Whether limitation applicable for refund of duty paid twice by mistake?

PJ/CASE LAW/2016-17/3140

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

Citation: 2016-TIOL-1306-CESTAT-MUM

Brief Facts:-The appellant, M/s. Spacetech Equipment & Structurals 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 by way of 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 said refund claim was rejected by the Assistant Commissioner 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.

Appellant Contentions:-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.

Respondent Contentions:-The learned AR relies on the impugned order.

Reasoning of Judgment:-CESTAT have gone through the rival submissions and find that the appellant had originally paid the duty through Cenvat and on the directions of the Revenue, the same duty was again paid through PLA. Immediately after paying such duty in PLA, the appellant approached the Revenue for taking the credit of the Cenvat which was earlier paid by them. However, they were directed to file a refund claim before the Assistant Commissioner of the Division. It was held that the decision of the Tribunal in the case of CCE, Ghaziabad Vs. Sharda Forging & Stamping Pvt. Ltd. - 2009 (240) ELT 223 (Tri-Del)and Standard Surfactants Ltd., (supra) is squarely applicable to the facts of the case. Para 4 of the decision of the Tribunal in the case of Standard Surfactants Ltd., reads as follows:
The present appeals are against the above order of Commissioner (Appeals). I have heard Shri R. Santhanam, Adv. for the appellants and Shri Swatantra Kumar, JDR for the respondents. Ld. Adv. for the appellants submits that though in view of the facts of the matter, 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. The ld. Adv. Contended that it is a simple accounting error, if at all, and appellant's refund claims under Section 11B could not have been rejected as time barred. I have considered these 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. I therefore see no merit in the rejection of their claim on the grounds of time bar.
Consequently the order passed by the lower authority is set aside and the appeals are allowed with consequential relief.
Relying on the aforesaid decision of the Tribunal, the impugned order is set aside. Further, I find that in the similar circumstances, the Hon'ble Tribunal in the case of Cipla Ltd., Vs. CCE, Raigad - 2013 (295) ELT 696 (Tri-Mum) has held that the bar of unjust enrichment would not apply in such circumstances.
In view of the aforesaid decision of the Tribunal, the appeal is allowed.

Decision:-Appeal allowed.

Comment:-The essence of this case is that refund claim under section 11B filed for mere accounting adjustment of duty paid twice cannot be rejected as time barred. Moreover, the principle of unjust enrichment would not apply in such circumstances in view of the decision given in the case of Cipla Ltd.

Prepared By:- Hushen Ganodwala

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PJ/CASE LAW/2016-17/3140

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