TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 6
X X X X Extracts X X X X
X X X X Extracts X X X X
....rodes which was not admissible in terms of the amendments made to definition of inputs (Rule 2 (k) of CENVAT Credit Rules, 2004) by substitution as per notification No 03/2011-CE (NT). Cenvat Credit on these electrodes was also not admissible as capital goods. 2.3 A show cause notice dated 27.05.2015 was issued to the appellant proposing to deny the inadmissible CENVAT credit and to recover the same along with interest. Penalty under Rule 15 read with Section 11AC was also proposed. 2.4 The show cause notice was adjudicated vide order in original dated 05.05.2016, confirming the demand along with interest. Penalty was also imposed. 2.5 Appellant deposited 7.5% of amount confirmed (Rs 24,998/- vide debit entry no 41 in the CENVAT account) and filed appeal before the First Appellate Authority. The appeal was dismissed by order in appeal dated 28.02.2018 2.6 Appellant further deposited 2.5% of the amount confirmed (Rs 8330/- vide Challan No 00030 dated 30.06.2018 and filed the appeal before CESTAT. The appeal was allowed as per Final Order No A/70606/2019-SM [BR] dated 14.03.2019, holding as follows: 3. Tribunal's decision in the case of M/s DSM Sugar Vs Commissioner of Central ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Rs. 3,52,728/- (Rupees Three Lacs Fifty Two Thousands Seven Hundred Twenty Eight only), as per details mentioned below:- (a) Pre Deposit @ 7.5% for filing First Appeal of Rs. 24,998/-, reversed vide Entry No. 041 dated 18.07.2016 (b) Pre-Deposit @ 2.5% for filing Second Appeal before CESTAT- Allahabad of Rs. 8,330/-, deposited vide CIN 00030 dated 30.06.2018 (c) Reversed Rs. 15,581/- only vide Entry No. 01 dated 01.04.2015, also got deposited Interest & Penalty Rs. 935/-, vide Challan No. 260 dated 30.04.2015, Ref IAR No. 54/HPR/CE/2015-16 (d) Reversed Rs. 11,330/- only, CENVAT involved in 5 (Five) Tax Invoices for the Month of March-2013 only. (e) Reversed Rs. 90,861/- only, CENVAT involved in 24 (Twenty Four) Tax Invoices from the Month of April- 2013 to March-2014 only. (f) Reversed Rs.57,208/- only, CENVAT involved in 28 (Twenty Eight) Tax Invoices from the Month of April- 2014 to March-2015 only. (g) Reversed Rs. 20,668/- only, CENVAT involved in 17 (Seventeen) Tax Invoices from the Month of April- 2015 to March-2016 only. (h) Reversed Rs. 23,695/- only, CENVAT involved in 5 (Five) Tax Invoices from the Month of April- 2016 to June-2016 only (i) Reversed Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt along with the interest in terms of provisions of Section 35FF of Central Excise Act, 1944. There is no dispute in respect of consequential refund arising as result of the said order. * Period of dispute in the present appeal is March, 2013 to June, 2017 which is not the subject matter of the tribunal order dated 14.03.2019. Hence the appellant cannot claim the refund in respect of the duty paid on welding electrodes by referring to the above order. * Appellant have never claimed the CENVAT credit in respect of the amounts now being claimed as refund, by referring to the above order. * No proceedings have been initiated for denial of any Cenvat Credit in respect of the welding electrodes received by the appellant during this period as they had never claimed any credit and reflected the same in their ER-1 returns. It is not even the case of the appellant that claimed the credit in ER-1 return and reversed same by debit entries made in the said return. * Letter dated 19.07.2013 cannot be said to be a letter of protest. * Appellant has not referred to any provision in the CENVAT Credit Rules, or Central Excise Act, 1944 as per which such a belated claim of credit and refu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the amount pre-deposited at the time of filing the appeals as well as for refund of Rs. 3,19,410/- pertaining to Cenvat Credit on Welding Electrode for the period from March, 2013 to June, 2017 5. The Adjudicating Authority found that the refund of Rs. 33,318/- which was pre-deposited for filing the refund claim alongwith the interest of Rs. 5,993/- was admissible for refund and the claim of Rs. 3,19,410/- was not arising out of the CESTAT's Order, and therefore, found to be inadmissible to them. On this issue, I find that the order of the Hon'ble Tribunal dated 14.03.2019 at para 4 clearly stated as follows: "....." 6. On perusal of the order as above, I find that the Show Cause Notice dated set aside by the Hon'ble Tribunal which 27.05.2015 was ultimately was pertaining to the period from June, 2010 to February, 2013 was decided on the ground of limitation and does not pertain to any subsequent period. The refund claimed by the appellant for the Cenvat Credit on Welding Electrodes for the period of March, 2013 to June, 2017 is not an issue before the Tribunal, and therefore, the Order of the Tribunal dated 14.03.2019 has got nothing to do with such a refund cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment of inadmissible credits in the returns action will be initiated as provided by Section 11A of the Central Excise Act, 1944, Rule 14 of the Cenvat Rules, 2004 etc. The scheme of Central Excise Act, 1944 do not permit any other method of making the claim to credit or for postponement of the right to credit for any reason. 4.7 The appellant has placed on record letter dated 19.07.2013 which reads as follows: "Ref: YSL/2013-14/59 Dated: 19.07.2013 To The Superintendent Central Excise Range-II Bareilly. Sub:- Reg. Cenvat Credit on Welding electrodes. Sir, During discussion with you regarding Cenvat Credit on welding electrodes, we have been told by your office that after change in definition of 'input' under Rule 2 (k), the Cenvat Credit on welding electrodes may not be taken. Hence, we have now stopped taking oif Cenvat Credit on welding electrodes used in fabrication, repair & maintenance of machine, machinery parts used in our Plant. We hereby reserve our right to claim the Cenvat Credit on welding electrodes if any higher court or authority allows Cenvat Credit on welding electrodes used for above purpose. With Regards Yours Faithfully For YADU SUGAR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of mis-construction, mis-application or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the ease may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him? Can he invoke Section 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading Section 72 of the Contract Act along with Section 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiyalal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three year....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... thereunder including Section 11B/Rule 11 too constitute "law" within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature - no claim for refund is maintainable except under and in accordance therewith. The second basic concept of law which is violated by permitting the above situation is the sanctity of the provisions of the Central Excises and Salt Act itself. The Act provides for levy, assessment, recovery, refund, appeals and all incidental/ancillary matters. Rule 11 and Section 11B, in particular, provide for refund of taxes which have been collected contrary to law, i.e., on account of a mis-interpretation or mis-construction of a provision of law, rule, notification or regulation. The Act provides for both the situations represented by Sections 11A and 11B. As held by a seven - Judge Bench in Kamala Mills, following the principles enunciated in Firm & Illuri Subbaiya Chetty, the words "any assessment made under this Act" are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words "an assessment made" cannot mean an assessment pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable as demonstrated hereinbefore. As a matter of fact, the situation today is chaotic because of the principles supposedly emerging from Kanhaiyalal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. 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 11B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion Bench of this Court observed: "16. It is well-known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same." (emphasis supplied) 38. The provisions in a taxing statute dealing with machinery for assessment have to be construed in accordance with the intention of the legislature to make the charge levied effective. [Gursahai Saigal v. CIT, (1963) 48 ITR (SC) 1 [9]] While interpreting provisions th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(S.C.) = (2000) 6 SCC 650, the question which came up for consideration before this Court was non-challenge of an appealable order where the adjudicating authority had passed an order which is appealable under the statute, and the party aggrieved did not choose to file an appeal. This Court held that it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing the order. The provisions of the Central Excise Act, 1944 came up for consideration. The Court has observed : "10. Coming to the question that is raised, there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing its order. If this position is accepted then the provisions for adjudic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment order. 7. We also see no substance in the contention that provision for a period of limitation indicates that a refund claim could be filed without filing an appeal. Even under Section 11 under the Excise Act, the claim for refund had to be filed within a period of six months. It was still held, in Flock (India)'s case (supra), that in the absence of an appeal having been filed no refund claim could be made. 8. The words "in pursuance of an order of assessment" only indicate the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an order of assessment to claim the refund. These words do not lead to the conclusion that without the order of assessment having been modified in appeal or reviewed a claim for refund can be maintained." (emphasis supplied) 41. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. 42. It was contended that no appeal lies against the order of self-assessment. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
...."any order" which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra). 44. The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or re-assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re-assessment is not permitted nor conditions of exemption can be adjudicated. Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended ....