2000 (5) TMI 474 - AT - Central Excise

Tribunal clarifies refund recovery process, emphasizes proper investigation & independence of criminal proceedings.

The Tribunal held that the review application by the Collector of Customs under Section 129D was not maintainable for recovering erroneous refunds, ... Refund - Erroneous refund of duty - Appeal - Refund - Limitation Issues Involved:1. Maintainability of the review application filed by the Collector of Customs under Section 129D of the Customs Act.2. Applicability of judgments favoring the appellants.3. Timeliness of the refund application filed by the appellants.4. Authenticity of the refund claim's filing date and allegations of forgery.Issue-wise Detailed Analysis:1. Maintainability of the review application under Section 129D:The Tribunal examined whether the review application filed by the Collector of Customs under Section 129D was maintainable. It concluded that the review application was not maintainable for erroneous refunds, which should be addressed under Section 28 of the Customs Act. The Tribunal emphasized that Section 129D is restrictive and only allows the Collector to challenge the legality or propriety of an order based on existing records, without introducing new evidence. The Tribunal cited several judgments, including 'Collector of Customs v. Ferro Alloys' and 'CCE v. Universal Radiators,' to support the view that erroneous refunds must be recovered through Section 28, not Section 129D.2. Applicability of judgments favoring the appellants:The Tribunal referenced multiple judgments that supported the appellants' position, including 'International Computers Indian Manufacturers Ltd. v. UOI,' 'Golak Patel Volkart Ltd. v. CCE,' and 'CCE v. Universal Radiators.' These judgments consistently held that recovery of erroneous refunds must follow the procedure outlined in Section 28, which includes issuing a show-cause notice and allowing the affected party to respond. The Tribunal reiterated that Section 129D cannot be used to circumvent the procedural requirements of Section 28.3. Timeliness of the refund application:The Tribunal found that the appellants had filed their refund application within the stipulated six-month period from the date of payment, as required by Section 27 of the Customs Act. The refund application, dated 5-3-1993, was acknowledged by the Customs House on the same date. The Tribunal noted that the department had not disputed the authenticity of the seal indicating the filing date. The Tribunal also referenced letters from the Assistant Collector acknowledging the receipt of the refund claim on 5-3-1993, further supporting the appellants' case.4. Authenticity of the refund claim's filing date and allegations of forgery:The Tribunal rejected the Collector (Appeals)'s findings of forgery and manipulation of the refund claim's filing date. The Tribunal noted that the Collector (Appeals) had conducted an independent investigation without disclosing how the alleged forgery was committed or identifying any individuals involved. The Tribunal emphasized that the proper procedure for addressing such allegations would have been through a detailed investigation and show-cause notice under Section 28, allowing the appellants to respond to the evidence. The Tribunal found no basis for the allegations of forgery and manipulation, as the department had acknowledged the refund claim's filing date on multiple occasions.Conclusion:The Tribunal concluded that the review application filed by the Collector of Customs under Section 129D was not maintainable for the recovery of erroneous refunds. The proper procedure should have been under Section 28, which includes issuing a show-cause notice and allowing the affected party to respond. The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the appellants had filed their refund claim within the stipulated time and had paid the duty under protest. The Tribunal also rejected the plea to stay the proceedings until the completion of the criminal case, stating that the criminal proceedings were independent of the proceedings under the Customs Act.