2011 (8) TMI 689 - SC - Central Excise

Supreme Court affirms Tribunal's decision on duty refund eligibility under Central Excise Act

The Supreme Court upheld the Tribunal's decision regarding the eligibility for a refund of duty under Section 11B of the Central Excise & Salt Act, ... Recovery of amount of refund paid to appellant earlier - SCN issued for recovery of refund on the ground of unjust enrichment - whether revenue is required to file appeal against refund order or proceedings for recovery u/s 11A by issuing SCN are valid - Held That:- In case of erroneous refund of excise duty the competent authority shall issue show cause notice under Section 11 A, in which the assessee has to show cause as to why the aforesaid amount of refund, which is erroneously refunded, should not be recovered from him. In such a case, there is no question of filing any appeal, as appropriate remedy as provided under Section 11A is available. Credit Notes issued on 7.8.91 - Duty paid on 17.7.89 - Held That:- When at the time of clearance no such document was filed and what is sought to be relied upon is a document issued after two years, the same raises a doubt and cannot be accepted as a reliable document. - Refund denied.Doctrine of merger - held that:- The Tribunal was also justified to rely on the decision of the Tribunal in S. Kumar’s Ltd. v. CCE, Indore [2007 -TMI - 1284 - CESTAT,NEW DELHI] in which reference was also made to the decision of the Supreme Court in Kunhayammed & Ors. v. State of Kerala (2000 -TMI - 40239 - SUPREME Court) wherein the question of merger as well as binding nature of the decision of the Supreme Court as precedence when civil appeals and special leave petitions are dismissed was considered. - Order of Tribunal upheld. Issues:- Eligibility for refund of duty under Section 11B of the Central Excise & Salt Act, 1944.- Validity of refund claim and credit note issuance.- Jurisdiction of authorities in sanctioning refunds.- Application of Sections 11A, 11B, and 12 of the Act.- Recovery of erroneously refunded amount.- Reliance on previous tribunal and court decisions.- Merger and binding nature of Supreme Court decisions.Eligibility for Refund of Duty:The appellant sought a refund of duty deposited on Sodium Hypochlorite clearance, which was allowed by the Assistant Commissioner but later challenged by the respondent. The issue was whether the appellant was eligible for the refund under Section 11B of the Act.Validity of Refund Claim and Credit Note Issuance:The respondent contended that the refund was wrongly sanctioned as the duty incidence was passed on to another entity. The appellant's claim was based on a credit note issued after the duty payment, raising questions about the validity of the claim and the credit note's timing.Jurisdiction of Authorities in Sanctioning Refunds:The Assistant Commissioner initially allowed the refund, which was later deemed illegal and without jurisdiction. The subsequent orders by the Commissioner (Appeals) and the Tribunal upheld this decision, questioning the authority's jurisdiction in sanctioning refunds.Application of Sections 11A, 11B, and 12:Section 11A provides for show cause notice issuance for erroneously refunded excise duty, allowing the competent authority to recover such amounts. The appellant's failure to establish the non-passing of duty incidence raised doubts about the refund claim's validity under Sections 11A, 11B, and 12.Recovery of Erroneously Refunded Amount:The Assistant Commissioner ordered the recovery of the erroneously refunded amount from the appellant in accordance with Section 11A of the Act, a decision upheld by higher authorities and the Tribunal.Reliance on Previous Tribunal and Court Decisions:The Tribunal cited and relied on previous decisions like Sangam Processors (Bhilwara) Ltd. and S. Kumar's Ltd. to support its findings, indicating the relevance of precedent in similar cases.Merger and Binding Nature of Supreme Court Decisions:The Tribunal's decision was further supported by referencing the Supreme Court's decision in Kunhay Ammed & Ors. v. State of Kerala, emphasizing the binding nature of Supreme Court decisions as precedence when civil appeals and special leave petitions are dismissed.In conclusion, the Supreme Court found no infirmity in the Tribunal's order, dismissing the appeal and leaving the parties to bear their own costs. The judgment emphasized the importance of complying with statutory provisions and established precedents in excise duty refund cases.