2014 (3) TMI 796 - HC - Central Excise

Court rules duty paid under protest falls outside limitation period if criteria met

The High Court ruled in favor of the appellant, a public limited company, in a case involving duty exemption for Modular Terminal Rosset (MTR) and refund ... Refund - period of limitation - duty was paid under protest on persuasion of department - Scope of section 11B - Held that:- Once second proviso appears in the Statute the very purpose of bringing such benefit is that if the case of applicant falls within the proviso giving rise to a benefit not to question limitation it has to be extended. In other words, no question of limitation would fall for consideration or deserves to be extended depending upon the conditional deposit when duty and interest payable if any made by the applicants. If no such liberty or protest is indicated at the time of payment of duty and interest, definitely such applicants are not entitled to claim such benefit provided under the second proviso to Section 11B. Computation of period of one year with reference to the relevant date is not an issue for adjudication as the very case of the appellant is such period of limitation, i.e. one year, is not applicable to his case as the duty was paid under protest. Since the duty paid by the applicant was subsequent to 20.09.1991, he is entitled to the benefit of second proviso to Section 11B, therefore the Tribunal was erroneous in setting aside the order of the first appellate authority which granted the benefit to the applicant - Decided in favour of assessee. Issues:1. Duty exemption claim for Modular Terminal Rosset (MTR) as an accessory.2. Refund of duty paid under protest beyond the limitation period under Section 11B of the Central Excise Act.3. Interpretation of the second proviso to Section 11B regarding duty paid under protest and limitation period.4. Comparison with relevant case laws regarding duty payment under protest and refund.Issue 1: Duty exemption claim for Modular Terminal Rosset (MTR) as an accessoryThe appellant, a public limited company, claimed exemption from duty on the sale of Modular Terminal Rosset (MTR) on the grounds that it is merely a matching connector or plug point between a telephone and telephone line, and not an essential component of a telephone. The Department insisted on duty payment, leading to a challenge by the appellant. The Tribunal allowed the appeal, determining whether duty was payable on the sale of MTR, thus favoring the appellant's claim.Issue 2: Refund of duty paid under protest beyond the limitation periodSubsequently, the appellant sought a refund of the duty paid under protest, which was rejected by the Department citing a limitation period under Section 11B of the Central Excise Act. The first appellate authority initially allowed the appeal for refund, but the Tribunal sided with the Department, stating that the claim for refund was beyond the one-year limitation period as specified under Section 11B.Issue 3: Interpretation of the second proviso to Section 11BThe appellant contended that the second proviso to Section 11B exempts cases where duty and interest were paid under protest from the one-year limitation period. Citing relevant case laws, the appellant argued that the limitation period should not apply to cases where duty was paid under protest, as in the present situation.Issue 4: Comparison with relevant case lawsThe appellant referred to the case of KVR Constructions and Electro Steel Castings Ltd. to support the argument that duty paid under protest should not be subject to the limitation period for refund claims. The Department, on the other hand, relied on the case of Dena Snuff (P) Ltd. to assert that the limitation period applies even to duty paid under protest.In conclusion, the High Court held that the appellant was entitled to the benefit of the second proviso to Section 11B as the duty was paid under protest after 20.09.1991. The Tribunal's decision was deemed erroneous, and the order of the first appellate authority granting the benefit to the appellant was upheld. The judgment emphasized that cases where duty and interest were paid under protest fall outside the purview of the limitation period specified under Section 11B, provided the duty payment falls within the scope of the second proviso.