2015 (10) TMI 572 - AT - Central Excise

Tribunal rules time-barred demand for erroneous refund, citing specific limitation over general law

M/s. M.M. Forgings Ltd. Versus CCE, Tiruchirappalli

The Tribunal ruled in favor of the appellant, holding that the demand for the erroneous refund was time-barred as the notices for recovery were issued ... Recovery of erroneous refund of unutilized cenvat credit - period of limitation - Export of service - whether notices issued by adjudicating authority for demanding erroneous refund is hit by limitation specified under notification No. 35/2000 or whether general limitation for extended period is covered under section 11A of Central Excise Act,1944 - Held that:- it is clear that the demand of erroneous refund made under this notification shall be within six months from the date of refund. We also find that the adjudicating authority has sanctioned the refund but there is nothing on record to show that the said order has been reviewed whereas we find that the adjudicating authority again issued show-cause notices for recovery of erroneous refund on his own under section 11A. - issue has already been decided by this Tribunal in the case of Shasun Chemicals & Drugs (1995 (3) TMI 284 - CEGAT, MADRAS) and by the Hon’ble Supreme Court in the case of CCE Vs. Raghuvar (India) Ltd. (2000 (5) TMI 40 - SUPREME COURT OF INDIA) wherein it categorically held that when there is a limitation provided under the notification, the period mentioned under section 11A is not applicable. Ratio of this Tribunal order and the Hon’ble Apex Courts judgment are clearly applicable to the facts of the present case and there is no dispute on the fact that the refund was sanctioned under Rule 5 of CENVAT Credit Rules, 2002 in terms of Notification No. 35/2000. Therefore, when such notification clearly stipulates time limit for recovery of erroneous refund the adjudicating authority ought to have demanded erroneous refund within six months, instead the notices were issued beyond six months by invoking section 11A. - Respectfully following the decision of the Hon’ble Apex Court and this Tribunal, the demand of erroneous refund is hit by limitation - Decided in favour of assessee. Issues:- Whether the notices issued by the adjudicating authority for demanding erroneous refund are hit by limitation specified under notification No. 35/2000 or whether general limitation for the extended period is covered under section 11A of Central Excise Act, 1944.Analysis:The case involved an appeal against an Order-in-Appeal passed by the Commissioner (Appeals) regarding the sanctioning of a refund under Rule 57AC(7) of Central Excise Rules, 1944 and Rule 5 of CENVAT Credit Rules. The adjudicating authority had initially sanctioned a refund, but later issued show-cause notices for recovery of the refund, demanding a substantial amount along with a penalty. The main contention was whether the notices for demanding the erroneous refund were within the time limit specified under a notification or under section 11A of the Central Excise Act, 1944.The appellant argued that the Department had sanctioned the refund under specific rules and that the notices for recovery were issued beyond the time limit specified in the notification. The appellant relied on various legal decisions to support their argument that the time limit specified under the notification should prevail over the general limitation under section 11A. The appellant emphasized that the refund orders were not reviewed, and the show-cause notices were issued beyond the stipulated time limit.On the contrary, the Revenue argued that the provisions of section 11A should apply as the show-cause notices were issued for demanding an erroneous refund granted under section 11A. The Revenue contended that the general limitation under section 11A overrides the specific time limit mentioned in the notification, and recovery cannot be made beyond a certain period.After considering the arguments from both sides and examining the records, the Tribunal focused on whether the notices for demanding the erroneous refund were hit by the limitation specified in the notification or under section 11A of the Central Excise Act, 1944. The Tribunal noted that the adjudicating authority had sanctioned the refund under specific rules but had not reviewed the orders before issuing show-cause notices for recovery under section 11A.The Tribunal referred to previous decisions by the Tribunal and the Supreme Court, emphasizing that when there is a specific limitation provided under a notification, the general limitation under section 11A does not apply. The Tribunal highlighted the distinction between cases falling under the notification's time limit and those covered by section 11A, stating that the recovery of an erroneously availed credit is different from the demand for payment under section 11A.Ultimately, the Tribunal concluded that the demand for the erroneous refund was hit by limitation as the notices were issued beyond the time limit specified in the notification. Following the decisions of the Hon'ble Apex Court and the Tribunal, the appeal was allowed in favor of the appellant.