09.06.2022: Refund Filed Before The Wrong Forum Is Not Time-Barred, Duty Paid Under Protest Covers Duty Paid By Mistake- CESTAT Chennai

The Hon’ble CESTAT Chennai vide its order dated 09.05.2022 in the matter of M/s Hivelm Industries Vs. The Commissioner of G.S.T. and Central Excise in Excise Appeal No. 40606 of 2016, held that the refund filed by the Appellant before the wrong forum shows the bonafide on the part of Appellant.  Thus, the refund claim filed, is within limitation.

The Appellant preferred the Appeal assailing the order-in-Appeal dated 28.01.2016 passed by the Ld. Commissioner of Central Excise (Appeals – II) whereby the refund filed by the Appellant was rejected on the ground of limitation and the adjudication order was upheld.

Facts: –

  • The Appellant supplied isolators and spares to DVC Koderma Thermal Power Project State 1 (2×500 MW) (A deemed export project) owned by Damodar Valley Corporation (M/s DVC) through its main contractor M/s Bharat Heavy Electricals Ltd. (BHEL).
  • That the deemed exports were exempted for payment of duty vide Notification No. 06/2006 dated 01.03.2006. However, the appellant made the payment of tax as its name was not reflecting in the project certificate issued by M/s DVC.
  • That later on 13.12.2011, the appellant filed an application for refund before Directorate General of Foreign Trade (DGFT), which was rejected by DGFT and against the said rejection, an appeal was preferred before the DGFT.
  • The Appellant also filed the refund claim on 17.07.2014 before the Excise Authorities, and the same was rejected by the Adjudicating authority vide its order dated 11.09.2014 on the ground that the refund has been filed beyond the prescribed period of one year. On appeal being preferred against the said order, same was also dismissed vide impugned order -in-Appeal dated 28.01.2016 concurring with the findings of the adjudicating authority.

Appellant’s Submissions: –

  • It was submitted on the behalf of the Appellant that there was no requirement under the law to pay duty for deemed exports in view of Notification No. – 06/2006 (Supra).
  • It has been duly acknowledged by the Superintendent of Central Excise, Alandur Range, Chennai – 600 035 that supply was against ‘Deemed Export Project’.
  • Further, the main contractor issued a disclaimer certificate to the effect that they have not reimbursed any Excise Duty to the sub-contractor and they have no objection, if the appellant claims the Excise Duty refund and other deemed export benefits.
  • Relying on the decisions of M/s. India Cements Ltd. v. Collector of C.Ex. – 1989 (41) E.L.T. 358 (S.C.), Commissioner of Central Excise, Chennai-I v. M/s. ITC Ltd. reported in 2005 (185) E.L.T. 114 (Mad.), Dy. Dir. General of Foreign Trade, New Delhi v. M/s. Acer India Pvt. Ltd. Vs. 2020 (371) E.L.T. 658 (Kar.), Commissioner of Central Excise (Appeals), Bangalore v. M/s. KVR Construction – 2012 (26) S.T.R. 195 (Kar.), Commissioner of C.Ex., Bhopal M/s.Bharat Sanchar Nigam Ltd. – 2017 (345) E.L.T. 549 (Tri. – Del.), it was submitted that Higher Courts including the Hon’ble Supreme Court, have held that the duty paid under protest would cover the ‘duty paid by mistake or by misunderstanding of Statute.’

On the other hand, it was submitted on the behalf of the respondent that the refund has been rightly rejected by the lower authorities as the name of the appellant was not mentioned in the project certificate issued by M/s. DVC and there is no mistake as claimed by the Appellant. 

Held:

  • The Hon’ble CESTAT after considering the submissions from the both sides, observed that it is not in dispute that excise duty was not leviable on the ‘deemed export.’ Therefore, it’s not the duty of the taxpayer to plead repeatedly before the authorities that the project in which it was involved was a ‘deemed export.’
  • It is to be noted that the Appellant immediately filed the refund claim. However, the same was filed before the wrong forum and proves a bonafide on the part of the Appellant, and also substantiate that the application for refund filed by the Appellant was within limitation, though before a wrong forum.
  • That both the purchase order and the tax invoice show that duty was not required to be paid, and if still paid, could be under protest only.
  • Further, the main contractor has given a disclaimer certificate stating ‘the appellant has paid the duty, however the same has not been refunded to the appellant and it has no objection if the appellant claims refund of the same’, and it clarifies the doubt of the revenue regarding non-mentioning of the appellant’s name in the certificate.
  • Lastly, it was found that the argument of revenue that the appellant was not required to make the payment’ holds no water. 

The Hon’ble Bench with the above findings set aside the impugned order and allowed the appeal with consequential benefits.

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