Commissioner of Central Excise, Ranchi vs Gillooram Gaurishankar

Dhirubhai Naranbhai Patel, J.—In this Tax Appeal, the following substantial question of law has been raised:-

"Whether a refund claim in terms of Rule 57F(3) of the Central Excise Rules, 1944 read with Notification No. 85/87-C.E., dated 1-3-1987 in respect of credit of duty taken under Rule 57A of the Central Excise Rules, 1944 which remain unutilized in respect of those consignments which were exported and sailed prior to 21-5-1989, made after expiry of six months is not barred by limitation?"

Counsel for the appellant mainly submitted that Order-in-Original has been preferred on 21st June, 1999. Initially, there were 5 refund applications. Four refunds were given and in this matter, only one refund application has been rejected vide Order-in-Original dated 21st June, 1999. In this matter, we are concerned with, an application No. AR4/I/89-90, dated 3-4-89. The date of export is 20th May, 1989 and refund application was preferred on 22nd November, 1989 in a proper format as required under Notification No. 85/87-C.E., dated 1-3-1987 (Annexure 3 to the memo of appeal). The refund application was rejected mainly for the reason that it was time-barred. Initially it was not in a proper format and the so-called input was received from a company which has been closed down at the relevant time. These aspects of the matter have not been properly appreciated by CESTAT while passing an order dated 26th February, 2007 [2007 (213) E.L.T. 528 (Tribunal)] and, hence, the said order deserves to be quashed and set aside, as both the orders were passed twice in Order-in-Original and also in Order-in-Appeal.

Counsel for the appellant has relied upon the decision rendered by the Hon''ble Supreme Court reported in 1987 (30) E.L.T. 641 (S.C.), wherein it has been held by the Hon''ble Supreme Court that if the refund claim is filed beyond the period of limitation, the same is liable to be rejected.

Counsel for the respondent submitted that no error has been committed by CESTAT while allowing the appeal preferred by the respondent vide order dated 26th February, 2007 [2007 (213) E.L.T. 528 (Tribunal)]. No substantial question of law is involved in this matter. The refund claim made earlier vide earlier letters has not been properly appreciated by the Department which are dated 25th May, 1989 and 4th July, 1989. Even otherwise also, refund claim was made on 22nd November, 1989 but it must have been received by the Department before 1-2 days because the said application was dated 13th November, 1989, otherwise, the claim is hardly barred by a day or two. These aspects of the matter have been properly appreciated by the CESTAT while allowing the appeal preferred by the respondent and, hence, this appeal may not be entertained by this Court.

Having heard learned counsels for both sides and looking to the facts and circumstances of the case, it appears that the respondent has initially claimed 5 refunds, out of which 4 refunds were given and one of the refunds, i.e., AR4/I/89-90, dated 3-4-1989 was rejected mainly for the reason that it was time-barred. It was initially not in the prescribed format and inputs were received from a company which was already closed down at the relevant time. Order-in-Original was passed on 21st June, 1999. It appears that aforesaid Order-in-Original was challenged by the respondent before the Commissioner (Appeals) and the said appeal was dismissed vide order dated 10-12-2003. Thus, the Order-in-Appeal confirms the Order-in-Original. Against this order, further appeal was preferred by the respondent in CESTAT, Kolkata which allowed the appeal preferred by the respondent dated 25th June, 2007 mainly for the reason that a Notification No. 85/87-C.E., dated 1-3-1987 permits only one refund application in a calendar year. This is an error apparent on the face of the record.

The Notification No. 85/87-C.E., dated 1st March, 1987 is at Annexure 3 to the Memo of Appeal. It permits the refund application to be submitted not more than once in any quarter in a calendar year.

Thus, in a one quarter, one application is to be preferred, whereas, CESTAT has observed that the aforesaid notification permits only one application once in a calendar year.

It further appears from the facts of the case that the export date is 20th May, 1989. Refund claim in a proper format as required as per Notification No. 85/87-C.E., dated 1st March, 1987 was preferred on 22nd November, 1989. Thus, it was beyond the period of six months. As per Section 11B of the Central Excise Act, 1944, the refund application period prescribed was six months at the relevant time before the export. As per Section 11B(1) of the Central Excise Act, 1944, the period of limitation to claim a refund was six months, whereas, the application for refund was preferred beyond the period of six months. Hence also, no refund can be granted to the respondent. This aspect of the matter has also not been properly appreciated by the CESTAT, Kolkata.

Thus, the substantial question which has been raised hereinabove, is answered accordingly. The credit of the duty taken under Rule 57A of the Central Excise Rules, 1944 which has remained unutilised in respect of those consignments which were exported and sailed prior to 21st May, 1989 is now time-barred, if the refund application is made after six months from the date of export.

It has been held by Hon''ble Supreme Court in Paros Electronics (P) Ltd. Vs. Union of India and Another, as under:-

"1. In both these appeals the questions which arise for consideration is whether the Customs Authorities are right in refusing to grant refund of duty paid and the levy whereof had become final being contested at all departmental levels. The duty was paid by the appellant without raising any protest whatsoever. It appears that thereafter, on the basis of another decision made in a different case applications were preferred for refund of duty on the ground that it was erroneously recovered. The said applications were dismissed on the ground that the same were barred by time since they were not made within the time prescribed by Section 27 of the Customs Act, 1962. These appeals are against the said decisions.

We have heard learned counsel for the appellants and we do not see any infirmity in the order made by the authority rejecting the application. In the first place, in the proceedings which emanated for levy of duty the order became final and without having that order set aside by a competent Court there would be no question of grant of refund merely on the ground that in some other case a different view was taken, even if the payment is made under mistake of law. As long as the order which became final stands the authority cannot grant refund. If the application is under Section 27 of the Act, then the authority, being a creation of the statute, must act within the ambit of that provision and if the application is delayed he has no alternative but to reject it as barred by limitation."

(emphasis supplied)

In view of the aforesaid decision also, if the application for refund is time-barred, the same cannot be granted by the Department.

Miles India Limited v. Assistant Collector of Customs reported in 1987 (30) E.L.T. 641 if the application is time-barred, the same is liable to be dismissed.

Hence, the order of CESTAT dated 26th February, 2007 in Appeal No. ESM-115/04 [2007 (213) E.L.T. 528 (Tribunal)] is hereby quashed and set aside and we, hereby, affirm the order passed by the Deputy Commissioner, Central Excise, Dhanbad in Order-in-Original dated 21st June, 1999 as well as Order-in-Appeal dated 10-12-2003. Appeal is hereby allowed and disposed of.