2011 (3) TMI 743 - HC - Central Excise

High Court Rules CESTAT Lacks Jurisdiction on Rebate Claims

COMMISSIONER OF C. EX. & CUSTOMS, SURAT-I Versus IMTIYAZ TRADERS

The High Court held that the Customs Excise & Service Tax Appellate Tribunal (CESTAT) lacked jurisdiction to entertain appeals related to rebate ... Rebate claim - Jurisdiction of tribunal to entertain the appeal - held that:- order of the Commissioner (Appeals) pertains to rebate of duty of excise on goods. - No distinction in the language used in Section 35B of the Central Excise Act as to bestow jurisdiction of the Tribunal in cases where question of recovery of rebate wrongly granted as compared to the question of grant of rebate arises independently. In our view, in any orders of the Commissioner, one relating to rebate of duty of excise on goods would, therefore, be covered under the exemption Clause (b) of the proviso to sub-section (1) of Section 35B of the Central Excise Act. The proviso emphasis in no unclear terms that in such a case, the Tribunal would have no jurisdiction to entertain an appeal against the order of Commissioner (Appeals). Issues Involved:1. Jurisdiction of the Tribunal under Section 35B of the Central Excise Act.2. Legitimacy of the rebate claim based on alleged fraudulent documents.3. Recovery of erroneously granted rebate under Section 11A of the Central Excise Act.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal under Section 35B of the Central Excise Act:The primary issue revolves around whether the Customs Excise & Service Tax Appellate Tribunal (CESTAT) had jurisdiction to entertain appeals related to rebate claims. Section 35B of the Central Excise Act specifies that appeals against orders related to rebate of duty of excise on goods exported outside India are barred from being entertained by the Tribunal. The Court noted that the respondent-exporters had claimed a rebate of excise duty, which was initially granted but later found to be based on non-genuine documents. The Commissioner (Appeals) upheld the recovery of the rebate, and the Tribunal remanded the case for further examination. However, the High Court concluded that the Tribunal lacked jurisdiction to entertain such appeals as they pertained to rebate claims, thus answering the first question of law in favor of the appellant and setting aside the Tribunal's orders.2. Legitimacy of the Rebate Claim Based on Alleged Fraudulent Documents:The respondent-exporters had claimed a rebate of Rs. 2,79,956/- on the basis that they exported goods and were entitled to a rebate of excise duty. The rebate was initially granted in 2004. However, subsequent investigations revealed that the rebate claims were based on bogus documents. A show cause notice was issued to the exporters, and the adjudicating authority ordered the recovery of the erroneously granted rebate under Section 11A of the Central Excise Act. The Tribunal, upon appeal, remanded the matter to the adjudicating authority for a fresh decision, highlighting the need for verification of the existence of the manufacturer and the legitimacy of the rebate claim. The High Court did not delve into the merits of this issue, as it concluded that the Tribunal lacked jurisdiction.3. Recovery of Erroneously Granted Rebate under Section 11A of the Central Excise Act:The adjudicating authority, upon finding that the rebate was fraudulently claimed, ordered its recovery along with interest and penalties. The Commissioner (Appeals) upheld this order. The High Court emphasized that Section 11A pertains to the recovery of duty not levied, short-paid, or erroneously refunded, including rebates. The Court clarified that the proceedings before the Commissioner (Appeals) were related to the recovery of rebate fraudulently obtained, thus falling under the ambit of Section 11A. Consequently, the High Court held that the Tribunal had no jurisdiction to entertain the appeal against the Commissioner (Appeals)' order, which related to the rebate of excise duty on exported goods.Conclusion:The High Court concluded that the Tribunal lacked jurisdiction to entertain appeals related to rebate claims under Section 35B of the Central Excise Act. The orders of the Tribunal were quashed and set aside, and the appeals were allowed. The respondents were advised to seek further remedies in accordance with the law. The High Court refrained from addressing the second question raised by the Revenue, which pertained to the merits of the Tribunal's order, as it had already concluded that the appeals were not maintainable before the Tribunal.