Reversing Credit under protest: CESTAT upholds Refund claim [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), upheld refund claim as there was reversal of credit under protest.

The appellant, M/s. Ponni Sugars (Erode) Ltd is engaged in manufacture of sugar and are registered with the Central Excise Department and filed for refund claim. The claim was filed for refund of the payment made by them under Rule 6 of CENVAT Credit Rules, 2004 on clearance of the waste products namely bagasse and press mud which emerged during the course of manufacture of sugar.

After due process of law, the refund sanctioning authority rejected the refund as time barred under the provisions of Section 11B of the Central Excise Act, 1944 as the credit has been reversed between 1.5.2010 and 1.5.2013 whereas the refund claim has been filed only on 19.9.2014 which is beyond one year.

The Counsel for the appellant stated that in the intimation, the appellant had informed the Department that the reversal is made by them only by abundant caution and they reserve their rights to go in appeal in case of need. The department did not consider this letter as a mark of protest. It was argued by the Counsel that such intimation makes that the credit has been reversed under protest. Therefore, the limitation envisaged under Section 11B of the Central Excise Act, 1944 will not apply.

A Coram consisting of C S SulekhaBeevi, Judicial Member held that “It clearly shows that the issue was under litigation which is indication of protest / disagreement. The factual matrix would be that the issue was in dispute and the appellant was disputing the amount alleged to be payable by them. The letters issued by the appellant every month intimating the reversal as well as reserving their right for litigation would show that the credit has been reversed under protest.”

“I am of the view that the allegation that the refund claim is hit by time-bar cannot sustain and requires to be set aside” the Tribunal ruled.

M.N. Bharathi, Advocate appeared for the Appellant and M. Ambe, DC (AR) appeared for the Respondent

To Read the full text of the Order CLICK HERE

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