TMI Blog2018 (7) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11B is applicable for claiming refund under Rule 5 of Cenvat Credit Rules. There is no infirmity in the impugned order rejecting the refund claim as time-barred - appeal dismissed - decided against appellant. - ST/21789/2016-SM - 20437/2018 - Dated:- 15-3-2018 - MR. S.S GARG, JUDICIAL MEMBER Ms. Savitha, Advocate For the Appellant Mr. Parasivamurthy, Deputy Commissioner (AR) For the Respondent ORDER Per: S.S GARG The present appeal is directed against the impugned order dated 12.09.2016 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the two refund claims of the appellant on the ground of bar of limitation. Briefly the facts of the present case are that the appellant is a 100% EOU engaged in procuring, processing and exporting of preserved Gherkins and other vegetables preserved in Natural Vinegar, Brine ad Acetic Acid. Being 100% EOU, they have huge accumulated cenvat credit which they are not in a position to utilize the same. Therefore, the appellant filed application seeking refund of cenvat credit for the period from 01.04.2011 to 31.03.2012 and 01.04.2012 to 31.03.2013 on 30.03.2015 along with the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 248 (MP) d. Deepak Spinners Ltd. Vs. CCE, Indore - 2014 (302) E.L.T. 132 (Tri. -Del.) e. Swagat Synthetic's Ltd. Vs. CCE - 2007 (220) E.L.T. 949 (Tri.- Ahmd.) f. CCE, Jalandhar Vs. JCT Ltd. 2013 (296) E.L.T. 426 (Tri.-Del.) g. Quality BPO Service Pvt. Ltd. Vs. CST, Ahmedabad - 2015 (39) S.T.R. 230 (Tri.-Ahmd.) h Hyundai Motors India Engineering - 2011 (21) S.T.R. 667 (Tri.-Bang.) i. GillooramGourishankar Vs. CCE - 2007 (213) E.L.T. 528 (Kol.-Tribunal) 4. On the other hand the learned AR defended the impugned order and submitted that the appellant's case is export of goods and in the case of export of goods for claiming refund under Rule 5 of Cenvat Credit Rules, the relevant date for the computation of period of one year would start from the date of export as prescribed in Section 11B itself. He further submitted that this issue has been considered by the Hon'ble High Court of Madras in the case of CCE, Coimbatore Vs. GTN Engineering (1) Ltd. - 2012-TIOL-369-HC-MAD-CX wherein it has been held that even though Section 11B of the Central Excise Act 1944 does not cover the refund of cenvat credit, Notification 5/2006-CE m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Supreme Court in Raghuvar case (supra) stating that it arose out of the proceedings under Section 11A of the Act and it was decided on the basis of the provision contained in Rule 57-1 as it stood prior to its amendment on 16-10-1988 as part of the Modvat Scheme. On behalf of the Department, learned counsel submits that on a plain reading of provision of Section 11B particularly reading Clause (c) below proviso to Sub-Section (2) thereof, the claim based on Modvat credit is early covered by the provisions of the said Section and the procedure and period of limitation prescribed therein are clearly attracted. It is argued that since the claim based on Modvat credit is clearly barred by limitation under Section 11B of the Act, the petitioner should not be allowed to indirectly obtain relief by approaching this Court under Article 226 of the Constitution, when such a course is not approved by the Larger Bench of the Supreme Court in Mafatlal Industries case (supra). In this respect, it is further argued that the petitioner itself invoked the provision of Section 11B and approached the Assistant Commissioner of Central Excise. Aggrieved by rejection of the claim by him, it challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 'duty of excise' or 'duty', Modvat or Cenvat was not expressly included. But this legislative change is no reason to hold that expression 'duty of excise' or 'duty' prior to insertion of Section 2A of the Act had no relating whatsoever with Modvat credit. Under Modvat Scheme, duty paid, on inputs is allowed to be taken as credit for duty paid on inputs in clearance of his final product. The credit taken is nothing but constituent of duty. When credit of duty is taken or credit is denied, duty to that extent, decreases or increases on the final product. Modvat credit is thus the second name for duty. Merely because it is not expressly included in the definition of duty by insertion of Section 2A in the Act, it cannot be held that it was not so prior to the insertion of that Section. The argument, therefore, advanced that Modvat credit is not a party of duty, has to be rejected as unsustainable on the provisions of the Act, Rules and the Modvat Scheme contained in them. 18. Learned Counsel for the petitioner has very heavily relied on the decisions of the Supreme Court in Raghuvar's case (supra) to support his submission that the claim based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any mischief committed by the manufacturer in abuse thereof, the provisions of the said special Scheme alone will govern such a situation and there is no scope for reading the stipulations contained In a general provision like Section 1 IA into the provisions of the rules in question which alone will govern in its entirety the enforcement of the Modvat Scheme. 20. It has also to be taken note of from the judgment of the Supreme Court in the case of Raghuvar (supra) that Rule 57-I prior to its amendment on 6-10-1988 permitted proper officer to disallow Modvat credit wrongly availed in the account of the manufacturer, and it did not prescribe any period of limitation for doing so. It has also taken note of the amendment with effect from 6-10-1988 of Rule 57-I, providing six months period of limitation from the date of such credit to the proper officer, to take action for disallowing credit. In case where there was wilful misstatement, collusion or suppression of fact on the part of manufacturer, period of six months limitation has to the read as live years ill the amended provision. 21. It is, therefore, on the basis of provisions of Rule 57-I prior to and after its amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the applicant, order of refund has to be made, but the amount so determined has to be credited to the Fund meaning Consumer Welfare Fund. Proviso to sub-Section (2) states that in cases falling under Clauses (a) to (t), the amount refundable after determination would not be credited to Consumer Welfare Fund and shall be paid to the applicant. In Clauses (a) to (f) is Clause (c), where on determination of the amount refundable, instead of crediting the same to the Fund, it has to be, paid to the applicant. Clause (c), speaks of 'refund of credit of duty paid on excisable goods used as Inputs in accordance with the Rules made, or any notification issued, under this Act'. 24. Learned Counsel for the petitioner submits that Clause (c) below the proviso to sub-section (2) cannot be taken aid of for construing sub-section (1) of Section 11B and holding that in the expression 'duty', Modvat credit is included. It is argued that prior to insertion of Section 2A in the Act and as defined under the Rules, 'duty' did not expressly include in its definition, Modvat credit. 25. We have given careful consideration to the submissions made on the effect of Clause (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso for construction of main enactment, we have to examine the correctness of the contentions advances on behalf of either of the parties. As has been pointed out to us, sub-section (2) in the main provisions speaks of refundable amount to be credited to Consumer Welfare Fund. Clauses (a) to (f) in the proviso including Clause (c) which makes mention of Modvat credit, provide that the amount refundable under the Modvat Scheme has to be paid to the applicant and it is not to be credited to the Fund. Clause (c) in the proviso thus has limited function for the purpose of sub-section (2) that such refund towards Modvat credit is to be paid to the applicant. Main Section 11B in sub-section (1) definitely covers refund claims on Modvat credit. If that were not so, Clause (c) in the proviso to sub-section (2) would not have been incorporated. We cannot accept the argument advances on behalf of the petitioner by the learned counsel that subsection (l) should be interpreted as not to include refund claims based on Modvat credit and Clause (c) of the proviso to sub-section (2) cannot be taken aid of to read into sub-section (1) such claim as included in the main sub-section (1). If the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issued thereunder do not take away right of a party to resort to the provisions of Section 11B of the Act for such a refund. Rule 57F with the Notification enables refund to be claimed under the Modvat credit Scheme but the procedure and the limitation for claiming such refund would be governed by the provisions of Section 11B of the Act. 29. We have, therefore, come to the conclusion that in view of clear language of Clause (c) in the proviso to sub-section (2), claim for refund based on Modvat credit is maintainable in accordance with the procedure and limitation prescribed, in sub-section (1) of Section 11B of the Act. We have also come to the conclusion that provisions of Section 11A are not comparable fully with the provisions of Section 11B particularly in the light of clause (c) in the proviso to sub-section (2) thereof. We also find that the decision of the Supreme Court in the case of Raghuvar (supra), which has been heavily relied on behalf of the petitioner, is distinguishable on the basis of provisions of Section 11A and Rule 57-I prior to and after the amendment as compared by the Supreme Court to hold that action of Department for recovery based on Modvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner cannot be allowed to plead ignorance of law and it should be presumed that the petitioner had knowledge of the Public Notice which had clarified that Modvat credit can be availed on the inputs used for manufacturing items for export. 33. What we find from the undisputed fact is that there was want of knowledge of the Public Notice to the petitioner, and also to the Department. The Department insisted on reversal of Modvat credit in the Modvat account of the petitioner, as the local Central Excise authorities were also unaware of the Public Notice published in the Excise Law Times. There is great force in the submission made on behalf of the petitioner that Modvat credit rightly availed was erroneously reversed on the insistence of the local Excise Authorities of the Department. Thus there was mutual mistake committed by the Departmental Authorities and the petitioner, as it is clearly a case of mutual mistake, we do not find any ground why the general law contained in Section 17 of the Limitation Act should not come to the rescue of the petitioner. Section 17 provides that where in a suit or application is based upon a mistake, the period of limitation would not begin to run ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of passing on the burden of excise duty to the transferee that is foreign buyer. It is a case of refund claim based on erroneous reversal of Modvat credit and therefore the burden of duty could not have been passed on to any one. It is, therefore, not a case of any unjust enrichment of the petitioner. This is the only relevant consideration to be taken note of as held by the Supreme Court in Mafatlal Industries case (supra). The concept of unjust enrichment so as to justify denial of refund claim to the tax payer should justly operate against the Department as well. If the tax payer is not to be allowed to make unjust enrichment, the Taxing Authority should also not be permitted to make unjust gain. In the instant case, the Department has not been able to deny that although Modvat credit could have been availed by the petitioner, on the insistence of the local Central Excise Authorities, credit already taken was erroneously reversed, In such circumstances, the Department cannot be allowed to take advantage of the mutual mistake committed by the parties in ignorance of Public Notice clarifying the legal position on QBAL Scheme. 37. We do not find anything in the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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