TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 849
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....the Central Excise Tariff Act, 1985. In the course of business, the Appellant sells tyres to Original Equipment Manufacturers and Replacement Market. Under the Replacement Market format, the Appellant offers various discounts and incentives to dealers for being elite dealers of the Appellant. The discounts offered by the Appellant vary on the basis of dealer type and dealer agreement. The Appellant calculates on a quarterly basis the percentage of discount a dealer is eligible for and prepares a quarterly report specifying the discount available to a dealer. The Appellant was facing difficulty in calculating the correct excise duty payable on tyres sold in the Replacement Market as the discount were given after sales and at the end of the scheme by way of credit notes. The Appellant, therefore, filed an application dated 03 June, 2002 before the Commissioner for making a provisional assessment under Rule 7 of the Central Excise Rules, 2002. This application was, however, rejected by order dated 26 July, 2002 on the ground that excise duty can be paid on Normal Transaction Value under Rule 7 of the Central Excise Valuation Rules, 2000 and the Appellant could file a refund claim unde....
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....2011 to September 2011 15 March, 2012 It needs to be stated at this stage that pursuant to the aforesaid orders, the refund amount were either paid or credited in favour of the Appellant. It also needs to be stated that the Department did not take recourse to the provisions of Section 35E(2) of the Act, as a result of which no direction could be given for filing appeals under Section 35A of the Act against the aforesaid orders nor appeals were filed. Thus, the aforesaid orders passed by the Original Authority granting refund attained finality. 5. The Department, however, issued a show cause notice dated 30 January, 2015 to the Appellant to explain why the amount of Rs. 8,67,17,675/- erroneously refunded by the 12 orders, referred to above, should not be recovered in cash under Section 11A(4) of the Act, referred to above. The gist of the reasons stated in the notice are contained in paragraph 10 of the notice and the said paragraph is reproduced below : "10. The Noticee in the instant cases of claiming the refunds of proportionate amount of duty suffered on the quantum of incentives/Discounts passed on to the selected dealers by way of credit notes only ensures that the Noticee....
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.... Written Submissions dated 06 October, 2017. In the Written Submissions, apart from stating the factual position, the Appellant also pointed out that since the orders passed for refund by the Original Authority had attained finality as appeals had not been filed by the Department, no show cause notice could have been issued under Section 11A of the Act. The Appellant also submitted that, even otherwise, the notice was time barred as there was no suppression of facts on the part of the Appellant. In this connection, it was pointed out that the limitation period for issuance of notice commences from the date of refund and as the first refund was granted for the period of April, 2001 and September, 2003 on 20 August, 2006, the show cause notice that was issued on 30 January, 2015 was even beyond the extended period of limitation. In regard to the other refunds, it was pointed out that the extended period of limitation could not be invoked. 7. The Commissioner of Central Excise by order dated 15 February, 2018, after holding that the Appellant was not entitled to refund as it would result in unjust enrichment, passed the following order : "a) I hereby order for recovery of amount of ....
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....e Act for the reason that the amount was erroneously refunded and there was no reason for the Department to have filed an appeal against the order of the Original Authority and in support of his contentions he placed reliance upon the contents of the notice. It has also been submitted that the notice was not barred by limitation. 12. We have considered the submissions advanced by the learned counsel for the Appellant and the learned Representative of the Department. 13. The first issue that needs to be decided is as to whether the show cause notice could have been issued by the Department under Section 11A of the Act for recovery of the duty refunded to the Appellant once the orders passed by the Adjudicating Authority granting refund of duty had attained finality. To examine this issue, it will be useful to refer to the relevant provisions of the Act. 14. Section 11B deals with claim for refund of duty and interest, if any, paid on such duty. Sub-sections (1) and (2), without the proviso, are reproduced below : "11B Claim for refund of duty and interest, if any, paid on such duty - (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty m....
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....ner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an Adjudicating Authority subordinate to him has passed any decision or order under the Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such Authority or any Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified. Sub-section (4) of Section 35E provides that, where in pursuance of an order passed under sub-section (1) or sub-section (2), the Adjudicating Authority or the Authorised Officer makes an application to the Appellate Tribunal or the Commissioner (Appeals), as the case may be, such application shall be heard by the Appellate Tribunal or the Commissioner (Appeals), as if such an application was an appeal made against the decision of the Adjudicating Authority and the provisions of the Act regarding appeals shall apply. 17. Section 35 of this Act deals with "Appeals to the Commissioner (Appeals)". It provides that : "SECTION 35: Appeals to Commissioner (Appeals) - (1) Any....
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....lant is given notice within the time-limit specified in section 11A to show cause against the proposed order. (4) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision. (4A) The Commissioner (Appeals) shall, where it is possible to do so, hear and decide every appeal within a period of six months from the date on which it is filed. (5) On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority, the Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise and the Principal Commissioner of Central Excise or Commissioner of Central Excise." 18. In the present case, as noted above, the 12 orders passed by the Adjudicating Authority for refund of the excise duty under Section 11B of the Act had attained finality in as much as appeals were not filed under Section 35 of the Act by the Department. 19. Section 11A of the Act deals with "Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded". Sub-section....
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....cise has not been levied or paid or has been short-levied or short-paid and the return has been filed, the date on which such return has been filed; (iii) in any other case, the date on which duty of excise is required to be paid under this Act or the rules made thereunder; (iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (v) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund;" 20. It is in this light of the aforesaid provisions of the Act that the submission of the learned counsel for the Appellant that if the orders granting refund under Section 11B of the Act had attained finality, a show cause notice under Section 11A of the Act could not have been issued has to be examined. If this issue is decided in favour of the Appellant, then it may not be necessary to examine the alternative submissions advanced by the learned counsel for the Appellant regarding the show cause notice being barred by limitation or on the merits of the orders granting refund. 21. The order dated 11 March, 2010 passed ....
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.... by order, direct such Authority or any other Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points specified in the order. 23. Sub-section (4) of Section 35E provides that the Adjudicating authority may make an application to the Appellate Tribunal or the Commissioner (Appeals) pursuant to an order passed under sub-section (1) or sub-section (2) of Section 35E within a period of one month from the date of communication of the order and such application shall be heard by the Appellate Tribunal or the Commissioner (Appeals), as the case may be, as if such application was an appeal against the decision or order of the Adjudicating Authority and the provisions of the Act regarding appeals would apply. In the present case, neither was there any direction to the Adjudicating Authority by the Principal Commissioner of Central Excise or Commissioner of Central Excise to file an appeal nor any appeal was filed. In such circumstances, the order passed by the Adjudicating Authority under Section 11B for refund of duty, attained finality. Section 11A of the Act does provide for recovery of duties erroneously refunded, but as the....
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....o be revoked under Section11A of the Act. The relevant paragraphs are reproduced below : "28. But, a careful look at the scheme of Sections 11A, 11B and 35E would show that an application for refund is not to be dealt with merely as a ministerial act or an administrative act. Under Section 11B of the Act, a person, claiming refund of any duty of excise and interest already paid, should make an application in the prescribed form. Such application is to be made within the period of limitation prescribed under sub-section (1) of Section 11B. The application should be accompanied by such documentary or other evidence, in relation to which, such refund is claimed. Sub-section (2) of Section 11B mandates that upon receipt of any application for refund, the Assistant Commissioner or Deputy Commissioner, if he is satisfied that the duty is refundable, should make an order. The refund order is capable of being given effect to in several methods including adjustment or rebate of duty of excise, all of which are prescribed in Clauses (a) to (f) under the Proviso to sub-section (2) of Section 11B. 32. It is only when an order of adjudication is passed under Section 11B that a person, who mak....
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....order of adjudication passed under Section 11B on an application. Once an application for refund is allowed under Section 11B, the expression 'erroneous refund' appearing in sub-section (1) of Section 11A cannot be applied. If an order of refund is passed after adjudication, the amount refunded will not fall under the category of erroneous refund so as to enable the order of refund to be revoked under Section 11A(1). One authority cannot be allowed to say in a collateral proceeding that what was done by another authority was an erroneous thing. Therefore, the question of law has to be answered in favour of the appellant/assessee and the appeal deserves to be allowed." [emphasis supplied] The Gujarat High Court also in Millat Fibres held that a show cause notice issued by the Adjudicating Authority on the ground of 'unjust enrichment' would amount to review of its own order granting refund, which is not permissible. The relevant paragraphs are reproduced below : "7. The record of the case indicates that vide order dated 22nd February, 2005, the adjudicating authority had adjudicated on the claim of refund made by the respondents. At the relevant time, it was permissible for the ....
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....,306/- of Customs Duty vide O-I-O dated 3-2-2004. Thus in effect and substance the adjudicating authority, has set aside its earlier order dated 13-2-2004 whereby the refund amount had been ordered to be appropriated against outstanding Government dues. The adjudicating authority has no power or authority under the Act to reconsider or review or sit in appeal over its earlier order. No such power or authority has been pointed out by the learned counsel for the appellant. 9. In the aforesaid factual background, the Commissioner (Appeals) was justified in holding that the show cause notice issued by the adjudicating authority on the ground of unjust enrichment, would amount to review of his own order which was not permissible. The view expressed by the Commissioner (Appeals) that the proper course of action was for the Department to review the order under Section 129D(2) of the Act and thereafter file appeal under Section 129D(4) is in consonance with the provisions of the Act. The impugned order of the Tribunal whereby it has confirmed the findings recorded by the Commissioner (Appeals) does not suffer from any legal infirmity so as to warrant interference. No question of law, much....