Statutory certification under an excise exemption scheme cannot be collaterally challenged through an unauthorised refund recovery notice.

A Central Excise Commissioner could not issue a show-cause notice to recover excise-duty refunds by challenging certificates issued by the statutory High Powered Committee under an exemption scheme. The scheme made Committee certification determinative of a unit's new status and prescribed plant-and-machinery investment; the certificates had followed departmental verification and were accepted when refunds were sanctioned. Allegations of misrepresentation directly attacked the certificates' validity, but no power authorised the Commissioner to reassess them and no reconsideration was sought from the Committee. The notice was therefore described as arbitrary, without jurisdiction, and an abuse of authority, and was quashed.

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Issues: Whether the Commissioner of Central Excise had jurisdiction to issue a show-cause notice seeking recovery of excise-duty refunds by disputing certificates issued by the statutory High Powered Committee under the exemption notification.

Analysis: The exemption scheme required certification by the High Powered Committee that the unit was new and that the prescribed investment in plant and machinery had been made. The certificates were issued after departmental verification, were accepted by the jurisdictional authorities, and refunds were sanctioned after scrutiny. The allegations that the certificates were obtained through misrepresentation directly questioned the validity of the Committee's certificates. No power was shown authorising the Commissioner to undertake that exercise, and no action was taken before the Committee to have the certificates reconsidered. The later proceedings concerning education cess for the same period also did not allege fraud or misrepresentation. In the exceptional facts, the notice was an exercise without authority, warranting interference under writ jurisdiction.

Conclusion: The show-cause notice was arbitrary, without jurisdiction, and an abuse of authority; it was quashed and set aside.

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