1994 (2) TMI 67 - HC - Central Excise

Court affirms CEGAT order on excise duty refund, clarifies Section 11D not retrospective

The court upheld the CEGAT's order directing the petitioners to deposit the excess excise duty collected, stating it would be refundable if the appellants ... Demand - Excise duty Issues Involved:1. Scope and ambit of Section 11D of the Central Excises and Salt Act, 1944.2. Entitlement to refund if the deposit is made as directed by the CEGAT and the appellants succeed in the appeal.Summary:Issue 1: Scope and Ambit of Section 11D of the ActThe petitioners, engaged in the manufacture of cables and registered as small scale units, were required to pay excise duty on an ad valorem basis. They collected excise duty at 25% on sales below Rs. 75 lakhs, although they were required to pay only 15%. A show cause notice dated 14-2-1992 was issued by the first respondent demanding Rs. 6,78,562.30 for excess collection of excise duty from 1-4-1990 to 9-6-1990, invoking Section 11D of the Central Excises and Salt Act, 1944. The petitioners did not dispute the excess collection. The first respondent determined the sum payable, and the petitioners appealed to the CEGAT, which directed them to deposit the amount. The petitioners sought to challenge this order, but the learned single Judge upheld the CEGAT's order, stating that the collections represented excise duty and would be refundable if the appellants succeeded in the appeal.Issue 2: Entitlement to Refund if the Deposit is MadeThe appellants contended that if they deposited the amount as directed by the CEGAT, they would not be entitled to a refund even if they succeeded in the appeal, due to the provisions of Sections 11B and 11D of the Act. They argued that Section 11D should apply only to amounts collected as excise duty from 20th September 1991 onwards. The respondents countered that Sections 11A, 11B, and 11D should be read together, and the power to recover duty under Section 11A would apply within the specified period, ensuring no unjust enrichment. The court held that Section 11D is not retrospective but applies to demands within the period specified under Section 11A. The court also noted that refund is permissible if conditions in Section 11B(2) are satisfied.Conclusion:The court concluded that the direction by the CEGAT to deposit the amount was justified, as the appellants admitted to collecting the excess amount as excise duty. The court dismissed the writ petitions and directed the appellants to deposit the amount in six monthly installments, considering their status as a small scale industry. The first installment was to be paid by 20th March 1994, with no order as to costs in the writ appeals.