In a recent case, the Chandigarh bench of Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) allowed the claim of self-credit refund on M. S. Ingots as the manufacturing of the same is exempted under excise notification. The Bench viewed that the refund of excise duty claimed by an assessee and sanctioned by the competent Authority under Notification No. 56 of 2002-CE which has attained finality as not having been challenged before any appellate or revisional authority under the Excise Act cannot be termed as ‘erroneous refund’ and recovered by resort to section 11A of the Act.
Tawi Chemical Industries, the appellant are engaged in the manufacture of M.S. Ingots falling under Tariff Heading 72 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and are availing the benefit of exemption under Notification No. 56/2002-CE dated 14.11.2002. The appellant has filed refund claims by way of self-credit for the period from October 2010 to March 2011 under the provisions of the said Notification. On scrutiny of refund claims filed by the appellant, it was observed by the Adjudicating Authority that the appellant has taken inadmissible self-credit of Education Cess and S&H Education Cess in contravention of para 2C of the Notification as the self-credit under the Notification is limited to the amount of duty (Cenvat) paid and nor for Education Cess and S&H Education Cess.
A show cause notice was issued to the appellant and in adjudication proceedings, the Adjudicating Authority vide its order-in-original disallowed the irregularly availed self-credit and confirmed the recovery of the same. The Adjudicating Authority has also imposed equal penalties under Section 11AC of the Central Excise Act, of 1944. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (Appeals), who vide the impugned order, dropped the penalty but confirmed the demand along with interest.
The appellant has stated that they had followed the Notification provisions entirely and have already paid the entire amount in dispute within five days of the date of intimation of the said order. The appellant has rightly taken the self-credit in respect of cesses as the appellant is entitled to a refund of the same as they are entitled to the benefit of exemption under the Notification, which exempts the goods manufactured by the appellant from the Cenvat (BED) paid by them through PLA other than the amount of duty paid by utilization of Cenvat Credit under the Cenvat Credit Rules, 2004,
The appellant contended that the refund claims issued under the Notification are not like refunds which are dealt with under Section 11B of the Central Excise Act, 1944. This intention of the legislation has been amply clarified by the CBEC vide its Circular No. 682/73/2002-CX dated 19.12.2002.
A two-member bench Sh. S S Garg, Member (Judicial) and Sh. P Anjani Kumar, Member (Technical) viewed that in the case of M/s Alu Bond Enterprises vs. CCE & ST, J&K, the Division Bench of the Tribunal has held that
“5. I heard both sides and perused the records of the case. We find that the impugned order considers the self-credit taken by the appellants as “erroneous” credit and confirms the demand of the same in terms of Section 11A of the Central Excise Act, 1944 along with interest and penalty under Section 11AC ibid. We find that the Hon’ble High Court Jammu & Kashmir vide their order in CEA 06/2018 held that:
“The refund of excise duty claimed by an assessee and sanctioned by the competent Authority vide its order under Notification No. 56 of 2002-CE which order has attained finality as not having been challenged before any appellate or revisional authority under the Excise Act cannot be termed as ‘erroneous refund’ and recovered by resort to section 11A of the Act. The extended period of limitation as provided under the proviso to sub-section (1) of Section 11A would be attracted only in a case where the refund made in favour of the assessee is erroneous because of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any provisions of the act and the rules framed there under with an intent to evade payment of duty by the assessee or his agent.”
By following the ratio of the decision, the Tribunal set aside the impugned order and allowed the appeal.
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