Case Law Details
Comexx Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
We find that the decisions relied on by the appellant in his support were passed without appreciating the decision of Hon’ble Apex Court in the case of Doaba Co-operative Sugar Mills (supra) and in the case of Mafatlal Industries Limited vs. UOI – 1997 (89) ELT 247 (SC). In both these decisions it has been categorically held that refund under Central Excise Act would be governed by Section 11B. In these circumstances, we find that the refund claim filed by the appellant would be governed by the provisions of limitation prescribed under Section 11B of Central Excise Act, 1944. Since the refund was filed after expiry of limitation the same cannot be entertained.
FULL TEXT OF THE CESTAT JUDGEMENT
This appeal has been filed by M/s. Comexx against rejection of refund claim filed by the appellant.
2. The appellant M/s. Comexx are an authorized agent for M/s. Zhangjiagang Kailin Trading Company Limited located in China. The appellant were registered with Service Tax Commissionerate under the category of Business Auxiliary Service. Learned Chartered Accountant appearing for the appellant pointed out that they are engaged in booking orders for its foreign principals. He pointed out that appellant receive commission for the services in convertible foreign currency. The appellants have paid service tax on the said amount received as commission. He pointed out that they are seeking refund of the said amount of service tax paid by them as they were not liable to pay any service tax.
2. Learned Chartered Accountant further pointed out that Revenue has sought to reject the said refund claim on the ground that appellant did not produce evidence or documentary proof that the appellant has not passed the incidence of duty to its customers. It was also alleged that the appellant has not submitted documentary evidence like Contract/MoU to establish that the service provided by the appellant is in the nature of export of service under Export of Services Rules, 2005. The refund was also sought to reject on the ground of limitation as the refund claim was filed after one year from the date of payment of service tax as specified under Section 11B of the Central Excise Act, 1944 made applicable to service tax under Section 83 of the Finance Act, 1994. Learned Chartered Accountant relied on the following decisions to assert that if any amount is paid by mistake, same cannot be treated as duty and therefore, limitation applicable relating to time-limit under Section 11B is not applicable:-
(a) Hon’ble Karnataka High Court in the case of CCE (Appeals), Bangalore vs. KVR Constructions – 2012 (7) TMI – KARNATAKA HIGH COURT
(b) Tribunal decision in the case of Hitachi Metals (India) Pvt. Limited vs. CCE & ST, Gurgaon – 2019 (6) 3120 CESTAT Chandigarh.
(c) CESTAT New Delhi decision in the case of Oriental Insurance Company Limited vs. CCE & ST, New Delhi – 2020 (1) TMI 324 –CESTAT New Delhi.
In these circumstances, he argued that provisions of Section 11B can only be invoked if the refund relates to legally payable duty. He, however, admitted that they have filed the refund claim invoking the provisions of Section 11B themselves.
3. Learned Authorised Representative pointed out that there is plethora of decisions that all the refund claims under service tax or Central Excise are governed by limitation prescribed under Section 11B of Central Excise Act, 1944. He relied on the following decision:-
(a) 2018-TIOL-3265-CESTAT-AHM – Petronet LNG Limited vs. CC, Ahmedabad
(b) 2018 (15) GSTL 59 (Tri. LB) – Veer Overseas Limited vs. CCE, Panchkula
(c) 1987 (30) ELT 641 (SC) – Miles India Limited vs. Assistant Collector of Customs
(d) 2017 (5) GSTL 291 (Tri. Del.) – LNG Security Services Pvt. Limited vs. CST, Delhi.
4. We find that there are decisions on the either side of the issue. There were decisions holding that provisions of Section 11B are not applicable to any amount which was paid by mistake or which was not payable. In these decisions the arguments forwarded was that the amount paid is not duty and Section 11B applies only to duty. It is difficult to comprehend that as to under what circumstances the provisions of Section 11B of Central Excise Act, 1944 can be invoked to claim the refund. The only provision under Central Excise Act which permits refund is Section 11B of the Act. The decisions relied by learned Chartered Accountant held that any amount which was not due to be paid or which was paid by mistake is not duty and therefore, the provisions relating to limitation under Section 11B does not apply. It needs to be noted that entire Section 11B relates to refund of duty. This issue has been examined by Hon’ble Apex Court in the case of Collector of Chandigarh vs. Doaba Co-operative Sugar Mills – 1988 (37) ELT 478 (SC) wherein it has been observed that:-
“6. It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund. This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefor in the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law, the party might seek recourse to such alternative remedy as it might be advised. See the observations of this Court in Miles India Ltd. v. The Assistant Collector of Customs [1987(30) E.L.T.641 (S.C.) = 1985 E.C.R. 289].
7. In the aforesaid view of the matter the Tribunal was right. The appeal, therefore, has no merits and it is accordingly not entertained and dismissed. There is no order as to ”
The Tribunal in the case of Petronet LNG Limited vs. CC, Ahmedabad – 2018–TIOL-3265-CESTAT Ahmdabad has examined the above decision and came to following conclusion:-
“4. We have carefully considered the submissions made by both the sides and perused the record. We find that the limited issue to be decided by us is, whether refund claim filed by the appellant is governed by Section 27 of the Customs Act, 1962 and consequently it is time-barred or otherwise. We find that though the amount of refund claim is related to duty paid and the said amount is customs duty including the duty on the actual receipt quantity. Therefore, the entire amount paid by the appellant is nothing but customs duty only irrespective to the fact that certain portion of the duty was not payable. Under the Customs Act, any amount which is refundable has to pass the test provided under Section 27 of the Customs Act, 1962. In the said Act, there is no other provisions made for refund of any amount which was paid either without authority of law or was not payable for any reason. Therefore, all the refund claims under the Customs Act has to be dealt with under the provisions of Section 27. The departmental authority has no legal authority to process and sanction the refunds going out of Section 27 of the Customs Act, 1962. Therefore, the Customs authorities have to process and dispose the refunds only and only under Section 27 of the Customs Act, Though in the identical facts, the Hon’ble Bombay High Court in the judgment cited by Ld. Counsel, in case of refund, in respect of duty paid on short imported goods held that limitation under Section 27 is not applicable. However, the Hon’ble Supreme Court in various judgments held that all the refund claims of customs and excise has to be governed by Section 27 of the Customs Act or Section 11B of the Central Excise Act, 1944. In the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills – 1988 (37) E.L.T. 478 (S.C.), the Hon’ble Apex Court held as under :-
“6. It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund. This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefore in the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law, the party might seek recourse to such alternative remedy as it might be advised. See the observations of this Court in Miles India Ltd. v. The Assistant Collector of Customs [1987 (30) E.L.T. 641 (S.C.) = 1985 E.C.R. 289].
7. In the aforesaid view of the matter the Tribunal was right. The appeal, therefore, has no merits and it is accordingly not entertained and dismissed.
There is no order as to costs.”
From the above judgment, it is clear that even if there is refund of duty which was recovered without authority of law, the refund made before the departmental authority, limitation provided under Customs/Central Excise Act shall be applicable. The Hon’ble Supreme Court has held that authorities functioning under an Act is bound by its provisions and any refund proceedings beyond the limitation provided under the Customs/Central Excise Act, the same can be initiated in the Civil Court. Accordingly, the time limit under the Customs Act is applicable. We are also of the view that the Tribunal being creature of the statute and under Customs Act have to deal with any refund case within four corners of the Customs Act, since the provisions for refund is only provided under Section 27 of the Customs Act, 1962. This Tribunal also cannot by-pass the same and decide the refund claims under general law. The Hon’ble Supreme Court in a land-mark judgment in the case of Mafatlal Industries Limited v. UOI – 1997 (89) E.L.T. 247 (S.C.) has endorsed the aforesaid judgment in the case of Doaba Co-operative Sugar Mills (supra). In the case of UOI v. Namdang Tea Estate – 2004 (164) E.L.T. 132 (S.C.), the Hon’ble Supreme Court held that claim filed beyond the stipulated time is not admissible. In the case of UOI v. VIP Industries Limited – 1998 (101) E.L.T. 8 (S.C.) the Hon’ble Supreme Court in the facts of the case held that assessee filing refund claim for past four years following a favourable decision on classification in the case of a manufacturer of similar goods, set aside the Hon’ble High Court order which directed the Assistant Commissioner to consider the claim for beyond limitation period without taking into consideration the question of limitation. Accordingly, the High Court judgment was set aside. In the case of Porcelain Electrical Manufacturing Company v. Collector of Central Excise, New Delhi – 1998 (98) E.L.T. 583 (S.C.), the Hon’ble Supreme Court held that refund claim filed before the departmental authorities to be governed by the time limit provided under the statute, general law of limitation not available. The decisions where assessee has invoked extraordinary jurisdiction of the High Courts and the Courts have applied the period of limitation of three years, the same is inapplicable to cases where the refund application has been moved before the Revenue authority. The decision in the case Escorts Limited v. UOI – 1998 (97) E.L.T. 211 (S.C.), the Hon’ble Apex Court has held that application for refund is presented before the Customs authority under Section 27 of Customs Act, 1962, the said authority must necessarily operate within the four corners of the said Act and cannot have recourse to Section 72 of the Indian Contract Act, 1872 and the delayed application rightly rejected as time barred. The Hon’ble Supreme Court in the case of UOI v. Amines and Plasticizers Limited held that refund claims filed beyond the period prescribed under Customs Act, 1962, the High Court order directing the Revenue to ignore the period of limitation and dispose of the refund claim stands set aside in the light of law declared in Mafatlal’s case and the refund claim was held to be dismissed as barred by time. The Hon’ble Supreme Court in the case of UOI v. Kirloskar Pneumatic Company – 1996 (84) E.L.T. 401 (S.C.) held that the High Courts under writ jurisdiction cannot direct the Customs authorities to ignore the time limit prescribed under Section 27 of the Customs Act, even though High Court itself may not be bound by the time limit of the said Section, Articles 226 and 227 of the Constitution of India, in view of the above judgment, only the High Court, under writ jurisdiction, can exercise the inherent power provided in it but the said power cannot be enjoyed by the Tribunal. In the case of Paros Electronics Pvt. Limited v. UOI – 1996 (83) E.L.T. 261 (S.C.), the Hon’ble Supreme Court held that customs authorities cannot grant refund, being a creation of statute they are bound by limitation of Section 27 of the Customs Act.
5. On the analysis of above judgments of Hon’ble Supreme Court, the gist is that any refund filed before the Customs/Central Excise authorities can only process the claim under Customs/Central Excise Acts and the departmental authorities have no jurisdiction to go beyond the provisions made under the Act and limitations provided under Section 27/Section 11B.”
5. A similar view has also been given by Larger Bench of the Tribunal in the case of Veer Overseas Limited vs. CCE, Panchkula – 2018 (15) GSTL 59 (Tri. LB). In the said decision, in Para 8 and 9 the Larger Bench examined the decisions of various Courts where Section 11B has been held to be not applicable to refund of any amount made under any mistake of law. The Larger Bench, after examining the said issue, has come to the following conclusion:-
“7. What is crucial is that the appellants paid the claimed amount as service tax. They have approached the jurisdictional authority of service tax for refund of the said money. It is clear that the jurisdictional service tax authority is governed by the provisions of Section 11B as the claim has been filed as per the said mandate only. Here, we have specifically asked the Learned Counsel for the appellant under what provision of law he is seeking the return of the money earlier paid. He admitted that the claim has been preferred in terms of the provisions of Section 11B. If that being the case, it cannot be said that except for limitation other provisions of Section 11B will be made applicable to the appellant. The Learned Counsel also did not advance such proposition. He repeatedly submitted that the amount is paid mistakenly. The same is not a tax and should be returned without limitation as mentioned in Section 11B. We are not convinced by such submission.
8. Here it is relevant to note that in various cases the High Courts and the Apex Court have allowed the claim of the parties for refund of money without applying the provisions of limitation under Section 11B by holding that the amount collected has no sanctity of law as the same is not a duty or a tax and accordingly the same should be returned to the party. We note such remedies provided by the High Courts and Apex Court are mainly by exercising powers under the Constitution, in writ jurisdiction. It is clear that neither the jurisdictional service tax authority nor the Tribunal has such constitutional powers for allowing refund beyond the statutory time-limit prescribed by the law. Admittedly, the amount is paid as a tax, the refund has been claimed from the jurisdictional tax authorities and necessarily such tax authorities are bound by the law governing the collection as well as refund of any tax. There is no legal mandate to direct the tax authority to act beyond the statutory powers binding on them. The Hon’ble Supreme Court in Mafatlal Industries Ltd. (supra) categorically held that no claim for refund of any duty shall be entertained except in accordance with the provisions of the statute. Every claim for refund of excise duty can be made only under and in accordance with Section 11B in the forms provided by the Act. The Apex Court further observed that the only exception is where the provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. We note in the present case there is no such situation of the provision of any tax levy, in so far as the present dispute is concerned, held to be unconstitutional. As already held that the appellant is liable to pay service tax on reverse charge basis but for the exemption which was not availed by them. We hold that the decision of the Tribunal in Monnet International Ltd. (supra) has no application to decide the dispute in the present referred case. We take note of the decision of the Tribunal in XL Telecom Ltd. (supra). It had examined the legal implication with reference to the limitation applicable under Section 11B. We also note that the said ratio has been consistently followed by the Tribunal in various decisions. In fact, one such decision reached Hon’ble Supreme Court in Miles India Limited v. Assistant Collector of Customs – 1987 (30) E.L.T. 641 (S.C.). The Apex Court upheld the decision of the Tribunal to the effect that the jurisdictional customs authorities are right in disallowing the refund claim in terms of limitation provided under Section 27(1) of the Customs Act, 1962. We also note that in Assistant Collector of Customs v. Anam Electrical Manufacturing Co. – 1997 (90) E.L.T. 260 (S.C.) referred to in the decision of the Tribunal in XL Telecom Ltd. (supra), the Hon’ble Supreme Court held that the claim filed beyond the statutory time limit cannot be entertained.
9. The Apex Court in Mafatlal Industries Ltd. (supra) observed that the Central Excise Act and the Rules made thereunder including Section 11B 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 and in accordance therewith. The Apex Court emphasized 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”.
10. Having examined various decided cases and the submissions of both the sides, we are of the considered view that a claim for refund of service tax is governed by the provision of Section 11B for period of limitation. The statutory time limit cannot be extended by any authority, held by the Apex Court.”
6. In the aforesaid circumstances, we find that the decisions relied on by the appellant in his support were passed without appreciating the decision of Hon’ble Apex Court in the case of Doaba Co-operative Sugar Mills (supra) and in the case of Mafatlal Industries Limited vs. UOI – 1997 (89) ELT 247 (SC). In both these decisions it has been categorically held that refund under Central Excise Act would be governed by Section 11B. In these circumstances, we find that the refund claim filed by the appellant would be governed by the provisions of limitation prescribed under Section 11B of Central Excise Act, 1944. Since the refund was filed after expiry of limitation the same cannot be entertained.
7. As regards the issue of unjust-enrichment, we find the same is not dealt in the impugned order. This question would not arise as a refund is not sanctioned on merit. In these circumstances, refund is not admissible being barred by limitation as prescribed under Section 11B of Central Excise Act, 1944. In view of the claim being barred by limitation, other issues do not remain relevant.
We find no merit in the appeal and the same is dismissed.
(Pronounced in the open court on 18.03.2020)
