Limitation Period Prescribed U/s. 11B Of Central Excise Act Is Applicable To Claims For Rebate Of Duty- Supreme Court

The Supreme Court recently observed that with respect to the claim of rebate of duty under Rule 18 of the Central Excise Rules 2002 (2002 Rules), the period of limitation prescribed under Section 11B of the Central Excise Act, 1994 should be applied.

The bench of Justice MR Shah and Justice MM Sundresh relied upon the decision of Everest Flavours Ltd. v. Union of India, 2012 (282) ELT 481 (Bombay) and observed that "since statutory provision for refund in Section 11B brings within its purview, a rebate of excise 22 duty, Rule 18 of the 2002 Rules cannot be read independent of requirement of limitation prescribed in Section 11B."

In this case, the Karnataka High Court upheld the order passed by the Deputy Commissioner, Large Tax Payer Unit, Bengaluru rejecting the claim of Sansera Engineering Limited for a rebate on the ground that the claim was barred by the limitation period prescribed under Section 11B of the Central Excise Act, 1944.

Senior Advocate Arvind P. Datar appeared on behalf of the appellant and submitted that in Rule 18 of the 2002 Rules and notification dated 6.9.2004, there is no mention to the applicability Section 11B of the Act and that the claim for rebate of duty under Rule 18 is different and is distinct than that of the claim for refund of duty under Section 11B of the Act.

Advocate Siddhant Kohli appeared on behalf of the revenue and submitted that in Section 11B of the Act, there is a specific reference to the rebate of duty and such claim of rebate of duty shall have to be made before the expiry of one year from the relevant date and that Rule 18 being subordinate legislation cannot override the main statute and Section 11B of the Act.

The issue dealt with by the Apex Court was-

Whether the claim for rebate of duty provided under Rule 18 of the Central Excise Rules, 2002, the period of limitation prescribed under Section 11B of the Central Excise Act, 1994 shall be applicable or not?

The Apex Court observed that as per Section 11B (1) of the Act any person claiming a refund of any duty of excise (including the rebate of duty as defined in Explanation (A) to Section 11B of the Act) has to make an application for refund of such duty to the appropriate authority before the expiry of one year from the relevant date and only in the form and manner as may be prescribed and as per Explanation (A) to Section 11B, "refund" includes "rebate of duty" of excise.

The Court further observed that "Merely because in Rule 18 of the 2002 Rules, which is an enabling provision for grant of rebate of duty, there is no reference to Section 11B of the Act and/or in the notification dated 6.9.2004 issued in exercise of powers conferred by Rule 18, there is no reference to the applicability of Section 11B of the Act, it cannot be said that the provision contained in the parent statute, namely, Section 11B of the Act shall not be applicable, which otherwise as observed herein above shall be applicable in respect of the claim of rebate of duty."

The Court also observed that the subordinate legislation cannot override the parent statute. It cannot be interpreted in such a manner that parent statute may become otiose or nugatory and said that "the subordinate legislation cannot override the parent statute. Subordinate legislation can always be in aid of the parent statute. At the cost of repetition, it is observed that subordinate legislation cannot override the parent statute. Subordinate legislation which is in aid of the parent statute has to be read in harmony with the parent statute. Subordinate legislation cannot be interpreted in such a manner that parent statute may become otiose or nugatory."

Accordingly, the Court dismissed the Appeal and observed that the claims were rightly rejected by the appropriate authority as the respective claims were beyond the period of limitation of one year from the relevant date.

Cause Title- Sansera Engineering Limited v. Deputy Commissioner, Large Tax Payer Unit, Bengaluru

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