Bombay High Court permits fresh refund claim for excess excise duty on exports despite time-barred rebate

Background of the dispute

The Bombay High Court, in the matter of ABB Limited Vs Union of India & Ors., dealt with two writ petitions involving an identical legal issue. Both petitioners were manufacturers supplying goods in the domestic market as well as for exports. For certain export consignments, they opted to pay central excise duty and to seek rebate under Rule 18 of the Central Excise Rules, 2002, instead of exporting without payment of duty under Rule 19.

The rebate claims so filed were rejected by the authorities solely on the ground of limitation. Significantly, the assessees accepted that, in view of the Supreme Court ruling in Sansera Engineering Limited v. Deputy Commissioner, Large Tax Payer Unit, Bengaluru, their rebate applications were indeed barred by time. They therefore did not dispute the finding on limitation in these writ petitions.

Instead, they advanced an alternative legal claim: since no excise duty is legally leviable on exports, any duty paid on exported goods was an excess/unwarranted payment, which the Department could not retain. On that basis, they sought either:

  • re-credit of the duty in their CENVAT account, with cash refund under Section 142(3) of the CGST Act, 2017, or
  • permission to directly take re-credit in their GSTR-3B returns.

The High Court treated this as a distinct claim, independent of the original rebate proceedings, and decided the petitions accordingly.

Facts and prayers in the writ petitions

Writ Petition No. 2188 of 2022

The first petitioner, a manufacturer-exporter, had:

  • exported some consignments under Rule 19 without payment of central excise duty against LUT/bond; and
  • exported other consignments on payment of duty under Rule 18, thereafter filing rebate claims.

Duty on such exports was discharged by debiting the petitioner’s CENVAT Credit account. Rebate claims under Rule 18 read with Notification No. 21/2004-C.E. (N.T.) dated 06 September 2004 were rejected as time-barred.

In this writ petition, the assessee sought, inter alia:

  • quashing of the order No. 138/2021-CX (WZ)/ASRA/Mumbai dated 16.3.2021;
  • a direction that it is entitled to re-credit of Rs. 3,79,54,713/- in its CENVAT Credit account, and a cash refund of this amount by virtue of Section 142(3) of the CGST Act; or, in the alternative,
  • permission to directly avail re-credit of Rs. 3,79,54,713/- in its monthly GSTR‑3B returns.

An interim relief was also sought for deposit of the said amount with interest under Section 11BB of the Central Excise Act, 1944.

Writ Petition No. 3128 of 2024

The second petition involved similar facts and the same legal issue. The petitioner, also a manufacturer-exporter, challenged an order dated 30.08.2023 rejecting its claim. The primary relief sought was:

  • setting aside the impugned order;
  • recognizing entitlement to re-credit of Rs. 58,08,147/- in its CENVAT Credit account; and
  • directing grant of refund of Rs. 58,08,147/- along with applicable interest in cash under Section 142(3) of the Central Goods and Services Tax Act, 2017.

Alternatively, the petitioner requested permission to directly take re-credit of Rs. 58,08,147/- in its GSTR‑3B returns.

Counsel for the petitioners clearly stated before the Court that, in light of Sansera Engineering Limited v. Deputy Commissioner, Large Tax Payer Unit, Bengaluru (2022 (382) E.L.T. 721 (SC)), the rebate claims under Rule 18 had been filed beyond the prescribed limitation period. Accordingly:

  • the assessees did not challenge the rebate rejection orders on limitation;
  • they accepted that their original rebate claims were time-barred.

The dispute, therefore, narrowed down to whether, despite the time-barred rebate, the petitioners could still demand re-credit/refund on the ground that duty on exports was never legally payable in the first place.