SATENDRA VIKRAM SINGH

1. M/s. Aryan Packaging Industries, GIDC, Vapi (Appellant) have filed refund claim for Rs.2,84,873/- with Jurisdictional Assistant Commissioner which was rejected on the ground that there is no provision for refund under Central Excise Act, 1944. Their appeal before learned Commissioner (Appeal) was also rejected vide impugned order dated 07.01.2021. Hence, appellant has filed the present appeal.

1.1 The facts of the case are that during EA 2000, the audit officers found that the appellant had availed Cenvat Credit of service tax of Rs.2,45,544/- on outward freight during the year 2016-17 and 2017-2018 (up to June 2017). As per the appellant, credit of above service tax was admissible to them as the said service (outward transportation) falls within the definition of the Input Service as defined under Rule 2(l) of Cenvat Credit Rules, 2004. The officers however objected to it and therefore, appellant paid back the said Cenvat Credit of Rs.2,45,544/- alongwith interest of Rs.39,329/- on 15.05.2018 and filed declaration for settling the issue under the provisions of Section 11A(2B) of the Central Excise Act, 1944. Subsequent to decision of Hon’ble Supreme Court in the case of M/s.Roofit Industries, M/s. Emco Limited, CBIC issued a Circular No.1065/4/2018-CX dated 08.06.2018 which allowed Cenvat Credit of service tax paid on outward transportation incurred upto the buyer’s premises provided contract for sale is on FOR basis. The appellant therefore, considered themselves eligible to above Cenvat Credit and since, they had reversed the same, they filed the refund application with the Jurisdictional authorities.

2. The appellant has taken following grounds in their appeal:-

• Learned Commissioner (Appeal) has observed that though the appellant is entitled to Cenvat Credit of above service tax but they cannot claim the refund as the issue stands concluded during audit under Section 11A(2B) of the Central Excise Act, 1944. The matter cannot be opened because as per the provisions of this Section, department has no power to issue show cause notice subsequent to appellant filing the declaration for settlement of their case.

• As per Article 265 of the Constitution, no tax shall be levied or collected except by the authority of law. They draw reference from the decision of Hon’ble Culcutta High Court in the case of State of West Bengal Vs. Suresh Chandra Bose reported in 1980 (45) STC 118 (Cal). In another case of Commissioner of Sales Tax Vs. Auraiya Chamber of Commerce, Allahabad reported in 1986 taxmann.com 903 (SC), it has been held that where assessee paid the tax on the belief that tax was due and payable but subsequently found that the provision for levy of sales tax on forward contract was ultra vires, then such sum should be refunded.

• In the case of Parle Products Ltd. Vs. Union of India reported in 1986 taxmann.com 398 (Bombay), it was held that the right to relief under Section 72 of the Indian Contract Act extends to money paid under mistake of law i.e. ‘mistake in thinking that the money paid was due when in fact, it was not due.’ In the case of Unitech Machines Ltd. Vs. Commissioner of C. Ex. & S.T. Meerut-1 reported in 2015 (40) STR 499 (Tri.- Del.), it was held that whatever service tax has been paid by the appellant to the job worker, appellant is entitled to take Cenvat Credit.

• The appellant in this case, was not required to reverse the Cenvat Credit but due to objection by the audit party, they had to pay the amount alongwith interest, refund of which is allowable to them. They rely on the decision of Hon’ble Bombay High Court in the case of Commissioner of Central Excise, Thane Vs. Clariant (I) Ltd., reported in 2015 (319) ELT 646 (Bom.) wherein, it has been observed that refund is allowed for voluntary payments made by the appellant.

• The appellant also relied on the decision of CESTAT Bangalore in the case of NSP Electronics Ltd. Vs. Commissioner of Central Excise, Bangalore reported at 2