Purchaser not entitled to claim refund of excise duty paid under  protest after limitation period u/s 11B

Purchaser of  goods  not entitled to claim refund of duty paid under protest by manufacturer after limitation period u/s 11B of the Central Excise Act

ABCAUS Case Law Citation:
ABCAUS 2793 (2019) (02) SC

Important Case Laws Cited/relied upon by the parties
M/s. Fenner (India) Ltd. Vs. Collector of Central Excise, Madurai 1995 (Suppl.) 2 SCC 567

Commissioner of Central Excise, Mumbai­ II  Vs. Allied Photographics India Ltd. 2004(4) SCC 34

The instant appeals filed by the appellant assessee were directed against the judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESAT) in rejecting the claim of the  appellant (buyer) for refund of the claim of the central excise duty   under Section 11B of the Central Excise Act 1944 (the Act) which was paid under protest by the manufacturer.

The appellant was a PSU engaged in coal mining.  The price of coal was fixed by the Coal Ministry  and the appellants used to sell  the  goods  on the price fixed by the Ministry and no central  excise  duty was payable  on coal. The manufacturer cleared their finished goods (conveyor beltings) as per suggested Tariff  and paid the duty under protest. 

The dispute with regard to classification of conveyor beltings was decided by the Hon’ble Supreme Court specifying the sub ­headings for classification of the conveyor beltings.

The manufacturer, pending classification had deposited central excise duty under protest and had never applied for its refund after the classification dispute was finally decided  by  the Court.

In the instant case, the appellant was the buyer of conveyor beltings from the manufacturer who filed application for claim of refund on the premise that the payment of excise duty was made by the manufacturer under protest due to pending classification and after issue of classification had been settled in favour of the manufacturer , the central excise duty collected should be refunded by the excise department and there  is  no  bar in claiming of refund in terms of the amendment made under Section 11B of the Act and limitation of six months shall not apply where  duty  had  been paid under protest.    

However, the Department rejected the refund application filed by the appellant on the ground  of  limitation and also on unjust enrichment.

The Hon’ble Supreme Court observed that Section 11B deals with the claim of refund of duty as paid on his own accord by any person for refund of such duty to the competent authority before the expiry of six months from the relevant date as prescribed but where the duty was paid under protest in terms of the 2nd proviso to Section 11B(1), the period of limitation may not  apply. Although the buyer can also apply for refund provided the duty of excise is borne by the buyer and he had not passed on the incidence of such duty to any other person as  referred to under Section 11B(2)(e) and the application has been moved within  the  period of  six  months from the relevant date of purchase of the goods by such person in terms of Section 11B(5)(B)(e) of the Act. 

The Hon’ble Supreme Court pointed out that the  scheme  of  Section  11B makes a distinction between right of the manufacturer to claim refund from right of the buyer to claim refund treating them separate and  distinct for making an application for refund exercising their right under Section 11B of the Act which had been examined by a three­ Judge Bench of the Court holding that the respondent was bound to  comply  with  Section  11B of the Act and the refund application was time­ barred in terms of Section 11B of the Act.

The Hon’ble Supreme Court observed that in the instant case, indisputedly the application was filed by the appellant as a buyer of the goods from the manufacturer who paid the duty under protest much after a period of limitation (six months) as prescribed under the mandate of law disentitled the claim of refund to the appellant in view of the  judgment of the full bench which held that holding that the purchaser of the goods was not entitled to claim refund of duty made under protest by the manufacturer without complying the mandate of Section 11B of the Act, 1944.

Accordingly, the appeal(s) were dismissed.

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