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2005 Supreme(Mad) 499
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. MARKANDEY KATJU & THE HONOURABLE MR. JUSTICE F.M. IBRAHIM KALIFULLA
Commissioner of Central Excise - Appellant
Versus
M/s.ITC Ltd. - Respondents
R.C.P.No.8 of 2003
Decided On : 21 March 2005
The determination of whether duty was paid under protest is a question of fact and should not be interfered with unless based on no evidence or perverse.
Headnote:
Central Excise - Refund Claim - Section 35 H (1) of the Central Excise Act, 1944 - Rule 191BB - Rule 233-B - Section 11B - Modvat Credit - Payment under Protest - Unjust Enrichment - Supreme Court Interpretations
Fact of the Case:
The assessee availed modvat credit on inputs used in the manufacture of printed cartons, some of which were exported without payment of duty. The revenue contended that the assessee was not entitled to modvat credit on such inputs. The assessee expunged the credit and subsequently filed a refund claim, which was rejected as time-barred under Section 11B.
Finding of the Court:
The Tribunal held that the payment made by the assessee was under protest, and hence there was no limitation to the claim for refund. The Court agreed with the Tribunal's view and observed that the question of whether duty was paid under protest is a question of fact.
Issues: The issues revolved around the entitlement to modvat credit, the time limitation for filing a refund claim under Section 11B, and whether the payment was made under protest.
Ratio Decidendi: The Court emphasized that the determination of whether duty was paid under protest is a question of fact and should not be interfered with unless based on no evidence or perverse. It also highlighted the interpretations of Rule 233-B and the Supreme Court's stance on the meaning of 'under protest.'
Final Decision: The reference petition was rejected as the Court found no merits in it.
The Honourable Chief Justice:
This is a reference application on behalf of the revenue under Section 35 H (1) of the Central Excise Act, 1944, by which the following questions have been sought to be referred to us for our opinion.
“1. Is the Hon’ble Tribunal right in holding that the payment of duty vide PLA No.580 dated 27.10.92 has not been paid voluntarily?
2. Can the letter OC.No.1124/97 dated 02.09.92 of the Superintendent of Central Excise asking the assesses to reverse an amount of Rs.5,98,000/- being irregular Modvat credit availed, and other correspondences in continuation, be considered to have raised a dispute since it is not a SCN issued under Section 11 A? Can the Action of the assessee debiting the said amount vide PLA No.580 dated 27.10.92 be considered payment under protest since no letter filed on that date giving any grounds for payment under protest and subsequently also filed no representation for payment made under protest as per sub-rule 5 of Rule 233B?
3.Can the letter of protest dated 31.10.92 filed by the assessee can have the retrospective effect of filing protest under Rule 233B? ”
2. Heard the learned counsel for the parties.
3. The facts of the case have been given in the judgment of CEGAT dated 26.04.2002, by which the CEGAT set aside the order of the Commissioner (Appeals), who had rejected the assesse’s claim for refund. The CEGAT by its order directed that the refund be given to the assessee, unless the duty has been passed on to the consumer.
4. The assessee is engaged interalia in the manufacture of Printed Cartons at its factory at Thiruvottiyur, Chennai. It avails modvat credit on various inputs used in the manufacture of printed cartons. Some of the printed cartons are exported without payment of duty under Rule 191BB of the Central Excise Rules, 1944. The revenue was of the opinion that the assessee was not entitled to modvat credit on inputs used in the manufacture of printed cartons, which were removed without payment of duty under Rule 191BB. On repeated request of the department, the assessee expunged the credit so taken on 27.10.92, even though it contended that the credit availed by it was in accordance with law. Within three days thereafter, i.e., on 30.10.92, the assessee intimated the department that this payment was made “under protest”. Subsequently, the department took a view that the inputs used by the assessee for manufacture of goods cleared under Rule 191 BB for exports were entitled to modvat credit. Accordingly, the assessee filed a refund claim for Rs.5,98,944/- on 25.7.95, which had been expunged on 27.10.92. The refund claim was rejected on the ground that the same was time barred under Section 11B of the Central Excise Act, 1944.
5. Section 11B of the Central Excise Act, 1944, as it stood at the relevant time, provided for a period of limitation of 6 months for filing refund claims. However, the proviso to Section 11B (1) states that the above limitation shall not apply where any duty has been paid under protest.
6. The stand taken by the Department was that since the assessee expunged the credit on 27.10.92 without any protest on that date, the refund claim made by it was barred by limitation and the proviso to Section 11B(1) does not apply.
7. The Tribunal reversed the judgment of the Commissioner (Appeals), and held that the payment made by the assessee was under protest, and hence there was no limitation to the claim for refund.
8. The Tribunal on a consideration of the facts observed that the question whether the payment vide PLA No. 580 dated 27.10.92 was under protest or not has to be determined after taking into accounts all the facts and circumstances. From the records it appeared that the amount had not been paid voluntarily, but only after several correspondences between the assessee and the revenue in which the assessee had been urging that they are entitled to the benefit of the notification No.33/90 (NT), and that they were also entitled to modvat cre
