1987 (10) TMI 214 - AT - Central Excise

Appellant's refund granted per Collector's order upheld, time limit not applicable. Protest letters nullify mis-statement claims. Time-barred demand notice invalid.

The tribunal concluded in favor of the appellant. The refund granted in compliance with the Collector's order was not erroneous, and the time limit under ... Refund made beyond limitation on basis of protest lodged Issues Involved:(a) Whether the refund sanctioned by an order passed in pursuance of the order-in-revision could be treated as erroneous refundRs.(b) Whether in case of refund granted in pursuance of an order-in-revision, the time limit prescribed under Section 11B is applicableRs.(c) Whether such a case is governed by sub-section (3) of Section 11B which calls for suomoto refund without waiting for a claimRs.(d) Whether any mis-statement could be attributed to the appellant relating to the protest when admittedly the department had received the letter of protestRs.(e) Whether in such a situation, the Asstt. Collector could invoke extended period of time under Section 11 A for recoveryRs.(f) Whether a time-barred claim in respect of an amount otherwise due could be recoveredRs.(g) Whether the demand notice dated 16-8-1984 (for recovery of the amount paid on 18.3.83) was time-barred in view of the fact that it is beyond a period of six monthsRs.Detailed Analysis:(a) Erroneous Refund:The learned counsel argued that the refund sanctioned in pursuance of an Appellate Order or Order-in-Revision cannot be termed as 'erroneous refund.' The refund was made in compliance with the order dated 29-9-1982 passed by the Collector in revision, which was binding on the Asstt. Collector. Therefore, the refund sanctioned by the order dated 11-5-1983 cannot be considered erroneous.(b) Applicability of Section 11B Time Limit:The counsel contended that the six-month limitation under Section 11B(3) should not apply to refunds granted in pursuance of an order-in-revision. The Asstt. Collector was required to grant the refund suo moto, making the time limit inapplicable.(c) Suo Moto Refund:The appellant argued that the case is governed by sub-section (3) of Section 11B, which calls for suo moto refund without waiting for a claim. Since the refund was due as a consequence of the Collector's order, it was the duty of the Asstt. Collector to grant the refund without a formal claim.(d) Mis-statement and Protest:The appellant had written letters indicating that the payment would be made under protest. The department's receipt of these letters negates any mis-statement by the appellant. The Asstt. Collector's reliance on the absence of 'Under protest' stamps on Gate Passes and R.T.12 forms was deemed insufficient to establish mis-statement.(e) Extended Period under Section 11 A:The Asstt. Collector invoked the extended period of five years under Section 11 A, citing mis-statement by the appellant. However, the tribunal found that the protest letters were sufficient to negate claims of mis-statement, making the extended period inapplicable.(f) Recovery of Time-barred Claim:The tribunal referenced multiple judgments, including the Kerala High Court and Tribunal decisions, to assert that a time-barred claim, if admitted and paid, does not confer a right of recovery on the department. Limitation bars the remedy but does not extinguish the right.(g) Time-barred Demand Notice:The demand notice dated 16-8-1984, issued more than six months after the payment on 18-5-1983, was deemed time-barred. The normal period for recovery under Section 11 A is six months, and the extended period was not applicable due to the absence of mis-statement.Conclusion:The tribunal concluded that the appellant's contentions were valid. The refund was due as a consequence of the Collector's order, making the time limit inapplicable. The protest letters negated claims of mis-statement, and the demand notice was time-barred. The order-in-appeal and the Asstt. Collector's order were set aside, and the appeal was accepted.