'Activity Did Not Involve Any Manufacturing, Central Excise Duty Was Collected Illegally': CESTAT Orders Refund

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has granted a refund along with interest, despite the absence of a statutory provision for interest under central excise laws at the relevant time. The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that “the amount collected by way of Central excise duty was illegal as the activity itself did not involve any manufacture and the same cannot be allowed to be retained by the Government.” In this case, the assessee/M.P. Power Transmission Co. Ltd., was compelled to register and pay central excise duty on its fabrication of transmission towers. The Assistant Commissioner, Central Excise, Bhopal rejected the refund claim holding that the activity undertaken by the assessee amounts to manufacture. Aggrieved by the decision of Assistant Commissioner the assessee filed an appeal to the Collector (Appeals). In the appeal filed, the Collector (Appeals) held that fabrication of towers does not amount to manufacture and, therefore, partly allowed the claim for the period 20.07.1988 to 31.03.1989. For the previous period i.e. 01.01.1977 to 19.07.1988, the claim was rejected on the ground that no documentary evidence was produced to show that the duty was paid “under protest” and, therefore, the claim was time barred. The bench opined that the amount collected by way of Central excise duty was illegal as the activity itself did not involve any manufacture and the same cannot be allowed to be retained by the Government. The Tribunal stated that “it is a settled principle that on mere procedural technicalities, the relief cannot be denied, which otherwise is available to a party. For the period prior to the introduction of Rule 233B (01.06.1981), there was no specific provision prescribing any specific mode of endorsing „under protest‟ and, therefore, the appellant cannot be non-suited for not making proper endorsement. With the introduction of Rule 233B, procedure to be followed in cases with duties paid under protest was provided.” The bench relied upon the case of Sandvik Asia Ltd. versus Commissioner of Income Tax –I, Pune [2006 (196) ELT 257 (SC)] where the Supreme Court has observed that in view of the express provisions of the Act the assessee is entitled to compensation by way of interest on the delay in the payment of amounts lawfully due to the assessee which were wrongly withheld by the Department for an inordinate long period. In view of the above, the Tribunal allowed the appeal. Case Title: Executive Engineer (Workshop) M.P. Power Appellant Transmission Co. Ltd. v. Commissioner (Appeals) Central Excise Customs & CGST Case Number: Excise Appeal No.50329 of 2021 Counsel for Appellant/ Assessee: Reena Khair and Vrinda Bagaria Counsel for Respondent/ Department: S.K. Ray Click Here To Read/Download The Order

'Activity Did Not Involve Any Manufacturing, Central Excise Duty Was Collected Illegally': CESTAT Orders Refund

Mehak Dhiman

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