2024 (1) TMI 636 - AT - Central Excise

Section 11B(1) limitation doesn't apply to refund of amounts deposited under-protest during adjudication proceedings

M/s Jalan Con Cast Ltd. Versus Commissioner of Central GST & Central Excise, Varanasi

CESTAT Allahabad ruled in favor of appellant regarding refund of amount deposited under-protest during adjudication proceedings. The tribunal held that ... Refund of the amount deposited under-protest - Applicability of bar of limitation under Section 11B (1) of Central Excise Act - HELD THAT:- The jurisdictional High Court after referring to a catena of judgments has categorically held that the amount deposited during pendency of adjudication proceedings or investigation is in the nature of deposit made under-protest or pre-deposit and therefore principles of unjust enrichment would not be attracted. The jurisdictional High Court also categorically held that such an amount cannot be retained by revenue, as it has no authority to retain such amount and it must be refunded along with interest. In the present case, when admittedly the Appellant is not required to pay any amount, then the Appellant was clearly entitled to refund of the amount deposited under-protest and consequently the revenue has no authority to retain such amount as it would be in violation of Article 265 of the Constitution. The Hon’ble High Courts of Bombay, Madras, Telangana and Calcutta have similarly held that refunds of amounts paid under mistake of law would not be hit by the statutory limitation periods. Thus, it is concluded that the statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax. The present appeal is allowed. Issues Involved:1. Applicability of the bar of limitation under Section 11B (1) of the Central Excise Act, 1944.2. Characterization of the amount deposited by the Appellant (whether it is duty or not).3. Entitlement to refund of the amount deposited under protest.Summary:Issue 1: Applicability of the Bar of Limitation Under Section 11B (1)The core issue in this appeal is whether the bar of limitation under Section 11B (1) of the Central Excise Act, 1944, would be applicable in the present case. The Ld. Commissioner (Appeals) had earlier held that the bar of limitation is applicable, and since the refund claim was filed after one year from the date of the tribunal's order, it is barred by limitation.Issue 2: Characterization of the Amount DepositedThe Appellant argued that the amount of Rs.30 lakhs was deposited under protest during the investigation and does not bear the character of duty. Therefore, Section 11B (1) of the Act, which applies only for the refund of duty of Excise and interest, has no applicability. The jurisdictional High Court and other High Courts have consistently held that amounts deposited during adjudication or investigation are in the nature of deposits made under protest or pre-deposit and are not subject to the principles of unjust enrichment.Issue 3: Entitlement to RefundThe Hon'ble Tribunal observed that since the Appellant is not required to pay any amount, they are clearly entitled to a refund of the amount deposited under protest. The revenue has no authority to retain such an amount as it would be in violation of Article 265 of the Constitution, which prohibits the levy or collection of tax except by authority of law. Various High Courts, including those of Bombay, Madras, Telangana, and Calcutta, have similarly held that refunds of amounts paid under a mistake of law would not be hit by statutory limitation periods.Conclusion:The statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax. Consequently, the appeal is allowed, and the Appellant is entitled to the refund amount along with interest.(Order pronounced in open court on 12th January, 2024)