HI-TECH MACHINERY Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is a job worker engaged in the machining of plastic. The appellant had done machining job for one M/s. Salasar Alloys & Steel Industries Pvt. Ltd. during the period 1 -4 -2008 to 31 -8 -2009. The appellant was under the belief that the Service Tax is leviable on the job done under the head 'Business Auxiliary Service' and accordingly charged Service Tax in it's bills, and having collected the same deposited with the Revenue. Then during audit by the Revenue in October, 2009 it was observed that the activity done by the appellant for registered manufacturer of goods (principal manufacturer) is exempted under Notification No. 8/2005, dated 1 -3 -2005. Thus, no Service Tax was leviable on the activity done by the appellant. Earlier Circular No. 2/91 -CX 3, dated 4 -1 -1991 was issued where the exemption was available to the assessee as a job -worker. In such case, the assessee was at liberty to pay Service Tax. Further the payment made by the appellant cannot be treated as duty/tax, but it would be deemed as deposit with the Government. Further, it was observed in Audit Note dated 9 -10 -2009 that on the basis of invoices of the appellant/job -worker, a total amount of Rs. 1,88,115/ - (including education cess) is not admissible to the principal manufacturer i.e. M/s. Salasar Alloys & Steel Industries Pvt. Ltd. as the input tax benefit. The Superintendent (Adj.) directed the principal manufacturer to pay or reverse the Service Tax credit availed wrongly to the Govt. Account forthwith under intimation to the Revenue. As a result, the principal manufacturer reversed the credit taken by them which included tax amount of Rs. 1,33,157/ - pertaining to the appellant concerned and also issued debit note to the appellant and recovered the amount of tax paid earlier by way of debit note dated 31 -10 -2009. The appellant in the facts and circumstances filed claim for refund on 18 -2 -2010 within one year of the audit objection being 9 -10 -2009. The Deputy Commissioner vide Order -in -Original dated 23 -8 -2010 allowed refund of Rs. 1,12,784/ - by way of cash refund and Rs. 13,792/ - by way of credit to the Cenvat account to the appellant denying the amount of refund with respect to tax paid prior to 19 -2 -2009. The Revenue challenged the order of refund before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) set aside the Order -in -Original granting refund on the ground that the refund is hit by limitation under Section 11B(1) of the Central Excise Act, 1944 read with Section 83 of the Finance Act, as the tax was paid more than one year prior from the date of claim for refund. Being aggrieved, the appellant has preferred this appeal before this Tribunal.

(2.) IT is vehemently stated by the appellant that under Section 11B, claim of refund of any duty or tax should be made before expiry of one year from the relevant date. The relevant date in the present case is the date of audit which is 19 -10 -2009, on which date the claim arose and on 31 -10 -2009, when Debit Note was issued. The appellant further relied on the ruling in the case of K.V.R. Constructions v. CCE, Bangalore - : 2010 (17) S.T.R. 6 (Kar.) where the Hon'ble High Court of Karnataka held that refund arising out of Service Tax paid, found not liable to be paid by the impugned order thereunder, amount paid by assessee to Revenue is treated as deposit in the hands of the Government. Section 11B of the Central Excise Act providing for refund of duty, sums deposited when held as deposit, no necessity to make claim invoking the Section 11B ibid. Order denying the refund was quashed and direction to refund was given under the provisions of Section 11B of the Central Excise Act read with Section 83 of the Finance Act.

(3.) HAVING considered the rival contentions, I find that the ruling of the Hon'ble Supreme Court is dated on 16 -8 -1988, whereas the Section 11B has been amended by Amendment Act No. 44 of 1980 wherein for the words "from the date of payment" the words "from the relevant date" was substituted. Thus, in view of the amendment made in the Section, the ruling of the Hon'ble Apex Court is not applicable in the facts of the present case. Further, in the facts and circumstances of the case, I find that the Commissioner (Appeals) has erred in holding that the appeal is hit by limitation as the appellant has filed refund claim by 2 months' delay from the date of deposit of the tax. Thus, the appeal is allowed and the order of Commissioner (Appeals) is set aside and the Order -in -Original is restored. It is further held that the appellant is entitled to refund of the whole amount of Service Tax paid, disallowed by Revenue audit and claimed back from appellant vide Debit Note dated 31 -10 -2009, being Rs. (1,03,157 + 98,645) or Rs. 2,01,802/ -. Thus, the appeal is allowed with consequential benefit.