Once payments made during investigation are appropriated towards confirmed demand upon adjudication, they assume the character of duty; consequently, a refund claim must be filed within one year of the first appellate order, irrespective of the pendency of further appeals.

Per Mr. VASA SESHAGIRI RAO

This appeal is directed against Order-in-Appeal No. 117/2018 dated 28.03.2018 passed by the Commissioner (Appeals), Coimbatore, whereby Order-in Original No. 7/CE/AC/2017 dated 13.04.2017 (hereinafter referred to as “the impugned order”) rejecting the refund claim filed by the appellant on the ground of limitation under Section 11B of the Central Excise Act, 1944 has been upheld.

1.2 The facts, briefly stated, are that the appellant, M/s. Galaxy Match Company, Srivilliputhur, is engaged in the manufacture of safety matches falling under Chapter 36 of the Central Excise Tariff Act, 1985. Based on intelligence, officers of DGCEI conducted searches and alleged suppression of production and clandestine removal of excisable goods, resulting in issuance of a show cause notice dated 10.12.2008 proposing demand of duty. During the course of investigation, even prior to issuance of the show cause notice, the appellant paid amounts of Rs.5,00,000/- on 01.10.2007 and Rs.3,00,000/- on 05.12. 2007.Subsequently, adjudication culminated in confirmation of demand along with interest and penalty vide Order-in-Original dated 15.02.2011. The appellant discharged the amounts as determined therein. On appeal, the Commissioner (Appeals), vide Order-in-Appeal dated 25.01.2012, substantially reduced the duty demand to Rs.38,870/- with corresponding modification of penalty, thereby resulting in excess payment by the appellant.

1.3 The Department preferred an appeal before this Tribunal against the said Order-in-Appeal; however, the same was subsequently withdrawn and dismissed vide Final Order dated 18.08.2016. Consequent upon the reduction of demand and attainment of finality of proceedings, the appellant filed a refund claim on 26.10.2016 for Rs.12,80,456/- (subsequently restricted to Rs.12,63,056/-). The refund claim was rejected by the adjudicating authority as time-barred under Section 11B of the Central Excise Act, 1944, and the said rejection has been upheld in the impugned Order-in-Appeal.

2. Aggrieved by the aforesaid OIA, the appellant is in Appeal before this Tribunal.

3. The Ld. Advocate Shri B. Ganesan, appeared on behalf of the Appellant. The Ld. Authorized Representative Ms. Anandalakshmi Ganeshram, appeared for the Revenue.

4. The Learned Counsel for the Appellant submitted that: -

i. the amounts paid during investigation cannot be treated as “duty” but are in the nature of deposits made under protest. It is contended that payments made prior to issuance of show cause notice, particularly at the instance of departmental officers, partake the character of deposit and not duty.

ii. It was further argued that such payments are deemed to be under protest and therefore the limitation prescribed under Section 11B is not applicable. Reliance is placed on the decision in USV Ltd. vs CCE , 2016 (45) S.T.R. 83 (Tri.-Mumbai), wherein it has been held that the relevant date for limitation would arise only upon adjudication and not at the time of deposit.

iii. It was also contended that payments made during investigation are deemed to be under protest. Reliance is placed on Opel Alloys Pvt Ltd vs CCE, 2010 (249) ELT 408 (Tri.-Del.), G.S. Radiators Ltd vs CCE, 2005 (179) ELT 222 (Tri.-Del.) and Bajaj Auto Ltd vs CCE, 2007 (6) STR 356 (Tri.-Mumbai), wherein it has been consistently held that limitation does not apply to amounts paid under protest.

iv. The appellant further submitted that duty paid during pendency of appeal is also to be treated as payment under protest and limitation would not apply. Reliance is placed on the judgment of the Hon’ble Supreme Court in Mafatlal Industries Ltd. vs. Union of India, 1997 (89) ELT 247 (SC).

v. It was further argued that no separate letter of protest