Sepulchre Brothers Pvt. Ltd. vs Commissioner Of GST & Central Excise

M. Ajit Kumar, Member (T)

This appeal arises out of Order in Appeal No. 26/2014 dated 11.3.2014 passed by the Commissioner of Central Excise (Appeals), Chennai.

Brief facts of the case are that the appellant import ‘Mould Release Agent’ from abroad and dilute the same by adding demineralized water. Though the Appellant felt that the activity does not amount to manufacture, they obtained Central Excise registration and pay central excise duty under protest. The department drew two test samples but the test result was not informed to the Appellant. Hence they filed a refund claim for the duty paid under protest but the same was returned by the Deputy Commissioner of Central Excise as premature. On appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.

Shri A.S. Harihara Kumar, learned consultant appeared for the appellant and Shri Harendra Pal Singh, learned AR appeared for the department.

3.1 The learned consultant submitted that as per section 11B of Central Excise Act, 1944, on receipt of refund application, the AC / DC has to examine the claim and pass an order either granting refund or credit the refundable amount to the fund or reject the claim by passing a speaking order. Section 11B of the Act nowhere prescribes to return the refund claim received from the appellant. Therefore, returning the claim application for refund was not the correct disposal as per section 11B of the Act. He relied on the judgment of the Hon'ble High Court of Kerala in the case of Sudha Ramachandran Vs. UOI reported in 2011 (24) STR 175 (Ker.) wherein it has held that when an application for refund under sec. 11B is preferred, the authority concerned is bound to adjudicate and pass speaking order on such claim for refund and there is no provision for return of refund application. The matter cannot be held back by the Department for so many years on the mere suspicion that the goods are leviable to tax.

3.2 The learned AR Shri Harendra Pal Singh supported the findings in the impugned order.

Heard both sides. During the oral hearing before this Tribunal on 10/11/2023, the learned AR requested for time to verify whether the chemical Examiners report has been received and whether further proceedings have been initiated. The same was allowed. During the subsequent hearings the learned AR has shown correspondences with the Department dated 10/11/2023 and 13/02/2024 for which the R and T Section, GST North Commissionerate, Chennai has replied by email dated 14/02/2024, stating that there is no file in R&T Section in r/o the Appellant. That enquiries were made with the Tiruvottiyur Division where the unit is falling but the officers are new to that Division, and they do not have any idea about it.

I find that the Board by its Circular No. 670/61/2002-CX, dated 1-10-2002 issued from F. No. 268/51/2002-CX.8 has drawn attention to its earlier Circular No. 398/31/98-CX., dated 2-6-98 [1998 (100) E.L.T. T16] and directed to fix responsibility for not disposing of the refund/rebate claims within three months from the date of receipt of application, the Board has reiterated its earlier stand on the applicability of Section 11BB of the Act. Significantly, the Board has stressed that the provisions of Section 11BB of the Act are attracted “automatically” for any refund sanctioned beyond a period of three months. I find that the return of refund application is not a recognised mode of disposal of the refund claim as per the Central Excise Act, 1944.

The above instructions would be applicable in Central Excise cases also. The delay of more than 10 years in finalizing the matter is shocking. No seriousness has been shown in the matter by the Divisional Authorities even though they were aware of the matter being pursued by the Appellant before higher Appellate forums. This being so the refund claim is restored back to the files of the learned Original Authority for proper disposal. In case the claim is sought to be rejected partially or in full, notice may be given to the Appellant following the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter disposing of the refund claim. The appellant should also co-operate with the adjudicating authority in completing the process expeditiously, which in any case should be within ninety days of receipt of this order. Considering the huge delay and hardship already faced by the Appellant, it is desirable that the jurisdictional Commissioner monitor the timely disposal of the matter in terms of departmental instructions and the directions given herein to the Original Authority, for which a copy of this order is being marked to him. The appeal is allowed and disposed of as per the above terms.