The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled in favour of General Motors, granting them a refund of excise duty despite procedural lapses.
The bench observed that substantive benefits under exemption notifications should not be denied solely due to procedural errors, provided the essence of the compliance has been met.
General Motors, manufacturer of automobiles had filed 50 refund claims for 20% of Central Excise duty and infrastructure cess paid on motor vehicles falling under heading 8703 of the Central Excise Tariff Act, 1985.
These vehicles, registered for use as taxis, were eligible for a refund under Notification No. 12/2012-CE dated March 17, 2012. The refund claims pertained to the period from December 2016 to June 2017.
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The refund claims were initially challenged by the department on the grounds that General Motors had failed to meet certain procedural conditions specified in the notification, particularly condition number 26. This condition required the manufacturer to credit the excess duty paid to their Account Current and submit the claim within six months.
The department issued a show cause notice on December 28, 2017, alleging that these conditions were not met, leading to the rejection of the claims by the Assistant Commissioner in March 2018. This decision was upheld by the Commissioner (Appeals) in October 2018.
General Motors contended that they had complied with all substantive requirements of the notification, although some procedural aspects were addressed after the initial claim submission.
The company submitted that denying the refund solely on procedural grounds was unjust, especially since the essential criteria for the refund—such as the vehicles being registered as taxis—were met. They further argued that procedural lapses should not override the substantive benefits entitled under the exemption notification.
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The bench noted that under Notification No. 12/2012-CE dated March 17, 2012, a vehicle with a passenger capacity of less than 13 persons, registered as a taxi, is eligible for a 20% reduction in excise duty, which must be refunded to the manufacturer. The manufacturer, in turn, must refund this amount to the dealer, who will pass it on to the end customer.
Despite the appellant’s minor procedural lapse—crediting the PLA after the six-month window—the basic condition of using the vehicle as a taxi and other substantive requirements were met.
The CESTAT agreed with General Motors. The bench observed that while the procedural requirements stipulated in Notification No. 12/2012-CE were not fully adhered to within the prescribed time frame, the substantive benefit of the exemption could not be denied.
The members of Ramesh Nair (Judicial) and C.L. Mahar ( Technical ) held that the essential conditions for the refund were fulfilled, and the procedural lapses were rectified subsequently. Citing previous judgments that emphasised the spirit of the notification over strict procedural adherence, the CESTAT ruled that the impugned orders were legally unsustainable.
Consequently, the CESTAT set aside the order denying the refund and allowed General Motors’ appeal.
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