Excise Refund Claim cannot be Reopened Once Earlier Appellate Findings Attains Finality: CESTAT Dismisses BHEL Appeal [Read Order]

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) dismissed the appeal filed by Bharat Heavy Electricals Ltd. holding that once findings recorded by the Commissioner (Appeals) in an earlier round of litigation attain finality, the assessee cannot re-agitate the same issues in subsequent proceedings, and the refund claim remains governed by limitation under Section 11B of the Central Excise Act, 1944.

Bharat Heavy Electricals Ltd (BHEL), the appellant, is a public sector undertaking engaged in the manufacture of transformers, diesel locomotives, and parts thereof. The appellant paid central excise duty on clearances made between January 2014 and March 2014, even though the goods were exempt under Sl. No. 336 of Notification No. 12/2012-CE dated 17 March 2012.

Since the buyer had not reimbursed the duty and had issued exemption certificates, the company filed a refund claim of ₹1,53,36,799 on 24 March 2015 under Section11B of the Customs Act.

The refund claim was initially rejected. In the first round of litigation, the Commissioner (Appeals), by order dated 26 March 2019, set aside the rejection and remanded the matter with specific directions.

In the remand proceedings, the adjudicating authority allowed refund of ₹38,24,252 relating to March 2014 and rejected the balance amount pertaining to January and February 2014 as time-barred. This view was upheld by the Commissioner (Appeals) in the impugned order dated 24 February 2021. Aggrieved, BHEL approached the CESTAT.

The appellant’s counsel argued that the relevant date for computing limitation should be the date of finalisation of provisional assessment, which was 16 January 2015, and not the date of payment of duty. They argued that the assessments were contract-based and spread over several months, and that the refund filed within two months of final assessment was within time. The counsel also argued that earlier departmental practice and earlier refund sanctions supported the appellant’s stand.

The revenue’s authorized representative argued that the issue of limitation and relevant date had already been conclusively decided by the Commissioner (Appeals) in the earlier order dated 26 March 2019. Since neither party had challenged that order, the findings had attained finality. It was argued that the refund claim for January and February 2014 was clearly beyond one year from the date of payment of duty and was rightly rejected.

The two-member bench comprising P. Dinesha (Judicial Member) and Sanjiv Srivastava (Technical Member) examined the record and observed that the findings recorded by the Commissioner (Appeals) in the earlier round had not been challenged by either side.

The Tribunal observed that those findings, including the determination of the relevant date under Section 11B, had attained finality and were binding in subsequent proceedings. The Tribunal pointed out that allowing the appellant to reopen settled issues would be contrary to the principles of res judicata and judicial discipline.

The Tribunal further observed that the adjudicating authority and the Commissioner (Appeals) had correctly applied the earlier appellate directions and had rightly held the refund for January and February 2014 as time-barred, while allowing refund for March 2014.

In view of these findings, the Tribunal held that the appeal lacked merit and dismissed it in entirety.

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