100% EOU refund claim allowed as limitation period calculated from export payment receipt date under section 11B

CESTAT NEW DELHI allowed the appeal in a 100% EOU refund case. The appellant's CENVAT credit refund claim was rejected by lower authorities as time-barred under section 11B of the Central Excise Act, 1944, calculating the one-year limitation from the date of input service invoices. CESTAT held that the relevant date for calculating the time limit is the date of receipt of payment for export of services, not the invoice date. Following the larger bench decision in Span Infotech, which established that limitation should be calculated from the last date of the quarter in which FIRCs are received, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal.

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Issues Involved:
1. Whether the refund claim of CENVAT credit of Rs. 21,82,843/- was barred by time.
2. Whether the refund claim was rejected on grounds not mentioned in the show cause notice.
3. Determination of the relevant date for calculating the time limit for filing a refund claim under section 11B of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Whether the refund claim of CENVAT credit of Rs. 21,82,843/- was barred by time:
The Assistant Commissioner rejected the refund claim of Rs. 21,82,843/- as it was filed beyond the one-year time limit prescribed under section 11B of the Central Excise Act. The Commissioner (Appeals) upheld this decision, stating that the relevant date for calculating the time limit should be the date of export of services. The Tribunal, however, referred to the decision in Span Infotech, which held that the time limit should be calculated from the end of the quarter in which the Foreign Inward Remittance Certificates (FIRCs) are received. Consequently, the Tribunal found that the rejection of the refund claim on the basis of time bar was not justified.

2. Whether the refund claim was rejected on grounds not mentioned in the show cause notice:
The show cause notice issued to the appellant did not mention the ground of limitation for rejecting the refund claim. Instead, it proposed rejection on the basis that the documents were insufficient to determine the nature of services provided and that the input services were not used for output services. The Assistant Commissioner, however, found that the appellant had produced all relevant documents and sanctioned a partial refund of Rs. 21,901/-. The remaining amount was rejected solely on the ground of being time-barred, which was not stated in the show cause notice. The Tribunal agreed with the appellant that the rejection on a new ground not mentioned in the show cause notice was not permissible.

3. Determination of the relevant date for calculating the time limit for filing a refund claim under section 11B of the Central Excise Act:
The Tribunal emphasized that the relevant date for calculating the time limit under section 11B should be the date of receipt of payment for export of services, as held in Span Infotech. The Notification dated 14.03.2006 also prescribes that a refund application should not be filed more than once for every quarter in a calendar year. Thus, the time limit should be calculated from the end of the quarter in which the FIRCs are received, rather than the date of the invoice of input services.

Conclusion:
The Tribunal set aside the order dated 09.08.2012 passed by the Commissioner (Appeals) and allowed the appeal with consequential relief, holding that the refund claim was wrongly rejected on the ground of being time-barred and that the correct relevant date for calculating the time limit should be the end of the quarter in which the FIRCs are received. The Tribunal's decision was pronounced on 25.09.2024.

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