2024 (9) TMI 550 - HC - Central Excise

Excise Officer's refund order upheld as lawful under prevailing Supreme Court precedent despite later overruling judgment

Commissioner of Central Goods and Services Tax and Central Excise, Siliguri Commissionerate Versus M/s Alkem Laboratories Ltd.

The HC dismissed the appellant's statutory appeal regarding recovery of erroneous refund under Section 11A of the Central Excise Act, 1944. The court held ... Recovery of erroneous Refund claim - Interpretation and applicability of Section 11A of the Central Excise Act, 1944 - whether the subsequent judgment of the Hon’ble Supreme Court rendered in M/s Unicorn Industries [2019 (12) TMI 286 - SUPREME COURT] overruling the judgment of M/s SRD Nutrients [2017 (11) TMI 655 - SUPREME COURT] will be applicable in the facts of the instant case? - HELD THAT:- A plain reading of section 11A of the Central Excise Act, 1944 reveals that it makes a distinction between the cases of duties of excise not having been levied, paid, short-paid or short-levied, erroneously refunded, for reasons of fraud, collusion or any mis-statement or suppression of facts or contravention of any provisions of the Act or Rules made with the intent to evade payment of duty and in cases where none of these elements are present, under sub-section (1) of section 11A of the Act of 1944, where any such duty of excise has not been levied or short-levied or erroneously refunded for any reason other than the reasons of fraud or collusion, etc., the Central Excise Officer would, within two years from the relevant date, serve a notice on the person chargeable to the duty calling upon him to show cause why the amount specified in the notice along with interest not be recovered. The learned Tribunal proceeded to observe to the effect that the Excise Officer had no other choice but to follow the decision of the Hon’ble Supreme Court in M/s SRD Nutrients. Any other action on his part would have been wholly illegal. His order of refund thus was in consonance with the law declared by the Hon’ble Supreme Court at the time when he was passing the order. The learned Tribunal proceeded further to observe that in its view any subsequent change in the legal position would not permit him to invoke the powers of section 11A of the Act of 1944. As is well settled, all legal proceedings on the date when are being decided by any Court, would be governed by the law laid down by the Hon’ble Supreme Court which prevails on such date. This statutory appeal is a classic example of an instance where precious and valuable time of the Court is lost because of the appellant choosing not to follow the law laid down by the Hon’ble Supreme Court which governs the field. The ratio of the decision rendered by the Hon’ble Supreme Court in the case of Commissioner of CGST and Central Excise (J and K) vs. M/s Saraswati Agro Chemicals Pvt. Ltd. [2023 (7) TMI 542 - SC ORDER] is squarely applicable in the facts of the instant case. Even then, this statutory appeal was filed by the Commissioner of Central Goods and Services Tax and Central Excise, Siliguri Commissionerate on 20th May, 2024. On that date (i.e. on 20th May, 2024), the judgment of the Hon’ble Supreme Court dated 04th July, 2023, was squarely governing the field - this is a fit case for imposition of cost upon the appellant. As such, this Court imposes a cost of Rs. 20,000/- upon the appellant which shall be deposited with the Sikkim State Legal Services Authority within a fortnight from date. It is refrained from imposing cost upon the appellant. Issues Involved:1. Validity of refund claims sanctioned based on the SRD Nutrients judgment.2. Applicability of the subsequent Unicorn Industries judgment on previously sanctioned refunds.3. Interpretation and application of Section 11A of the Central Excise Act, 1944.4. Finality of judicial decisions and the impact of subsequent overruling judgments.5. Imposition of costs for filing a frivolous appeal.Issue-wise Detailed Analysis:1. Validity of Refund Claims Sanctioned Based on the SRD Nutrients Judgment:The Tribunal allowed the appeals, stating that the refund claims were sanctioned in light of the SRD Nutrients judgment, which was valid at the time. The Tribunal held that 'the refund claims were rightly sanctioned to the appellants as held by the Hon'ble High Courts,' making the show cause notice issued to the appellant unsustainable.2. Applicability of the Subsequent Unicorn Industries Judgment:The Deputy Solicitor General argued that the subsequent overruling of SRD Nutrients by Unicorn Industries should allow the recovery of erroneously refunded duties under Section 11A of the Central Excise Act. However, the Tribunal found that the Excise Officer's refund order, based on the SRD Nutrients judgment, was lawful at the time and could not be invalidated by a subsequent judgment. The Tribunal emphasized that 'any subsequent change in the legal position would not permit him to invoke the powers of section 11A of the Act of 1944.'3. Interpretation and Application of Section 11A of the Central Excise Act, 1944:Section 11A allows recovery of duties not levied, short-levied, or erroneously refunded. The Tribunal noted that the term 'erroneously refunded' is significant and that the Excise Officer's actions were in line with the prevailing Supreme Court judgment. The Tribunal stated, 'Sub-section (1) of section 11A thus authorises the Central Excise Officer to recover any duty of excise, besides others, which has been erroneously refunded.'4. Finality of Judicial Decisions and the Impact of Subsequent Overruling Judgments:The Tribunal cited the Supreme Court's decision in Commissioner of CGST and Central Excise (J&K) vs. M/s Saraswati Agro Chemicals Pvt. Ltd., which held that judgments rendered based on prevailing law cannot be reopened due to subsequent overruling. The Tribunal quoted, 'Any other view would lead to total anarchy... If years later such view is reversed, the parties who had not carried the proceedings in higher forum and thus not kept the proceedings alive, cannot trigger a fresh look at the decision already rendered.'5. Imposition of Costs for Filing a Frivolous Appeal:The Tribunal criticized the appellant for filing a frivolous appeal despite the clear Supreme Court ruling. The Tribunal noted, 'This statutory appeal is a classic example of an instance where precious and valuable time of the Court is lost.' Initially, the Tribunal imposed a cost of Rs. 20,000 on the appellant but later refrained from doing so upon the Deputy Solicitor General's assurance that such frivolous appeals would not be filed in the future.Conclusion:The appeal was dismissed, and the Tribunal upheld the validity of the refund claims sanctioned based on the SRD Nutrients judgment. The Tribunal emphasized the finality of judicial decisions and ruled that subsequent overruling judgments do not affect decisions that have already attained finality. The Tribunal also highlighted the importance of adhering to Supreme Court rulings to avoid frivolous litigation.