The Kolkata Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that an excise duty refund cannot be termed as “Erroneous” if it was sanctioned following prevailing laws and CBEC clarifications.
Megha Plast Pvt. Ltd., the appellant claimed benefits under Notification No. 32/99-CE dated 08/07/1999, receiving refunds based on this notification. A Show Cause Notice ( SCN ) was issued alleging that the appellant had included freight charges in the assessable value, resulting in a higher refund.
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In addition to that, there was a discrepancy between the stock values shown in the balance sheet and the Daily Stock Register. The SCN covered the periods 2006-2007 and 2007-2008. The SCN invoked the extended period of limitation.
The main issue of the case was whether the appellant was right to include freight charges in the assessable value, resulting in a higher excise duty and thus a higher refund.
The appellant challenged the SCNs before the Kolkata bench of CESTAT arguing that their refund claims were based on the provisions of the prevailing law and notifications at the time.
The two-member bench comprising R. Muralidhar ( Judicial Member ) and Rajeev Tandon ( Technical Member ) observed both side’s arguments and referenced the ruling in RNB Carbides & Ferro Alloys Pvt. Ltd. v. Commr. of Central Excise, Shillong, which held that freight charges were not includible in the assessable value and that refunds sanctioned under previous legal interpretations could not be termed “erroneous” retroactively due to later changes in legal interpretation.
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The tribunal did not find any evidence of suppression of facts by the appellant as the returns were filed regularly and the refunds were granted monthly by the department. Hence, the extended period of invocation was deemed unjustified.
Therefore, the tribunal set aside the orders and allowed the appellant’s appeal with consequential relief as per the law, if applicable.
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