2025 (2) TMI 1486 - AT - Central Excise

Extended period of limitation cannot be used to recover sanctioned self credit refunds when revenue had verified and known them.

Invocation of the extended period of limitation for recovery is unsustainable where refunds claimed by self-credit under an exemption notification were ... Extended period of limitation - recovery of erroneously granted refund u/s 11A - area based exemption refund by self credit in PLA - verification and sanction of refund by departmental authorities - invocation of extended limitation where department had prior knowledge of sanction - HELD THAT:- We find that, in this case, the appellant was availing area-based exemption as per Notification No. 20/2007-C.E. dated 25.04.2007. We find from the said Notification that whatever duty is paid in cash after utilising CENVAT Credit on value addition, the appellant is entitled to take self-credit in their current account. Further, the appellant was filing their E.R.-1 Returns regularly, manually as well as electronically and the sanctioning of refund claim was confirmed and verified by the authorities. In these circumstances, for the period from 2011-12, the Show Cause Notice has been issued on 27.11.2015, which is barred by limitation. As the sanctioning of the refund claim was already in the knowledge of the Department, we are of the view that the extended period of limitation is not invokable in the present case. Accordingly, without going into the merits of the case, in the facts and circumstances of the case, we hold that the invocation of extended period of limitation is not sustainable. Consequently, the impugned order is not sustainable in the eyes of law. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, as per law. The cross objection is also disposed of on the above terms. Issues: (i) Whether invocation of the extended period of limitation for recovery under Section 11A of the Central Excise Act, 1944 is sustainable where refunds by way of self-credit under Notification No. 20/2007-C.E. dated 25.04.2007 were sanctioned/verified and known to the department.Analysis: The appellant availed area-based exemption under Notification No. 20/2007-C.E. dated 25.04.2007 and claimed refunds by way of self-credit for duties paid in cash after utilizing CENVAT credit. Monthly ER-1 returns and corresponding verification certificates were submitted and the refund sanctioning was confirmed and known to the department. A show cause notice seeking recovery was issued on 27.11.2015 in respect of transactions during 2011-12. The legal question concerns applicability of the extended limitation period for recovery under Section 11A of the Central Excise Act, 1944 when the department had prior knowledge of and had verified/sanctioned the refund claims.Conclusion: Invocation of the extended period of limitation is not sustainable in the circumstances where refund claims by way of self-credit were sanctioned/verified and were within the knowledge of the department; the impugned order disallowing self-credit and confirming demand is set aside and the appeal is allowed with consequential relief as per law.Ratio Decidendi: Where refund claims are sanctioned or verified and are within the knowledge of the revenue, the extended period of limitation under Section 11A of the Central Excise Act, 1944 cannot be invoked to recover such refunds.