CESTAT Denies Refund of Ocean Freight Service Tax Claim Filed Beyond Limitation

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has denied a refund claim for service tax paid on ocean freight. The appellant filed the claim over a year after paying the tax, exceeding the one-year limitation period set by Section 11B of the Central Excise Act, 1944. Despite the levy later being declared unconstitutional, the Tribunal upheld the rejection, stating that statutory authorities cannot waive mandatory limitation periods.

The appellant had imported raw materials on a CIF basis and paid service tax on ocean freight during audit proceedings in July 2018. Subsequently, relying on the Gujarat High Court's decision in SAL Steel Ltd. v. Union of India, which held the levy on such ocean freight transactions to be unconstitutional, the appellant filed a refund claim on 23 September 2020. The department rejected the claim as time-barred under Section 11B of the Central Excise Act, 1944.

The Tribunal observed that Section 11B prescribes a one-year limitation period from the relevant date, and in the present case the payment was made on 24 July 2018, whereas the refund application was filed only on 23 September 2020. Therefore, the claim was filed beyond the prescribed period.

The Tribunal also considered the appellant's argument that the levy had subsequently been held unconstitutional and therefore the limitation under Section 11B should not apply. Referring to the Supreme Court's decision in Mafatlal Industries Ltd., the Tribunal noted that while an exception exists for unconstitutional levies, a refund is not automatic or unconditional and must be pursued through the appropriate constitutional remedy where applicable.

The Tribunal further held that statutory authorities and the Tribunal can exercise only the jurisdiction and powers conferred upon them by statute and cannot condone limitation beyond the authority granted under the law. Since the refund claim was filed beyond the prescribed period, the rejection was upheld.

Held: The refund claim was barred by limitation under Section 11B. The impugned order was upheld and the appeal was dismissed.

This AI-generated summary is for informational purposes only. Please view attached original judgment for the complete text and authoritative interpretation.