TaxTMI 
TaxTMI 
2026 (1) TMI 898
X X X X Extracts X X X X
X X X X Extracts X X X X
....- against payment of duty paid on clearance of 'fly ash' under protest. The refund claim was arisen consequent to dismissal of department's appeal by Hon'ble Supreme Court against the judgment of the Hon'ble Madras High Court in the matter of M/s Mettur Thermal Power Station in WA No.1518 of 2015 holding that the fly ash do not fall under the category of excisable goods so as to attract levy of central excise duty. 2.3 Appellant claimed that they had paid the duty on 'fly ash' under protest and his other units, which were falling under the jurisdiction of Lucknow Commissionerate. Appellant also stated that they had paid central excise duty of Rs.2,65,297/- on clearance/dumping of fly ash and Rs.59,798/- as interest on late payment of the said duty from August 2015 till June 2017. 2.4 Show cause notice dated 25.09.2024 was issued to the appellant, asking them to show cause as to why the refund claim filed by them on the basis of department's appeal being dismissed by the Hon'ble Supreme Court on 08.03.2019, against the order of Hon'ble Madras High Court in the WP 17282 of 2014 and that the refund appears to be hit by limitation as laid d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dgement, it is clear that Central Excise duty was not chargeable on fly ash. Accordingly, the appellant would be entitled to a refund of the Central Excise duty so paid under protest. However, the adjudicating authority rejected the refund claim on the grounds of limitation, observing that the appellant filed their refund application on 14.08.2023, whereas the Hon'ble Supreme Court decided the matter on 08.03.2019. It was observed that the claim should have been filed within the limitation period as prescribed under Section 11B, from the date of Hon'ble Supreme Court decision on 08.03.2019, since the 'protest' ceased to exist with the final decision on that date. 4.3 I observe that the citations made by the appellant to indicate that the duty paid by them qualifies as being paid under protest are not material since this issue has not been disputed by the department. The citations made by them on the issue of limitation are also not relevant since they deal with the cases where provisions related to unjust enrichment have been invoked or where refunds have been rejected considering the due date to be the date of payment of duty even where the matter was subj....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction; (f) in any other case, the date of payment of duty. 4.4.1.A harmonized interpretation of the above provisions shows that even when duty is paid under protest, the protest cannot remain indefinitely. There must come a point when it concludes upon final resolution of the issue. Such finality occurs, for example, when a favourable judgment is rendered. In Central Excise matters, in situations of disputes on account of issues such as uncertainty in valuation, classification etc., the duty can either be paid provisionally or under protest. Both the said mechanisms of payment are resorted to, to keep the final payment of duty in abeyance. 4.4.2. When the duty is paid on a provisional basis, the one-year limitation period begins from the date specified in clause (eb) of Explanation B to Section 118(1), i.e., when the duty is finally adjusted after the provisional assessment. However, in the present case, the duty was paid under protest, and that protest came to an end only with the Supreme Court's judgment on 08.03.2019. Therefore, clause (ec) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....." The Hon'ble Court, thus, held that Central Excise refunds must comply with the timeline prescribed under Section 11B of the Act. 4.6. It is incorrect to interpret the second proviso to Section 11B(1) as granting a perpetual exemption from limitation simply because duty was paid under protest. The statute provides that the one-year limitation does not apply to such protest-based payments. In ordinary cases, where duty is paid in the normal course, the limitation period begins from the relevant date, which is typically the payment date. However, when duty is paid under protest, that payment date cannot be used to trigger the limitation period. Instead, as per clause (ec) of Explanation B, the limitation begins from the issuance of a judgment, order, or directive which determines that the duty is refundable. The limitation begins once the taxpayer has a legally enforceable cause of action, usually the "relevant date," such as the date of payment or judgment that created entitlement. The second proviso only effectively halts the running of time until resolution of the case or creation of that entitlement. 4.7 I find that in the grounds of appeal the appellant h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng duty on fly ash. The above letter clearly shows that taking note of the above judgment, appellant was paying duty under protest. 4.5 No action was taken by the revenue's authorities on the letter of protest filed by the appellant to either accept or reject the same. In the meantime Hon'ble Supreme Court has dismissed writ appeal filed by the revenue against the order of Hon'ble Madras High Court referred above. Subsequently, appellant claimed refund of the duty paid by them under protest, which is the bone contention in the present proceedings. 4.6 I find that the protest made by the appellant was never decided. Dismissal of the appeal/ SLP filed by the revenue against the order of Gujarat High Court in case of some other person would not amount to disposal of the protest made by the appellant. Hon'ble Supreme Court has in the case of M/s Mafatlal Industries Ltd. [1997 (89) ELT 247 (SC)] observed as follows: "70. Re : (II) : We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back - is sought to be recovered on the ground of alleged discovery of mistake of law on the basis of a decision of a High Court or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law : The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act. It was clarified that even if the authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is un-understandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for re-op....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he learned Counsel for the petitioners-appellants that if the above interpretation is placed upon amended Section 11B, a curious consequence will follow. It is submitted that a claim for refund has to be filed within six months from the relevant date according to Section 11B and the expression "relevant date" has been defined n Clause (B) of the Explanation appended to sub-section (1) of Section 11B to mean the date of payment of duty in cases other than those falling under Clauses (a), (b), (c), (d) and (e) of the said Explanation. It is submitted that Clauses (a) to (e) deal with certain specific situations whereas the one applicable in most cases is the date of payment. It is submitted that the appellate/revision proceedings, or for that matter proceedings in High Court/Supreme Court, take a number of years and by the time the claimant succeeds and asks for refund, his claim will be barred; it will be thrown out on the ground that it has not been filed within six months from the date of payment of duty. We think that the entire edifice of this argument is erected upon an incomplete reading of Section 11B. The second proviso to Section 11B (as amended in 1991) expressly provides ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly with a view to keep a record of the payment of duty under protest. It is meant to obviate any dispute whether the payment is made under protest or not. Any person paying the duty under protest has to follow the procedure prescribed by the Rule and once he does so, it shall be taken that he has paid the duty under protest. The period of limitation of six months will then have no application to him. 86.We may clarify at this stage that when the duty is paid under the orders of Court (whether by way of an order granting stay, suspension, injunction or otherwise) pending an appeal/reference/writ petition, it will certainly be a payment under protest; in such a case, it is obvious, it would not be necessary to lodge the protest as provided by Rule 233B." 4.7 In terms of the above, it is necessary for the officer to whom the protest was filed to dispose of the same in the case of the appellant, which has not been done. Revenue cannot rely to said that because Hon'ble Supreme Court has in the case of some other person decided the matter, the protest gets immediately disposed of. 4.8 The crux of the above referred para of Hon'ble Supreme Court is that each person in respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... electricity in our Power Plant, the coal is burned and while burning the Coal, the fly ash |Fly Ash from ESP's (Electro-Static Precipitators)] arises. $ 2. Fly ash hos been held to be a non-excisalle item by the Hon'ble Supreme Court of India in the case of Union of India vs. Ahmedabad Electricity Co. Limited reported in Con pe ( 19 ( 198) T.L.T. 3 [5.C.) in as much as it is not a manufactured product. In para 26 Veciytt vor tidjudgment the following has been held :- 26. Can burning of coal be called manufacturing? The locomotive steam #igines used to run on coal. Coal was being constantly burnt in the boiler पà¥à¤°à¤¾à¤ªà¥à¤¤ किया of the engine. The constant burning of coal produced cinder. Could it, be Ltd. Bajar Erer5 / 2y Vill-Barberad Plibhit MAXsom 55 said that the engine driver was manufacturing cinder? Is any manufacturing activity involved? Burning of coal for purposes of producing steam cannot be said to be a manufacturing activity. Therefore, neither ash nor cinder can be said to be products of a manufacturing process. From burning coal when you get either cinder or ash, it cannot be said that a new prod....