Rejection of refund claim - time barred

[kiran kujur]

I have debited E.cess from the amount deposited under BED head of Account in 2007 . later in 2008,audit team objected and advised to deposit the duty amount afresh. accordingly i have deposited the said amount in E.Cess head of account and applied for refund of E.Cess payment made in 2007. The department rejected the refund application on ground of applicability of time bar u/s 11B of Central Excise Act, 1944. pl suggest me is it a case of refund of duty u/s 11B and is limitation of one year period is applicable. Relevant case laws may kindly be referred.

[Rama Krishana]

As per the provision of cenvat credit rules, 2004, Eduction Cess can not be utilized to pay BED. But credit of BED can be utilized to pay E.Cess. Therefore, it appears your earlier action was not wrong. In that case, you should argue and file the refund claim citing both the deposit details and claiming refund of any one which department feel correct. In my view the claim of refund of second one is better.

[kiran kujur]

Sir, actually i have debited the said amount from account current and also deposited the amount objected by the departmental authority through TR-6 challan, so whole exercise is related to Account current/PLA. we are in need of a case laws reference to prove our case as refund of deposit and not refund of duty

[Rama Krishana]

I think you would not find any case law matching in toto with your case. I my view, you should take this matter as deposited under protest against the advise of audit team. The amount deposited under protest, if no show cause notice is issues, should be refunded.

[Rakesh Chitkara]

Mr. Rama Krishnan's logic is correct. Fact that you are seeking refund by itself denotes protest. Please file the claim, and ask them to issue an appealable order. Let us examine what the department's reasons for rejection are. Appeal process will have to be undergone by you. Let us take the plea that it was merely a deposit and not payment of tax / duty, as it hasn't been appropriated by the deptt. yet. Plea that not section 11 but the law of limitation of 3 years is applicable in this case should be advanced.

AI Summary

Time bar on excise refunds: treat contested payment as deposit under protest to invoke longer limitation for recovery. The refund claim was rejected as time barred under the one year duty refund limitation; the core issue is whether the sum represents a refund of duty or a refund of a deposit. Under Cenvat rules E.Cess cannot be used to pay BED (while BED credit may be used for E.Cess), affecting classification of the transaction. The recommended course is to treat the payment as a deposit made under protest, assert it was not appropriated by the department, file the refund claim and seek an appealable order, and argue that the longer limitation for deposits applies.