TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1154
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.... Excise Registration No. AAACRG4896AXM003. The appellants avail CENVAT credit of duty paid on inputs, capital goods and input services used for manufacture of final products and utilize the said credit for payment of duty on their final products. 2.2 The Central Government had introduced a completely revised Central Excise duty structure in the Union Budget 2004, wherein manmade fibres alone were subject to mandatory duty viz., 24% on polyester filament yarn (including textured yarn) and 16% on all other filament yarns and manmade fibres. Except for these duties, all Textile goods viz., yarn, fabrics, garments, articles of chapter 50 to 63 were made fully exempt, if no CENVAT credit of duties is taken under the CENVAT Credit Rules, 2002/ 2004. Further, CENVAT credit scheme for textiles was made optional. For those units/ manufacturers opting to pay Central Excise duty, and thereby avail of CENVAT duty credit, the applicable rates of duty for all other goods of chapter 50 to 63 was prescribed at 4% for pure cotton textiles including yarn, fabrics, garments, made ups and articles; and 8% for other textiles including yarn, fabrics, garments, made ups and articles. All textiles and ....
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....of Central Excise duty. Whereas the appellants have filed the refund claim for the duty paid on 17.07.2004, after a lapse of nearly thirteen years, on 02.06.2017, which is not proper in law. Therefore, he had issued Show Cause Notice (SCN) dated 20.07.2017 seeking reply of the appellants as to why the refund claim filed by them should not be rejected under Section 11B ibid read with Section 142(3) of the CGST Act, 2017. 3.2 In adjudication of the said SCN dated 02.06.2017, the Deputy Commissioner, CGST & Central Excise, Jalgaon Division vide Order-in-Original dated 19.09.2017 had rejected the refund claim. Being aggrieved with the said order of the original authority, the appellants had filed an appeal before the Commissioner (Appeals). In deciding the case, by relying on the decision of the Hon'ble Supreme Court in the case of M.P. Steel Corporation Vs. Commissioner of Central Excise - 2015 (319) E.L.T. 373 (S.C.) and the fact that the refund claim had been filed almost after a lapse of 13 years, he rejected the appeal on merits as well as on maintainability in upholding the order of the original authority. Feeling aggrieved with the above order of the learned Commissioner (App....
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....gar Mills Ltd.,- 1988 (37) E.L.T. 478 Jalandhar (viii) KVR Construction Vs. CCE - 2012 (26) S.T.R. 195 (Kar.) (ix) ASL Builders Private Limited Vs. Commissioner of Central GST & CX. - 2020 (1) TMI 431 - CESTAT Kolkata 5.1 On the other hand, the learned Authorized Representative (AR) had vehemently argued the case by reiterating the impugned order and stating that the learned Commissioner (Appeals) had thoroughly examined the grounds submitted by the appellants in their refund claim and had ultimately rejected the appeal on merits, limitation and maintainability. By relying on the following binding precedents of Hon'ble Supreme Court, she stated that the refund claim filed beyond the prescribed statutory time limit cannot be entertained and the impugned order rejecting such refund claim is sustainable. (i) Mafatlal Industries Ltd. Vs. Union of India - 1997 (89) E.L.T. 247 (S.C.); (ii) ITC Limited Vs. Commissioner of Central Excise, Kolkata-IV - 2019 (368) E.L.T. 216 (S.C.); (iii) Assistant Commissioner (CT) LTU, Kakinada & Ors. Vs. Glaxo Smith Kline Consumer Health Care Limited - 2020 (36) G.S.T.L. (305) 305; (iv) Pfizer Ltd. ....
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....excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person :...... xxx xxx xxx xxx Provided further that the limitation of 5[one year] shall not apply where any duty and interest, if any, paid on such duty] has been paid under protest. xxx xxx xxx xxx Explanation : For the purposes of this section,- (A) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which a....
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....of manufacture of filament yarns, monofilaments, filament tows or staple fibres or manufacture of textured yarn (including draw twisted and draw wound yarn) of heading Nos. 54.02, 54.03, 55.01, 55.02, 55.03 or 55.04. Explanation. - For the purposes of this exemption, "manufacture of filament yarns, monofilaments, filament tows or staple fibres" means manufacture of filaments or staple fibres of organic polymers produced by processes, either : (a) by polymerization of organic monomers, such as polyamides, polyesters, polyurethanes, or polyvinyl derivatives; or (b) by chemical transformation of natural organic polymers (for example cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates 9. 55.08, 55.09, 55.10, 55.11, 55.12, 55.13, 55.14 All goods 10. 55.06, 55.07 Staple fibres procured from outside and subjected to carding, combing or any other process required for spinning, by a manufacturer who does not have the facilities in his factory (including plant and equipment) for producing goods of heading Nos. 55.01, 55.02, 55.03 and 55.04. xxx xxx xxx 16. 61, 62, 63 (except 6307....
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....arly transpires that in order to avail central excise duty exemption on final products specified therein, the essential condition is that no credit of duty on inputs or capital goods has been taken by the person claiming exemption under the provisions of the CENVAT Credit Rules, 2002. From the facts of the case and on perusal of the refund application filed by the appellants, it is specifically stated therein that all the final products manufactured by them are eligible for the aforesaid central excise duty exemption, and therefore the appellants have decided to avail such exemption, by reversal of duty involved in respect of inputs, dyes & chemicals, furnace oil, packing materials contained in their work in progress and lying as such as on 08.07.2004 and had also informed the same to the jurisdictional Central Excise Superintendent vide their letter Ref. EX/JAL/2004-05/206 dated 19.07.2004 hand delivered and acknowledged by the office of the Assistant Commissioner of Central Excise, Jalgaon Division for having received on 21.07.2004. On such background of the facts, it cannot be said that the payment of duty by reversal of CENVAT credit is 'by mistake of law'. 8.4 The relevant ....
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....s. Alternatively, he can reverse the credit amount and avail of full exemption on the finished goods." On careful reading of the above clarification issued by CBIC, it transpires that the circular had tried to address the problems faced by the industry and field formations with respect to changes made in the excise duty structure on Textiles and Textile Articles. In fact, the clarification issued by CBIC dated 28.07.2004 provided for two options for the manufacturer who intend to avail the exemption on final products. These are viz., (i) option one, by paying the applicable duty of 4%/8% on the final products, in cases where input credit has been taken and CENVAT facility is desired to be continued; and (ii) option two, by reversal of credit amount in respect of inputs contained in final products or inputs which are proposed to be used in final products, for availing full exemption from central excise duty on final products by availing the notification dated 09.07.2004. Therefore, the appellants always had the option to either continue to avail CENVAT credit facility by paying applicable central excise duty or to reverse the credit, in case of availing full ....
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.... prior to amendment in Rule 11(3) of CCR of 2004, tantamount to 'mistake of law'. 9.1 We have also carefully examined the refund application dated 02.06.2017 filed by the appellants before the Assistant Commissioner of Central Excise, Jalgaon Division claiming refund of an amount of Rs.1,46,26,733/-. The extract of the same is given below: 9.2 On reading of the above two page letter of the appellants, it clearly reveals that they had reversed the CENVAT credit for the purpose of availing the excise duty exemption in clearance of the final products manufactured by them and specifically for complying with the condition attached to such exemption, and not under any mistake of law. Further, on the basis of the orders passed by the Tribunal in the relied upon cases, they interpreted that such condition requiring reversal of credit is effective from 01.03.2007, and thus claimed refund of CENVAT duty credit reversed by them earlier on 17.07.2004. This has also been reiterated in the Refund application in the prescribed Form-R, the extract of which is given below: 9.3 On careful reading of the details given by the appellants in the refund application vis-à-vis the legal pro....
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....ty, and thereby avail of duty credit, the applicable rates of duty for all other goods of chapter 50 to 63 will be: (a) 4% for pure cotton textiles including yarn, fabrics, garments, made ups and articles (b) 8% for other textiles including yarn, fabrics, garments, made ups and articles. 4.8.4 It may be noted that no intimation is needed by any unit either for availing of the exemption or for payment of duty at the above rates. The optional route is open for all sectors i.e. handloom, power looms, independent processors, stand-alone units as well as composite mills." On perusal of the above, it further transpires that both the options i.e., payment of duty on final products at the rate of 4%/8% by availing the input duty credit; or not availing CENVAT benefit of input duty credit for availing full duty exemption for clearance of final products, were available to the manufacturers of textile and textile articles. Such options have also been made voluntary, without involving even a simple intimation to the Department. Therefore, it could be concluded that payment of input duty credit on inputs contained in the final products, inputs lying as such for usi....
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....ion of litigation by such other person, and to claim that consequently limitation of 3 years from the date of discovery of such mistake should be applied for refund of the taxes paid by the claimant-applicant. The relevant paragraphs of the judgement delivered by the Hon'ble Supreme Court in the case of Mafatlal Industries (Supra) is quoted below: "7. We must, however, pause here and explain the various situations in which claims for refund may arise. They may arise in more than one situation. One is where a provision of the Act under which tax is levied is struck down as unconstitutional for transgressing the constitutional limitations. This class of cases, we may call, for the sake of convenience, as cases of "unconstitutional levy". In this class of cases, the claim for refund arises outside the provisions of the Act, for this is not a situation contemplated by the Act. xxx xxx xxx xxx 18. Second situation is where the tax is collected by the authorities under the Act by mis-construction or wrong interpretation of the provisions of the Act, Rules and Notifications or by an erroneous determination of the relevant facts, i.e., an erroneous finding of fact. Thi....
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....vy of duty becomes final and his claim that the duty is not leviable is finally rejected. But it so happens that sometime later - may be one year, five years, ten years, twenty years or even fifty years - the Supreme Court holds, in the case of some other manufacturer that the levy of that kind is not exigible in law. (We must reiterate - we are not speaking of a case where a provision of the Act whereunder the duty is struck down as unconstitutional. We are speaking of a case involving interpretation of the provisions of the Act, Rules and Notification.) The question is whether `X' can claim refund of the duty paid by him on the ground that he has discovered the mistake of law when the Supreme Court has declared the law in the case of another manufacturer and whether he can say that he will be entitled to file a suit or a writ petition for refund of the duty paid by him within three years of such discovery of mistake? Instances of this nature can be multiplied. It may not be a decision of the Supreme Court that lead `X' to discover his mistake; it may be a decision of the High Court. It may also be a case where `X' fights up to first appellate or second appellate stage, gives up t....
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.... 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 and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is 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 regulatio....
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.... 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 that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/Assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excise Act and the Rules made 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 situatio....
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.... 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-opening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article. In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view 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 ....
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....er of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case. 6. Both decisions have held the limitation prescribed under Section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 11B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under Section 11B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable." 10.3 In the present case....
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.... 12. In the result, the impugned order is upheld and the appeal filed by the appellants is dismissed. (Order pronounced in the Open Court on 20.01.2026) ============= Document 1 JK 0 2 JUN 2007 Hand Delivery Date: 01.06.2017 Ref .: RL/EXC/JAL/2017-18 The Assistant Commissioner,u. Central Excise & Customs, Jalgaon Division, 1 Bendre Towers, Near Icchadevi, N.H.6, Jalgaon (M.S.). 0 Dear Sir, Sub: Application for Refund of CENVAT Credit wrongly reversed of Rs. 1,46,26,733/ -. Raymond Limited is a Company registered under the Companies Act, inter alia, engaged in thé manufacture of textile fabrics and articles of textiles falling under Chapter Nos. 51, 55, 62 and 63 of Central Excise Tariff Act, 1985. We are registered under Central Excise regulations holding Registration Certificate No. AAACR4896AXM003 issued by the Divisional Deputy/Assistant Commissioner of Central Excise, Jalgaon. As per the Government's policy on textile and textile artides declared during Union Budget 2004-05, we opted for exemption from payment of duty as provided under Notification No.30/2004-CE dated 09/07/2004 with effect from 09/07/2004. Prior to the period :09/07/2....
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....n Rule 11 of Cenvat Credit Rules, 2004 vide Notification No.10/2007-CE(NT) w.e.f. 01/03/2007. Therefore, the subject amendment will have retrospective effect and same cannot be applied for earlier period. Recently, in Hon'ble CESTAT, in following cases has held that the amendment to Rule 11(3) which was brought into effect from 01/03/2007, by virtue of Notification No.10/2007-CE(N.T.) }dated 01/03/2007 being prospective and not retrospective operation: (1) Commissioner of Central Excise, Nagpur -vs- Suryalaxmi Cotton Mils - reported in. 2016-TIOL-3336-CESTAT-Mum; (2):Madhu Industries Limited -vs - C.C.E. Ahmedabad - reported in 2017(2) TMI 837 - CESTAT Ahmedabad. A copy of each citation mentioned above, attached for your ready reference. As the amendment requiring to reverse the CENVAT credit on inputs, inputs contained in the semi finished goods and finished goods came into effect from 01/03/2007, therefore, the reversal of CENVAT which has been made during July 2004 was not required to be done. As the reversal of the CENVAT credit was made as per the Budget instruction which is without authority of law, therefore the same is liable for refund .. We are theref....