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Judgment
By this appeal, the appellant has challenged the Order-in-Appeal passed by the Commissioner (Appeals), Kochi, whereby the Commissioner (Appeals) has upheld the rejection of refund claim. It is the case of the appellant that they have filed a refund claim of Rs.22,16,229/- for the refund of service tax paid by them for the period October 2016 to December 2016 in terms of Notification No.27/2012-CE (NT) dated 18.06.2012. It is the case of the appellant that the appellant had exported goods during the said period without payment of duty but they were also not in a position to use the CENVAT credit of service tax liability under Rule 3 of CENVAT Credit Rules, 2004 which prompted them to file the refund application under Rule 5 of CENVAT Credit Rules, 2004.
The Adjudicating Authority vide Order-in-Original dated 28.12.2018 rejected the appellant's claim alleging that the claimant had not fulfilled the conditions of limitation laid down under Notification No.27 ibid. On appeal, the Commissioner (Appeals), Kochi, vide impugned order upheld the rejection of refund on the claim being time barred, which has resulted in the present appeal before this Forum.
Heard Shri Badrinath, learned Chartered Accountant for the appellant and Shri K.B.Nanaiah, learned Authorized Representative for the Respondent, I have gone through the documents placed on record and also gone through the various decisions relied on during the course of argument.
In such a situation, the jurisdictional Hon'ble High Court of Karnataka in one of its decisions in the case of CCE (Appeals), Bangalore Vs KVR Construction-2012 (26) STR 195 (Kar.) has observed as under:
"23. Now we are faced with a similar situation where the claim of the respondent/assessee is on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. If we consider this payment as service tax and duty payable, automatically, Section 11B would be applicable. When once there was no compulsion or duty cast to pay this service tax, the amount of Rs. 1,23,96,948/- paid by petitioner under mistaken notion, would not be a duty or "service tax" payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11B. Therefore, it is outside the purview of Section 11B of the Act."
The SLP against this order was dismissed by the Hon'ble Supreme Court.
In one another case, M/s DHL Express India Pvt. Ltd. Vs Commissioner of Service Tax-2021-TIOL-1830-HC-KAR-CUS, the Hon'ble jurisdictional High Court again dealt with the same situation and after analyzing Section 27 of the Customs Act vis-à-vis various case laws, has held as under:
"14. In the considered opinion of this Court, in the light of the judgment of Mafatlal Industries Ltd. (supra), wherein it has been categorically held that for refund of the amount, the duty paid without authority of law, the refund provisions under Section 27 of the said Act of 1962 are not applicable and the limitation applicable is in terms of the Limitation Act and not one year specified under Section 27 of the said Act of 1962.
In the present case, duty of customs payable on the transaction in question under the statute is Rs.4,743/-, which has been admitted by the respondent and on account of erroneous calculation, the duty has been paid in excess to the tune of Rs.42,26,975/-. The Authorities have turned down the claim of appellant on the ground of limitation. The claim of the appellant could have been corrected and the Tribunal has erred in observing that the payment of excess duty requires to be rectified under Section 154 of the said Act of 1962. The Authorities ought to have refunded the said excess amount to the appellant Company either upon their application or on an application made by the importer. In the case of Mafatlal Industries Ltd. (supra), it has been held that in order to claim excess duty paid, which falls outside the purview of the said Act of 1962, the limitation provided under Section 27 is not applicable. Hence, the appellant-company is certainly entitled for refund of duty.
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In the light of the law laid down by the Hon'ble Supreme Court and the other High Courts keeping in view the peculiar facts and circumstances of the case, it is crystal clear that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the said Act of 1962 will not be applicable. Therefore, the Tribunal has erred in law and fact, solely relying on Section 27 of the said Act of 1962 while dismissing the application of the appellant-Company."
Keeping in view of the settled legal position, I do not find any justification in the reasons adopted for rejection of the refund claim by the lower authorities and hence the impugned order is not sustainable in the eye of law. Therefore, the impugned order is set aside and the appeal is allowed with consequential benefits, if any, as per law.
(Order pronounced in the Open Court on 21/10/2021)