2014 (6) TMI 939 - Commissioner - Central Excise

CESTAT Upheld Denial of Refund Claims for Cesses & Duty Paid in Cash

In Re : Insecticides (India) Ltd.

The appeals challenging the denial of refund claims for the cesses, year-end differential refund, and refund of duty paid in cash were rejected by the ... Refund claims for the cesses rejected - Held that:- The appellants were already aware about the provisions of amending notifications, when they set up the unit in the year 2011, so the question of promissory estoppels cannot not arise in their case. In view of the above discussions referred to above are applicable to the petitioner units only and not to the appellants and accordingly, uphold the impugned order with regard to dis-allowance of refund to the appellants, over and above the value addition cap. The appeals of the appellants listed at Sr. Nos. 2 to 7 of the above table, against rejection of their refund claims for the cesses are rejected and the impugned orders on this issue are upheld. The appeal of the appellants, listed at Sr. No. 1 of the above table, on the issue of admissibility of year end differential refund between the amount claimed and the amount sanctioned by the adjudicating authority is rejected and the impugned order, as detailed at Sr. No. 1 of the above table is upheld. The appeal of the appellants, listed at Sr. No. 5 of the above table, on the issue of admissibility of differential refund between the duty paid through PLA and the refund of duty payable in terms of para 2 of the new notification is rejected and the impugned order is upheld. Issues Involved:1. Admissibility of refund of the cesses under the notification or the new notification.2. Admissibility of year-end differential refund between the duty paid through PLA and refund in terms of value addition norms.3. Admissibility of refund of duty paid in cash in terms of the new notification.Issue 1: Admissibility of Refund of the CessesThe first issue to decide is the admissibility of refund of the Education Cess and Secondary & Higher Education Cess levied under the Finance Acts, 2004 & 2007, respectively, under the notification or the new notification. The notification and the new notification provide for exemption to goods manufactured in Jammu & Kashmir from duty of excise and additional duty of excise paid in cash. However, the cesses are levied under the Finance Acts, 2004 & 2007, and not under any of the Acts specified in the notification or the new notification. Therefore, the refund of the cesses is not admissible under the notification or the new notification.The Principal Bench of CESTAT, New Delhi, in the case of M/s. Jindal Drugs Ltd & Ors., held that the notification does not specify the Finance Acts under which the Cess is levied. The Hon'ble CESTAT stated that there is no prohibition for the levy and collection of education cess or higher education cess in respect of goods entitled to exemption under the notification. The notification does not exempt the liability to pay the education cess or higher education cess. Therefore, there is no question of refund of education cess or higher education cess paid by those who have availed the benefit under exemption Notification No. 56/2002.The appellants' reliance on the Hon'ble Tribunal's decision in the case of M/s. Bharat Box Factory Limited was also found not maintainable as the Hon'ble High Court of J&K dismissed the department's appeal on jurisdictional grounds, and the SLP filed by the department was admitted in the Hon'ble Supreme Court. The Principal Bench of the Hon'ble Tribunal in its later decision also held that the cesses levied under the Finance Acts are not covered by the notification.The Hon'ble Tribunal in Kamakhya Cosmetics & Pharma. Pvt. Ltd. v. CCE, Guwahati, held that the Tribunal's judgment in the case of Cyrus Surfactants was over-ruled by the Hon'ble Himachal Pradesh High Court. The Hon'ble Tribunal denied the refund of the cesses, holding that the notification provides refund of basic excise duty or additional duty of excise paid from the PLA account, and there is no provision for refund of duty paid from the Cenvat Account.Subsequent cases, including M/s. Tawi Chemical Industries Ltd., M/s. R.B. Jodhamal & Co. Pvt. Ltd., and M/s. Berger Paints India Ltd., consistently held that refund of Edu. Cess is not allowed under the notification. Therefore, the refund of the cesses has correctly been denied by the adjudicating authority.Issue 2: Admissibility of Year-End Differential RefundThe appellants contended that they are entitled to a refund of the full amount of duty paid in cash, citing the judgment in the case of Reckitt Benckiser v. UOI, where the Hon'ble High Court of J&K quashed the restrictions imposed by the amending notifications. However, the adjudicating authority sanctioned the refund excluding the duty paid on the product Triacontanol, which was rejected in the monthly refund claims for the year 2012-13. The appellants did not provide any submissions against these findings.The Hon'ble High Court of J&K's interim directions modified its earlier order, directing that 50% of the amount due be released to the respondents upon furnishing solvent surety. The appellants, who started commercial production on 22-4-2011, are not petitioners in the aforementioned case, and the decision cannot be applied to units that came into existence after the issuance of the first amending notification. Therefore, the appellants' plea for refund over and above the value addition cap is not maintainable.Issue 3: Admissibility of Refund of Duty Paid in CashThe appellants contended that they are entitled to a full refund of duty paid in cash in terms of the new notification, citing a decision by the Commissioner (Appeals) in their own case. However, the referred O-I-A pertained to another unit of the company situated at Samba (J&K) and not the appellants' unit at Udhampur. The issue of admissibility of refund in terms of value addition cap was not raised in the department's appeals, and the Commissioner (Appeals) is bound by the points specified in the review directions issued under Section 35E of the Act.The appellants started commercial production at Udhampur on 22-4-2011 and claimed refund under the notification until April 2013, switching to the new notification from May 2013. The point of switching refund claims before the stipulated period is not an issue before the appellate authority. The Hon'ble High Court's judgment in the case of Reckitt Benckiser pertains to the amendments in the notification and not the operation of the new notification. Therefore, the refund of duty payable is governed by para 2 of the new notification, and the adjudicating authority rightly determined the refund accordingly.Conclusion:1. The appeals listed at Sr. Nos. 2 to 7 against rejection of refund claims for the cesses are rejected, and the impugned orders are upheld.2. The appeal listed at Sr. No. 1 on the issue of year-end differential refund is rejected, and the impugned order is upheld.3. The appeal listed at Sr. No. 5 on the issue of differential refund between the duty paid through PLA and the refund of duty payable in terms of para 2 of the new notification is rejected, and the impugned order is upheld.