2024 (4) TMI 789 - AT - Service Tax

Pre-deposit cannot become excess tax payment after Commissioner accepts it for appeal hearing under Section 35F

CESTAT Chennai allowed the appeal regarding recovery of erroneous refund of Rs.4,80,000. The appellant's Chennai unit paid pre-deposit for an appeal ... Recovery of erroneous refund - amount paid by the appellant’s Chennai Unit towards the pre-deposit in connection with an appeal filed arising out of order in Tuticorin Central Excise Division with a different Registration Number - whether the amount paid by the appellant from their Head Office Registration can be treated as a pre-deposit or not? - time limitation - HELD THAT:- The appellant was made to file a refund-claim before the Assistant Commissioner of GST and Central Excise, Egmore Division, Chennai who has treated the pre-deposit amount as excess payment of tax and rejected the refund-claim as being hit by limitation in terms of provisions of Section 11B of the Central Excise Act, 1944. The appellant’s contention that the Commissioner (Appeals), Madurai has accepted the above pre-deposit for the purpose of hearing the appeal filed by the appellant has fallen on deaf ears. The Commissioner (Appeals) has accepted the payment of pre-deposit and decided the appeal on merits. As such, the Department cannot turn back and dispute the nature of payment of pre-deposit while sanctioning the refund-claim. An amount of Rs.4,80,000/- was paid by the appellants in order to avail the remedy of appeal. The nature of payment as a pre-deposit would not undergo any change to become excess payment of tax as contended by the lower Adjudicating Authorities. This contention is totally unjustified and has to be termed as patently illegal. There cannot be any doubt as to the payment made being a pre-deposit may be vide their Head Quarter’s Service Tax Registration at Chennai. In the case of SUVIDHE LTD. VERSUS UNION OF INDIA [1996 (2) TMI 136 - BOMBAY HIGH COURT] the Hon’ble High Court of Bombay has held that in respect of pre-deposit made under Section 35F of Central Excise Act, 1944, the provisions of Section 11B of Act ibid can never be applicable. The amount paid by the appellant towards pre-deposit cannot be treated as an excess payment of duty and the provisions of Section 11B of the Central Excise Act, 1944 cannot be made applicable in the facts and circumstances of this case - the appellant is eligible for refund of pre-deposit of Rs.4,80,000/- paid for filing of an appeal under Section 35F of Central Excise Act, 1944. Appeal allowed. Issues Involved:1. Recovery of erroneous refund.2. Refund claim of pre-deposit and applicability of limitation u/s 11B of CEA, 1944.Summary:1. Recovery of Erroneous Refund:M/s. Alba Industries Limited (formerly known as Beach Minerals Company India Ltd.) filed refund claims under Notification No. 41/2012-ST for services used in export of goods which were initially sanctioned. However, a Show Cause Notice dated 12.07.2021 was issued for recovery of erroneous refund of Rs.63,89,431/- due to allegations of illegal mining and invalid transit permits. The Joint Commissioner confirmed the demand along with interest and penalty.2. Refund Claim of Pre-deposit and Applicability of Limitation u/s 11B of CEA, 1944:The appellant paid a pre-deposit of Rs.4,80,000/- on 28.02.2020 under Chennai registration while filing an appeal before the Commissioner (Appeals), Madurai. The Commissioner (Appeals), Madurai set aside the Order-in-Original and remanded the case. The appellant then filed a refund claim for the pre-deposit, which was initially returned by the Deputy Commissioner, Tuticorin, advising to file it before Egmore Division, Chennai. The Assistant Commissioner, Egmore Division, rejected the refund claim on the ground of limitation u/s 11B of CEA, 1944. The appellant argued that the pre-deposit was made u/s 35F and hence, Section 11B was not applicable. They cited several judgments, including Suvidhe Ltd. Vs. Union of India and Estee Auto Pressings (P) Ltd. Vs. Commissioner of Central Excise, to support their contention.The Tribunal concluded that the pre-deposit made by the appellant was for availing the remedy of an appeal and not an excess payment of duty. Therefore, the provisions of Section 11B of CEA, 1944 were not applicable. The Tribunal allowed the appeal and ordered the refund of Rs.4,80,000/- with consequential relief as per law.