By TIOL News Service

CHENNAI, JUNE 20, 2017: THIS is a Revenue appeal.

The respondent is engaged in the manufacture of motorcars [Ch. 87]. During the period under dispute, they cleared the motorcars on payment of the normal rate of duty of 32% adv.Some of those motorcars were registered by the Transport authorities as taxis.

As per notification No.3/2001-CE, the respondent is eligible for exemption of special excise duty of 16% advalorem, if condition No.40 of the notification is fulfilled. Notification also prescribes the procedure for availing the concessionary rate, which is to be claimed as a refund.

It is stated that the refund claims were filed by the respondent after the expiry of six months from the date on which the duty was paid on the motor vehicles.

Therefore, the AC, CEX issued SCNsproposing to disallow the claims and upon adjudication, the 31 claims for refund of Rs.22,95,991/- were rejected as time barred. These orders were upheld by the Commissioner(A).

However, the CESTAT allowed the appeal by observing that the period of limitation u/s 11B is one year and so the notification cannot whittle down the period provided under the statute thereby allowing the appeal filed by the respondent assessee.

It is against this order that the department has come up in appeal before the High Court.

The following substantial questions of law were framed by the High Court -

1. Whether Notification No.3/2001 dated 01.03.2001 (Sl.No.225 read with condition 40) is a special provision for a specific purpose comprising a self contained code governing the procedure and conditions for grant of refund in respect of vehicles registered as taxis and ambulances?

2. Whether the Tribunal was correct in applying the time limit specified in the general provision of Section 11B of the CEA, 1944 in preference to the time limit contained in the special provision contained in Notification 3/2001 particularly in view of the observation of the Hon'ble Supreme Court in the case of Raghuvar (India) Ltd. = 2002-TIOL-711-SC-CX-LB that the provisions of the special scheme alone will govern such a situation and there is no scope for reading the stipulations contained in a general provision?

3. When an assessee has accepted an exemption notification and claimed refund under the same, is he entitled to say that the conditions stipulated therein, including the time of limitation, are not applicable to him and would take shelter under general provisions of law?

After considering the submissions and reproducing the impugned notification and sections 5A and 11B of the CEA, 1944, the High Court placed reliance on a plethora of case laws and observed thus -

Maintainability:

++ For the purpose of refund of the excise duty paid by the respondent assessee, it has to fulfill the conditions stipulated in the notification, failing which they are not entitled to the benefit of exemption, under such notification. Therefore, the contention of the respondent assessee that the instant case relates to the determination of rate of duty of excise and so the appeal will not lie within the jurisdiction of this court, cannot be accepted . The respondent assessee has claimed refund of excise duty by accepting the conditions prescribed in the notification No.3/2001-CE dated 01.03.2001. Without challenging the said notification, the respondent assessee cannot have any right to claim the refund under Section 11B of the Act.

Merits:

++ The notification under dispute provides partial exemption of excise duty on fulfillment of conditions. Section 5Aauthorises the issuance of such notification with such conditions and the source of granting absolute or partial exemption and the way of giving the exemption, by way of refund on fulfillment of post condition of removal and subject to the proof that excess excise duty is returned to the customer makes the notification as a complete code. The concept of unjust enrichment is also taken care in this notification and on fulfillment of return of excess excise duty only the benefit is given to the manufacturers. Therefore, Section 11B of the Act would have no role to play in the instant case.

++ The Hon'ble Supreme Court in the case of Sarabhai M.Chemicals = 2004-TIOL-104-SC-CX has held that the conditions prescribed in the exemption notification have to be strictly construed. Therefore, the notified time limit has to be strictly construed and there is no scope for liberty in implementation of the condition.

++ The said notification is issued by exercising the powers under Section 5A of the Central Excise Act, 1944. Therefore, the said provision is an independent one and Section 11B of the said Act would not apply to the notification issued under the powers vested .

Therefore, the substantial questions of law were answered in favour of the appellant Revenue.

The order passed by the CESTAT is set aside and the Civil Miscellaneous Appeal was allowed.

(See 2017-TIOL-1136-HC-MAD-CX)