Commissioner's excise duty refund rejection quashed for ignoring pandemic period exclusion from limitation computation

The HC quashed the Commissioner's order rejecting the petitioner's application for excise duty refund fixation on limitation grounds. The petitioner sought special rate fixation under notifications 19/2008 and 34/2008 following the SC judgment in VVF Ltd case. The HC held that despite statutory time limits, extraordinary writ jurisdiction was warranted given the undisputed eligibility for refund and the Commissioner's failure to exclude the pandemic period (15.03.2020 to 28.02.2022) from limitation computation as directed by SC. The Commissioner was directed to treat the December 2022 applications as timely filed and decide on merits.

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Issues Involved:
1. Challenge to the rejection of applications for fixation of special rate of actual value addition for the financial years 2011-2012 and 2012-2013.
2. Applicability of the period of limitation in light of the COVID-19 pandemic and the Supreme Court's directives.
3. Consideration of the petitioner's entitlement to excise duty refund under amended notifications.

Detailed Analysis:

1. Challenge to the Rejection of Applications:
The petitioner, a proprietorship concern, challenged the order dated 02.02.2023 by respondent No. 2, which rejected their applications dated 27.12.2022 for fixation of special rate of actual value addition for the financial years 2011-2012 and 2012-2013, citing them as barred by limitation. The petitioner argued that, under Notification No. 56/2002-CE dated 14.11.2002, they were entitled to a 100% refund of excise duty. However, Notification No. 19/2008-CE dated 27.03.2008 amended this, restricting the refund to the duty payable on value addition. The petitioner contended that they could not apply for the special rate due to ongoing litigation and the stay on the notification, which was ultimately resolved by the Supreme Court in favor of the Revenue on 22.04.2020 in Union of India vs VVF Ltd. (2020) 20 SCC 57.

2. Applicability of the Period of Limitation:
The petitioner claimed that the delay in filing applications was due to the COVID-19 pandemic, which led to continuous lockdowns. The Supreme Court had directed authorities to exclude the period between 15.03.2020 to 28.02.2022 from the computation of limitation. The petitioner's applications were delayed by 27 days beyond the permissible period, which included a 30-day condonation period by the Commissioner. The Commissioner dismissed the applications, considering them delayed by two years and eight months from the Supreme Court's decision, without accounting for the exclusion period mandated by the Supreme Court.

3. Consideration of Petitioner's Entitlement to Excise Duty Refund:
The Court noted that the petitioner had filed refund applications in 2012 and 2013 under the 2002 notification and only sought a different mode of computing the refund after the Supreme Court's decision in 2020. The Court emphasized that the petitioner's entitlement to the refund was not disputed by the respondents, and dismissing the claim on the technical ground of delay would be unjust. The Court exercised its writ jurisdiction under Article 226 of the Constitution, directing respondent No. 2 to treat the applications as filed in time and decide them on merits.

Conclusion:
The petition was allowed, quashing the impugned order dated 02.02.2023. Respondent No. 2 was directed to treat the applications dated 27.12.2022 as timely and pass fresh orders on merits. The judgment also applied to WP(C) No. 1577/2023 and WP(C) No. 2044/2023, with similar directions issued for those cases. The Court clarified that it had not given an opinion on the merits of the petitioner's claim.

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