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2018 (11) TMI 15 - MADRAS HIGH COURTRefund claim - duty paid on Scented Supari pending adjudication - Section 5-B of the Central Excise Act, 1944 - reversal of MODVAT Credit - Section 5-B of the Central Excise Act, 1944 - time limitation - Held that:- There is no dispute that a refund claim accrues on the petitioner as a result of the Order dated 27.04.2010 in Writ Appeal No. 1271 of 2000 going in favour of them against the department. And there is also no dispute that the modvat credit taken and utilized for the payment of duty on the final products shall not be allowed as refund - And a proceeding is pending on the file of the respondents, one on the refund claim and another regarding the ineligibility of modvat credit. Whether the impugned Show Cause Notice No 34/2010 dated 11.10.2010 is sustainable? - Held that:- Admittedly there was a dispute going on at the material time. The duty was paid by the petitioner under protest - In the peculiar circumstances of the case, the question of demanding modvat credit availed is not tenable. It is arbitrary exercise of power. It is not correct to argue that the dispute got settled in favour of the petitioner by virtue of an order of this Court and as a consequence a demand notice gets slapped on them. Such a preposition borders on absurdity. The recourse to Section 5-B of the Central Excise Act, 1944 by the respondents is not correct. At the material time, while the petitioner had contested the assessment by registering protest, the respondents endorsed the assessment that included the availment of modvat credit. Also the dispute in the pending court cases pertained to the dutiability of the final products and the availing of modvat credit was never in dispute during the pendencies. Therefore the plea on the principle of equity made by the respondents on the bar of limitation is misplaced. The modvat credit was availed during the period May, 1994 to March, 1995 - Even the Writ Petition was decided against the Department on 12.04.1999. The Show Cause Notice was issued on 11.10.2010. Therefore, the Show Cause Notice is hit by limitation also. The issue of Show Cause Notice No 34/2010 dated 11.10.2010 is arbitrary exercise of authority and hit by the bar of limitation. Therefore the statutory remedy is not efficacious making it a fit case warranting Writ interference under Article 226 - Petition allowed.
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