2011 (6) TMI 536 - AT - Central Excise

Refund claim for cost recovery charges by 100% EOU not time-barred under Central Excise Act

The Tribunal held that the refund claim for cost recovery charges by a 100% EOU was not time-barred under Section 11B of the Central Excise Act, 1944, as ... Refund of cost recovery charges - amount deposited as cost recovery charges are as per the conditions of licence for the private bonded warehouse issued under Section 58 of the Customs Act to 100% EOUs. Therefore, the refund claim is not covered under the provisions of the Central Excise Act or the Rules or Customs Act or the Rules. The refund of cost recovery charges is an administrative function and the respondent herein should have approached the jurisdictional Commissioner or the administrative machinery of the department for refund of the amount instead of filing an appeal under Section 35 of the Central Excise Act, 1944. appeal itself was not maintainable before the Commissioner (Appeals). appeal of the Revenue is thus allowed. Issues:1. Time limitation for refund claim under Section 11B of the Central Excise Act, 1944.2. Applicability of Limitation Act, 1963 to refund claims.3. Maintainability of appeal before Commissioner (Appeals) for refund of administrative charges.Analysis:Issue 1: Time limitation for refund claim under Section 11B of the Central Excise Act, 1944The dispute in this case revolves around a refund claim of cost recovery charges by a 100% EOU. The jurisdictional Assistant Commissioner rejected the refund claim as time-barred under Section 11B(2) of the Central Excise Act, 1944, citing a lapse of three years from the date of payment of charges. The Commissioner (Appeals) allowed the appeal, asserting that Section 11B does not apply to cost recovery charges and that the general law of limitation does not govern refund claims under the Central Excise Act. The department contended that the refund claim, filed after five years, is time-barred under the Limitation Act, 1963. The Tribunal noted conflicting judgments but emphasized that the refund of cost recovery charges is an administrative function, not covered by the Central Excise Act or Customs Act. Hence, the appeal before the Commissioner (Appeals) was deemed not maintainable.Issue 2: Applicability of Limitation Act, 1963 to refund claimsThe department argued that the general limitation period of three years under the Limitation Act, 1963 should apply to refund claims. However, the respondent's counsel relied on precedents to assert that separate limitation provisions exist under the Central Excise Act, rendering the Limitation Act inapplicable. The Tribunal concurred, emphasizing that the absence of a prescribed time limit under the Central Excise Act for refund of cost recovery charges entitles the respondent to seek a refund.Issue 3: Maintainability of appeal before Commissioner (Appeals) for refund of administrative chargesThe Tribunal highlighted that the refund of cost recovery charges is an administrative function, not falling under the purview of the Central Excise Act or Customs Act. Citing previous judgments, the Tribunal held that the respondent should have sought refund through the jurisdictional executive Commissioner or administrative machinery instead of appealing under Section 35 of the Central Excise Act. The Tribunal set aside the Commissioner (Appeals) order, directing the respondent to approach the jurisdictional Commissioner of Central Excise for any refund of cost recovery charges, thereby allowing the Revenue's appeal.In conclusion, the Tribunal's judgment clarifies the nuances of time limitation for refund claims, the inapplicability of the Limitation Act to certain refund scenarios, and the necessity to approach the appropriate administrative channels for specific types of refunds not covered by statutory provisions.