2024 (5) TMI 191 - AT - Central Excise

Refund claim rejected for excess duty paid after price reduction without provisional assessment under Section 11B

M/s. Strescon Industries Ltd. Versus Commr. of CGST & CX, Siliguri

CESTAT Kolkata dismissed the refund claim filed by the appellant who sought refund of excess duty paid due to subsequent price reduction without opting ... Refund claim - Can refund be claimed without opting of provisional assessment? - Reduction in price subsequently resulting in payment of duty in excess - time limitation - Section 11B of the CEA, 1944 - HELD THAT:- The word “may” is used interchangeably with “shall” and does not necessarily mean that the word “may” used cannot be read as “shall”. If the Learned Advocate‟s contention is taken as correct, that would mean that the refund claim can be made even after many years since no specific mention has been made that the refund claim should be made within one year. This would make the time specified under Section 11B (1) otiose. On going through the orders of the lower authorities, it is found that they have passed a detailed and considered Order wherein they have rejected the refund claim solely on the ground of time bar. There are no reason to interfere with the same. Accordingly, the present Appeal is dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether a claim for refund of excise duty is time-barred under Section 11B of the Central Excise Act, 1944 where the claim is filed more than one year after the 'relevant date' (here, date of payment of duty). 2. Whether the use of the word 'may' in Section 11B(1) permits a refund application to be entertained beyond the one-year period prescribed from the relevant date (i.e., whether 'may' should be read as directory or mandatory). 3. Whether the pending reference to a Larger Bench on the related question of claiming refund without opting for provisional assessment necessitates keeping the present appeal pending when the sole ground of rejection is delay under Section 11B. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Time bar under Section 11B: applicability of the one-year period from the 'relevant date' Legal framework: Section 11B(1) requires that any person claiming refund of excise duty 'may make an application for refund ... before the expiry of [one year] [from the relevant date]' and that the application be accompanied by documentary evidence. Explanation B defines 'relevant date' and includes in clause (f) 'in any other case, the date of payment of duty.' Interpretation and reasoning: The Court identified that payment of excise duty on the subject clearance occurred on 5 April 2010 and therefore that date falls within Explanation B(f) as the relevant date. Computing one year from that relevant date yields expiry on 4 May 2011. The refund application filed on 7 July 2011 thus falls beyond the one-year period. Precedent treatment: The Court reviewed the legislative text and the arguments but did not rely upon or cite any binding precedent that alters the statutory one-year period in comparable circumstances; the decision proceeds on statutory construction and application to the facts. Ratio vs. Obiter: Ratio - The Court's holding that the refund claim is time-barred where filed after one year from the relevant date (date of payment) is the operative ratio applied to dismiss the appeal on those facts. Conclusions: The refund claim was correctly rejected by the lower authorities as barred by Section 11B(1) because the claim was filed after the one-year period from the relevant date (date of payment of duty) had expired. The Tribunal finds no reason to interfere with the time-bar decision. Issue 2 - Meaning and effect of 'may' in Section 11B(1): directory or mandatory? Legal framework: Section 11B(1) uses the expression that a person 'may make an application for refund ... before the expiry of [one year] [from the relevant date]'. The legal question is whether the permissive verb 'may' renders the time limit non-mandatory or whether it should be read as mandatory (i.e., equivalent to 'shall'). Interpretation and reasoning: The Court examined the argument that 'may' should not be construed as a mandatory obligation and rejected it. The Court observed that in the statute the word 'may' is used interchangeably with 'shall' in some contexts and that to accept the appellant's construction would negate the legislative time limit and render Section 11B(1)'s specified period otiose, enabling refund claims to be made indefinitely. The Court noted the absence of cited authority where a Tribunal, High Court, or Supreme Court had interpreted Section 11B's 'may' to permit claims beyond one year on that basis. Precedent treatment: The Court specifically recorded that the appellant did not produce any authority supporting the permissive construction relied upon; consequently no precedent was followed to expand the time limit. The Court did not overrule or expressly distinguish any existing authority on the point, but relied on statutory interpretation and practical consequences. Ratio vs. Obiter: Ratio - The Court's construction that 'may' in Section 11B(1) cannot be read so as to permit delay beyond the one-year period forms part of the binding reasoning applied to dispose of the appeal. Conclusions: The permissive wording 'may' in Section 11B(1) does not permit a refund application to be entertained beyond the one-year period from the relevant date; the statutory time limit is mandatory in effect for the facts of this case. Issue 3 - Effect of pending Larger Bench reference on disposition of an appeal when grounds differ Legal framework: The pendency of a reference or precedent pending before a Larger Bench on a related issue may, in some cases, require or justify adjournment or holding an appeal in abeyance where the pending reference bears decisively on the controversies in the appeal. Interpretation and reasoning: The Court acknowledged that the broader question whether refund can be claimed without opting for provisional assessment has been referred to a Larger Bench. However, on examination of the show cause notice and orders in the present matter, the Tribunal found that the refund was rejected solely on the ground of delay under Section 11B and not on the ground of non-exercise of provisional assessment. Because the determinative ground in this appeal was time-bar and not the point reserved for the Larger Bench, the Court concluded there was no reason to keep the appeal pending and, with consent of parties, proceeded to final disposal. Precedent treatment: The Court noted the referral but treated it as inapplicable to the dispositive issue in the present appeal; no binding pronouncement from the Larger Bench was necessary to decide the time-bar question. Ratio vs. Obiter: Ratio - It is a necessary part of the Court's approach that an appeal need not be held pending a Larger Bench decision where the pending reference concerns a different ground and the impugned order rests solely on grounds not covered by that reference. Conclusions: The pending Larger Bench reference on provisional assessment did not preclude final adjudication of this appeal because the lower authorities rejected the refund exclusively on the ground of delay under Section 11B; the Tribunal therefore proceeded to decide and dismissed the appeal. Overall Disposition The appeal is dismissed on the ground that the refund application was time-barred under Section 11B(1) being filed after the one-year period from the relevant date (date of payment of duty), and the argument that 'may' permits filing beyond one year is rejected. The pending Larger Bench reference on a distinct procedural issue does not affect the present conclusion.