2021 (9) TMI 496 - AT - Central Excise

Tribunal overturns penalty refund denial, finds delay justified within time limit.

M/s. V.V. ENTERPRISES Versus Commissioner of CENTRAL EXCISE AND CENTRAL GST, ALWAR

M/s. V.V. ENTERPRISES Versus Commissioner of CENTRAL EXCISE AND CENTRAL GST, ALWAR - TMI Issues Involved:Application of Section 11B of Central Excise Act, 1944 to a refund claim for a penalty amount, delay in filing the refund claim, and the scope of Show Cause Notice.Analysis:Issue 1: Application of Section 11B of CEA to the refund claimThe Tribunal examined whether Section 11B of the Central Excise Act, 1944 applied to the refund claim of a penalty amount. The facts dated back to 1993 when a demand was made against the predecessor company, and the appellant acquired its assets in 2004. The appellant deposited the outstanding dues and later filed a refund claim. The Tribunal held that the time bar of Section 11B was wrongly invoked as the appellant was not obligated to clear the predecessor's dues. Previous Tribunal orders had already established that the dues paid were refundable, and the refund claim was within the prescribed time limit from the final order allowing the refund. The Tribunal relied on case law and concluded that Section 11B was inapplicable to the penalty amount refund claim.Issue 2: Delay in filing the refund claimThe Tribunal addressed the contention of delay in filing the refund claim. The appellant had initially filed a refund claim for a significant amount, which was allowed after legal proceedings. Subsequently, the appellant filed a refund claim for the balance penalty amount. The Tribunal noted that the second refund claim was filed after the initial claim and held that it was not possible to include the balance amount in the previous application. The rejection based on delay was deemed unsustainable as the second claim was within the prescribed time limit from the final order allowing the initial refund claim.Issue 3: Scope of Show Cause NoticeThe Tribunal analyzed whether the finding of a 10-year delay in the refund claim was beyond the scope of the Show Cause Notice. It determined that the relevant date for the refund application was the date of the final order allowing the refund, not the date of the original demand. The Tribunal concluded that the finding of a 10-year delay was erroneous and beyond the scope of the Show Cause Notice. It emphasized that the rejection based on this ground was unjustified.In conclusion, the Tribunal set aside the order under challenge, finding it unsustainable due to ignoring relevant facts and exceeding the scope of the Show Cause Notice. The appeal was allowed, emphasizing that Section 11B did not apply to the penalty amount refund claim, and the delay in filing the claim was within the prescribed time limit from the final order allowing the refund.