2025 (12) TMI 1142 - AT - Central Excise

Refund claim for Rule 6(3)(i) payments on exempted goods-whether time-barred u/s11B; balance denied, appeal dismissed.

The dominant issue was whether the refund claim was barred by limitation under s.11B of the Central Excise Act despite being asserted as an amount paid ... Refund claim hit by time limitation or not - case of appellant is that the claim was not a ‘Central Excise duty’ but was relating to the exempted goods as per Rule 6(3)(i) of CCR, 2004 for which, limitation prescribed under Section 11B could not apply - HELD THAT:- The Appellant clearly admits that the period of dispute is from April 2011 to March 2014 for which the application for refund was filed on 05.06.2014 (date of the application doesn’t matter). The Commissioner (Appeals) has, after a detailed analysis granted partial refund for the period which was not hit by limitation, which order stands accepted by the Department and, hence, insofar as the earlier periods of dispute are concerned, they are apparently barred by limitation. It is found that but for the decision of Apex Court in Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT], the Appellant would not have even conceived of filing any refund claim and clearly, it is only the decision of Supreme Court that triggered the filing of refund claims in question, by the Appellant. This is precisely what the Hon’ble Apex Court in Mafatlal [1996 (12) TMI 50 - SUPREME COURT] has held that 'Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 118 and under no other provision and in no other forum.' It is also noted that in Mafatlal’s case it has been declared by the Apex Court that any action taken to refund an amount collected as tax, under and in accordance with the provisions of Section 11B would be an action taken under the ‘authority of law’ and hence, any and every claim for refund of excise duty would only be made under and in accordance with Rule 11 or Section 11B, as the case may be. This ratio, in fact, takes care of the arguments of the Appellant that what was claim by it was not the refund of “Central Excise duty” under Rule 2(e) of the Central Excise Rules, 2002 read with Section 3 of Central Excise Act, 1944. This also became evident when the whole refund mechanism is provided under Section 11B alone. There are no infirmity in the impugned order to the extent it is appealed against in this Appeal - appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the refund claim (to the extent disputed) was barred by limitation under Section 11B of the Central Excise Act, 1944, considering that the amount had been paid by the assessee under Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of exempt clearances of sulphuric acid. 2. Whether the assessee could avoid the statutory limitation under Section 11B by characterising the amount paid under Rule 6(3) of the Cenvat Credit Rules, 2004 as not being 'Central Excise duty', and by relying on a subsequent judicial decision as the trigger for claiming refund. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Limitation under Section 11B for the disputed part of refund Legal framework: The Court examined the applicability of the limitation regime governing refunds under Section 11B, as the statutory mechanism for claiming refund of amounts collected/paid as tax/duty within the excise framework. Interpretation and reasoning: The Court noted that the disputed period of payments was April 2011 to March 2014, while the refund application was received by the Department on 05.06.2014. The appellate authority had already granted refund only for the portion not hit by limitation, and this partial grant was accepted by the Department. For the earlier part of the claim, the Court found that it was 'apparently barred by limitation' as per the statutory scheme. Conclusions: The Court held that the refund claim, to the extent it related to earlier periods falling beyond the limitation contemplated under Section 11B, was time-barred, and the denial of that portion was sustainable. Issue 2: Whether the amount paid under Rule 6(3) CCR could escape Section 11B limitation as not being 'duty', and whether a later judicial decision could extend limitation Legal framework: The Court applied the principle that claims for refund of amounts paid/collected within the excise law framework must be filed and adjudicated only under the refund provisions (Section 11B), and that 'mistake of law' based on another assessee's later success cannot be used to reopen closed/older periods beyond statutory limitation. Interpretation and reasoning: The Court found, as a matter of fact, that the refund was prompted only after the Supreme Court's ruling in a separate matter, and that but for that ruling the assessee would not have conceived filing the refund claim. The Court treated this as falling squarely within the principle that a later decision in another assessee's case cannot be used to invoke a fresh limitation period based on 'discovery' of a mistake of law. The Court further rejected the argument that the amount paid under Rule 6(3) was not 'Central Excise duty' and therefore Section 11B would not apply, reasoning that the statutory 'refund mechanism' is provided under Section 11B alone and that refunds of such amounts must be sought only in accordance with that provision, as an action 'under the authority of law'. Conclusions: The Court conclusively held that Section 11B governed the refund claim notwithstanding the characterisation attempted by the assessee, and that limitation could not be avoided on the basis that the payment was not 'duty' or that a subsequent judicial pronouncement triggered the claim. Consequently, the time-barred portion remained non-refundable. Final determination: Finding no infirmity in the order to the extent challenged, the Court rejected the appeal and upheld the denial of the disputed (time-barred) portion of refund.