2009 (11) TMI 377 - AT - Central Excise

Appeal granted for refund claim under Central Excise Act - Duty rate & limitation date crucial.

The Tribunal allowed the appeal and remitted the case for fresh consideration regarding a refund claim under Section 11B of the Central Excise Act, 1944. ... Refund of duty on account of reduction in rate - relevant date under Section 11B(5)(d) - limitation under Section 11B - applicability of Rule 9A of the Central Excise Rules for rate determination - date of removal from factory as determinative of duty rate - depot as place of removal for valuation under Section 4 - remand for fresh adjudicationRelevant date under Section 11B(5)(d) - limitation under Section 11B - refund of duty on account of reduction in rate - Remand for fresh consideration of whether the relevant date for limitation and refund is the date prescribed in Section 11B(5)(d) so as to render the refund claim time-barred or maintainable. - HELD THAT: - The Tribunal observed that the appellants advance a statutory plea that the relevant date for computing limitation is the one specified in Section 11B(5)(d) in view of a post-clearance reduction in duty rate and that, if so accepted, the refund claim would not be barred. This contention was not raised before the adjudicating authority or the Commissioner (Appeals) and the lower authorities did not consider it. Because the question turns on statutory construction of the relevant-date provision in Section 11B(5)(d) and its application to the facts, the Tribunal concluded that the matter ought to be examined afresh by the adjudicating authority after giving the assessee an opportunity to be heard.Issue remanded to the adjudicating authority for fresh decision on the applicability of Section 11B(5)(d) to the refund claim.Applicability of Rule 9A of the Central Excise Rules for rate determination - date of removal from factory as determinative of duty rate - depot as place of removal for valuation under Section 4 - Remand for fresh consideration of whether the rate of duty applicable to the impugned clearances is governed by the date of actual removal from the factory under Rule 9A, and whether the reduced post-budget rate can apply to pre-budget clearances routed through depots. - HELD THAT: - The Tribunal noted that Rule 9A prescribes the rate applicable as the rate on the date of actual removal from the factory. Although depots are treated as a 'place of removal' for valuation under Section 4, that classification does not necessarily determine the rate of duty under Rule 9A. The lower authorities did not examine whether the appellants had in fact paid duty at a rate higher than the applicable rate or whether the reduced rate (effective 1-3-1997) could be applied to goods removed earlier. These questions are material to entitlement to refund and were not considered in the show-cause notice or the orders below. Accordingly, the Tribunal directed that the adjudicating authority consider the applicability of Rule 9A and determine the correct rate of duty after hearing the appellants.Issue remanded to the adjudicating authority for fresh adjudication on the rate of duty in light of Rule 9A and related statutory provisions.Final Conclusion: The impugned orders are set aside and the matter is remitted to the adjudicating authority to decide, after affording the appellants a reasonable opportunity of being heard, (i) whether the relevant date under Section 11B(5)(d) governs limitation and entitlement to refund, and (ii) whether Rule 9A requires that the rate of duty be determined by the date of actual removal from the factory; fresh orders to be passed in accordance with law. Appeal allowed by way of remand. Issues: Refund claim under Section 11B of the Central Excise Act, 1944 for differential duty due to reduction in duty rate; Determination of relevant date for computation of limitation period; Applicability of Rule 9A of the Central Excise Rules, 1944 on rate of duty for pre-budget clearances.Analysis:1. The case involved a refund claim under Section 11B of the Central Excise Act, 1944 for the period when the duty rate was reduced from 20% to 18%. The appellants, manufacturers of explosives, faced challenges in collecting the differential duty from customers post the duty reduction. The claim was initially rejected due to being time-barred under Section 11B, with only a partial refund granted. The adjudicating authority upheld this decision, leading to the appeal.2. The Tribunal considered the relevant date for limitation under Section 11B(5)(d) in cases of duty reduction by the Government. The appellants argued that the duty reduction date should be the relevant date, which was not raised earlier. The Tribunal highlighted the importance of determining the applicable duty rate under Rule 9A at the time of actual removal of goods from the factory. It was noted that the authorities had not assessed whether the reduced rate could apply to pre-budget clearances, emphasizing the need to consider the rate applicable at the time of removal.3. Consequently, the Tribunal set aside the previous order and remitted the case for fresh consideration. The adjudicating authority was instructed to address the applicability of Rule 9A and hear the appellants on both the duty rate issue and the relevant date as per Section 11B(5)(d). It was emphasized that determining the correct duty rate was crucial for assessing eligibility for the refund claim. The appellants were to be given a fair opportunity to present their case before a new decision was made.4. In conclusion, the appeal was allowed for a remand to reevaluate the refund claim in light of the duty rate determination and the relevant date for limitation under Section 11B. The case highlighted the importance of considering statutory provisions and ensuring a thorough assessment of the duty rates applicable during the relevant period for excise duty refunds.