Limitation Period of One Year applicable to Excise Refund Claims: Karnataka HC [Read Judgment]

The Karnataka High Court held that refund applications filed under the CENVAT Credit Rules, 2004 cannot be without reference to limitation or time prescribed under Section 11-B of the Central Excise Act, 1944.

Appellant is engaged in the manufacture and export of rubber contraceptives falling under Chapter Heading 40141010 of Central Excise Tariff Act (CETA), 1985 and it is a 100% Export Oriented Unit holding Private Bonded Warehousing Licence. The Appellant is availing CENVAT credit facility under CENVAT Credit Rules (CCR), 2004. The Appellant filed three refund claims under Rule 5 of CENVAT Rules.

The original authority by order rejected the claim on the ground it was time-barred. Commissioner (Appeals) set aside the said order on the ground that limitation prescribed under Section 11B of the Central Excise Act, 1944 does not apply for an accumulated Cenvat Credit. Revenue filed appeals before CESTAT and tribunal after considering the rival contentions by order has allowed the appeal of Revenue by setting aside the order of the appellate authority and restored the order of the original authority by opening that refund claim has to undergo the scrutiny of limitation provided under the Act and as such accepted the plea of the revenue.

The division bench consisting of Justice Aravind Kumar and Justice E.S. Indiresh while answering the substantial question of Law held that refund applications filed under the CENVAT Credit Rules, 2004 cannot be without reference to limitation or time prescribed under Section 11-B of the Central Excise Act, 1944.

“We have already held that provisions of Section 11-B of Central Excise Act would be applicable though Section 11-B of the Act does not cover a refund of Cenvat credit, notification No.5/2006 makes it explicitly clear that for the purpose of relevant data for computing one year prescribed under Section 11-B, it has to be determined by applying Rule 5 of Cenvat Credit Rules, 2004, necessarily the refund claims ought to have been filed within one year from the relevant date as specified in Section 11-B,” the division bench said.