paid through their Modvat credit account. It is contended that the double payment by the appellants is not in dispute and when the Departmental authorities have themselves observed that the first payment through Modvat credit account was erroneous and in pursuance of their direction, the appellants made payment through their PLA, they could have credited back their Modvat account, but by way of abundant precautions, they filed the refund claims but the same have been rejected as time barred.

Appellant’s Contention:- The appellant, M/s. Specetech Equipment & Structural’s Pvt. Ltd., are registered manufacturers. The appellant were asked by the Revenue to pay an amount of Rs.11,71,111/- in PLA vide letter dated 08/06/2009. The appellant paid the said amount on 26/06/2009 in PLA and sought re-credit of the duty paid through Cenvat during 20/06/2008 to 13/07/2008 as re-credit in their account on 29/06/2009. By an endorsement on their letter the inspector of Central Excise directed them to file a refund claim with the Assistant Commissioner of the Division. The appellant vide letter dated 26/06/2009 sought refund of Rs. 10,38,644/- from the Assistant Commissioner, but the letter was submitted on 15/07/2009. The ld. Adv. Contended that it is a simple accountal error, if at all, and appellant's refund claims under Section 11B could not have been rejected as time barred.

Respondent Contention:- The Assistant Commissioner by refund claim was rejected holding it to be time barred. It was observed that the appellant have submitted their refund claim dated 26/06/2009 to the office on 15/07/2009 in respect of the reversals of credit made during 20/06/2008 & 13/07/2008. It was observed that the refund claim has been filed after the expiry of one year from the relevant date. The appellant agitated the matter before the Commissioner (Appeals) who upheld the order of the Assistant Commissioner. The Commissioner (Appeals) observed that the refund claim should have been filed within one year of the relevant date which in this case was the date of payment of duty. The departmental representative pleaded that the order of the lower authorities should be upheld.

Reasoning of Judgment:- The Tribunal have considered the submissions. Admittedly the party has made payments twice over for the same event i.e. once through their Modvat credit account and again through their PLA. As rightly contended, at the most, it is an accountal adjustment and by making entitled to take the credit back in their Modvat credit account for the amounts paid through their PLA. Therefore, Tribunal do not see no merit in the rejection of their claim on the grounds of time bar.
The learned Counsel for the appellant relied on the decision of this Tribunal in the case of Standard Surfactants Ltd., Vs. CCE, Bhopal - 2001 (132) ELT 79 (Tri-Del) wherein it has been held that duty first paid through Modvat credit account and again through PLA is only an adjustment of account and therefore cannot be rejected on the grounds of time bar. He also cited certain decision relating to the application of unjust enrichment in such circumstances. The learned Counsel also relied on the decision of Standard Surfactants Ltd., (supra) it has been held that such refunds cannot be treated as refund under Section 11B of the Central Excise Act.
Following the decisions relied upon by the appellant, the appeal is allowed with consequential relief.

Decision:-The appeal is accordingly allowed.

Comment:-The gist of the case such refund claimed by appellant of duty mistakenly paid through CENVAT account cannot be rejected on the grounds of time bar. In the present case, the amount of duty was paid wrongly by utilising cenvat credit which was again paid through PLA. Hence, the refund of duty paid by wrongly utilising cenvat credit is mere adjustment and cannot be hit by the clause of limitation as mentioned in section 11B of the Central Excise Act, 1944.

Prepared by:- Bharat Chouhan

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PJ/CASE LAW/2016-17/3186

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