Tribunal Partially Upholds Appeal, Sets Aside Refund Direction, Parties to Bear Own Costs

The Tribunal partially allowed the appeal, upholding the refund direction of Rs. 25,46,588/- but setting aside the refund direction of Rs. 1,08,797/-. Each party was directed to bear its own costs.

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Issues Involved:
1. Whether the provisions of Section 11B of the Central Excise Act, 1944 are inconsistent with Section 33 of the IBC, 2016.
2. Whether the Liquidator's application for refund of Rs. 25,46,588/- was filed within the permissible time limit.
3. Whether the Liquidator is entitled to the refund of Rs. 1,08,797/- without filing an application.

Detailed Analysis:

Issue 1: Inconsistency between Section 11B of the Central Excise Act, 1944 and Section 33 of the IBC, 2016

The Adjudicating Authority had directed the refund of Rs. 25,46,588/- and Rs. 1,08,797/- to the liquidation account of the Corporate Debtor, concluding that Section 11B of the Central Excise Act, 1944 is inconsistent with Section 33 of the IBC, 2016. The Tribunal observed that Section 238 of the IBC gives it an overriding effect over other laws. However, the Tribunal found no inconsistency between Section 11B and Section 33(5) of the IBC. Section 11B provides a procedure for availing refunds, which does not conflict with the moratorium under Section 33(5) of the IBC that protects the Corporate Debtor from legal proceedings. The Tribunal cited the principle laid down by the Supreme Court in "M. Karunanidhi vs. Union of India and Another" to conclude that both statutes can operate without conflict. Therefore, the Tribunal did not approve the Adjudicating Authority's view that Section 11B is inconsistent with Section 33 of the IBC.

Issue 2: Timeliness of the Liquidator's Application for Refund of Rs. 25,46,588/-

The Liquidator's application for refund of Rs. 25,46,588/- was filed on 31.12.2020, beyond the one-year period from the order dated 06.11.2019. The Tribunal considered the Supreme Court's order in Suo Motu Writ Petition (Civil) No. 03 of 2020, which extended the limitation period due to COVID-19. The Supreme Court's order extended the limitation from 15th March 2020 till further notice, which was applicable to all petitions, applications, suits, appeals, and other proceedings. The Tribunal concluded that this extension applied to the Liquidator's application under Section 11B, making the application timely. Consequently, the Tribunal upheld the direction for the refund of Rs. 25,46,588/-.

Issue 3: Entitlement to Refund of Rs. 1,08,797/- without Filing an Application

The Tribunal noted that no application had been filed by the Liquidator for the refund of Rs. 1,08,797/-. Since the Central Excise department was not obligated to refund the amount without a proper application, the Tribunal set aside the Adjudicating Authority's direction to refund this amount.

Conclusion:

The Tribunal partly allowed the appeal. It upheld the direction for the refund of Rs. 25,46,588/- but set aside the direction for the refund of Rs. 1,08,797/-. Each party was directed to bear its own costs.

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