2024 (9) TMI 315 - HC - Central Excise

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 ... 100% refund of the excise duty on the goods manufactured in terms of N/N. 56/2002-CE dated 14.11.2002 - seeking fixation of special rates - time limitation - HELD THAT:- While, in case of limitation prescribed by a statute, the time prescribed in the statute, including for condonation of delay up to a particular period is required to be respected unless an extraordinary and an exception case is made out for exercise of writ jurisdiction to direct an authority to entertain an application even beyond time. That apart, having regard to the object of granting the area-based exemptions to the industrial units located in specified areas and also having regard to the fact that the entitlement of the petitioner to refund as per the excise notification of 19 of 2008 read with notification No. 34 of 2008 is not disputed, a liberal approach in the matter of condonation of delay is called for. Ordinarily, the petitioner, with a view to taking benefit of exemptions under the amending notifications of 2008, should have made applications seeking fixation of special rates as was provided in the amending notifications immediately after the judgment of Supreme Court in VVF Ltd’s case [2020 (4) TMI 885 - SC ORDER]. For two years, it could not do so because of pandemic and up to September 2022, he was entitled to apply for as provided under the notifications itself. There is also a provision for condonation of delay in the notifications for a period of one month. Once the respondents do not dispute the eligibility of the petitioner to claim refund of excise duty in terms of amending notifications of 2008, it would be travesty of justice if the claim of the petitioner is thrown out on the technical ground of delay - this is a fit case for exercise of extraordinary writ jurisdiction under Article 226 of the Constitution and direct the respondent No. 2 to treat the applications filed by the petitioner in time and decide the same on merits. The Judgment in Greatship (India) Ltd [2022 (9) TMI 896 - SUPREME COURT] does not deal with the issue in the manner as dealt with in this case. Had respondent No. 2 decided the matter on merits or had there been a dispute of fact with regard to the computation of limitation, we would have definitely relegated the petitioner to the alternative remedy provided under the Statute. In the instant case, the Commissioner has failed to take note of a clear directive of the Supreme Court to exclude the period of limitation between 15.03.2020 to 28.02.2022 while computing the limitation provided for filing of any appeal or application before any Court or authority under the statute. The Commissioner also failed to take note of the fact that the petitioner had filed refund appellations in the year 2011 and 2012 itself and made the applications on 27.12.2022 only seeking determination of refund of excise duty in terms of excise notifications of 2008 which were upheld by the Supreme Court in VVF Ltd.’s case. The impugned order dated 02.02.2023 passed by respondent No. 2 is quashed. Respondent No. 2 is directed to treat the applications dated 27.12.2022 filed by the petitioner in time and pass fresh orders on merits - petition allowed. 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.