TaxTMI 
TaxTMI 
2022 (9) TMI 675
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....trucks, buses radial tyres and tubes. In the course of business, the appellant sells tyres directly to the original equipment manufacturers and pays central excise duty on the transaction value. The appellant also transfers the manufactured tyres to depots that later on sell the tyres to dealers. In this case, the appellant pays excise duty at the time of clearance from its manufacturing place. Under the replacement market format, the appellant offers various discounts and incentives to dealers like early bird discount, cash discount and dealers' loyalty discounts. 3. The discount amount is calculated on the basis of performance and according to the appellant has no nexus with the facilities provided by the Dealer to its customer. To show that these discounts are connected to the quantity offtake by the dealers and not dependent or conditional to the type of Dealership, a sample discount matrix showing the mode of calculation of these discounts has been provided by the appellant and it is as follows:- Category Offtake >700 Offtake 699- 500 Offtake 499- 300 Offtake 299-200 Select=>220 Offtake 199- 150 Offtake 149- 100 Offtake 99-50 ....
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....ver the amount refunded to the appellant for the period from April 2001 to June 2004 and from October 2008 to September 2011. The appellant filed a reply, but the Commissioner by order dated 15.02.2018 upheld the demand made in the show cause notice. The appellant filed an appeal before the Tribunal which was allowed by the Tribunal by order dated 30.01.2019. The Tribunal, after noticing that the orders under section 11B of the Excise Act by which refund was granted to the appellant had attained finality as no appeal was filed by the Department, held that though section 11A of the Excise Act provides for recovery of duties erroneously refunded but as the duties had been refunded pursuant to orders passed by the adjudicating authority under section 11B of the Excise Act, powers under section 11A of the Excise Act could not have been exercised for refund of an amount erroneously refunded. It was also held that when a specific power is conferred on the Principal Commissioner of Central Excise to examine the legality or propriety of any order passed by the adjudicating authority and when this power had not been invoked, it will not be open to the Department to take recourse to the prov....
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....efore the Commissioner (Appeals), who by order dated 17.07.2014 partly allowed the appeal holding that the claim of refund was not hit by the doctrine of unjust enrichment, but the matter was remanded to the adjudicating authority to assess the quantum of such eligible discounts before allowing the refund. 12. Feeling aggrieved by part of the aforesaid order passed by the Commissioner (Appeals), the appellant filed an appeal before the Tribunal and the Department also filed an appeal before the Tribunal. The Tribunal, by order dated 04.06.2015, allowed the appeal filed by the appellant and dismissed the appeal filed by the Department and the observations are as follow:- "7.1. Since in the present case, the discount policy of the assessee is known prior to the clearance as the rate of discount is mentioned in the assessee's agreements with their dealers and also from the circulars, it is clear that the deduction of quantity discount cannot be disallowed. However, according to the department, the quantity discount being extended by the assessee is a sort of reimbursement to the dealers for maintaining certain infrastructure and service facilities at the showroom....
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....Department that refund should be denied because of unjust enrichment was not accepted by the Tribunal. 14. It has been stated that the order dated 04.06.2015 passed by the Tribunal has attained finality as no appeal was filed by the Department. This factual position has not been controvertered by the Department. 15. On the basis of the aforesaid order dated 04.06.2015 passed the Tribunal, an amount of Rs. 2,34,99,027/- was refunded to the appellant for the period October 2011 to June 2012. Subsequently, further refund of Rs. 16,74,54,344/- was granted to the appellant for the period from July 2012 to December 2015 on the basis of the aforesaid order dated 04.06.2015 passed by the Tribunal. 16. However, a show cause notice dated 30.08.2017 was issued by the Commissioner seeking to recover duty amounting to Rs. 19,09,56,371/- (Rs.2,34,99,027 + Rs.16,74,57,344/-) alleging that the amount had been 'erroneously refunded' to the appellant. The show cause notice also proposed to credit this amount to the Consumer Welfare Fund. This show cause notice covered the period from October 2011 to December 2015 and was issued on the basis of the judgment of Supreme Court in Commissioner o....
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....ellant for various periods into four Blocks and they are as follows:- Block Period Date of Refund Amount (in Rs.) Block I October, 2011 to June, 2012 12.10.2015 2,34,99,027/- Block II July, 2012 to March, 2014 & October, 2015 to December, 2015 07.09.2015 to 08.06.2016 16,74,57,344/- Block III April 2001 to September 2003 & October 2008 to September 2011 _ _ Block IV January 2016 to June 2016 _ _ 20. The present proceedings relate to an amount of Rs. 2,34,99,027/- for Block I for the period from October 2011 to June 2012 and an amount of Rs. 16,74,57,344/- for Block II for the periods from July 2012 to March 2014 and October 2015 to December 2015. 21. As noticed above, the Tribunal by order dated 04.06.2015 had, for Block I, decided both the issues relating to entitlement of the appellant to refund and the issue of unjust encroachment in favour of the appellant and the Department did not file any appeal against the said order. The amount for Block II was refunded to the appellant only on the basis of the said order of the Tribunal. 22. The contention of Shri Tarun Gulati, learned senior c....
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....le evidence to prove that the incidence of duty was not passed to the end customer. Learned authorized representative also submitted that the proper course for recovery of an erroneous refund is to invoke the provisions of section 11A of the Excise Act. 25. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 26. As noticed above, the appeal is confined to Block I and Block II. The refund applications filed by the appellant for Block I were rejected by order dated 15.05.2013 passed by the Deputy Commissioner. The appeal filed by the appellant before the Commissioner (Appeals) was partly allowed. The Commissioner (Appeals) examined: i. Whether, in facts and circumstances of the case, the refund claims of the appellant are hit by the clause of unjust enrichment? ii. Whether the different discounts, as claimed by the appellant, are entitled for deduction from assessable value? 27. Both the said issues were decided by the Commissioner (Appeals) in the following manner:- "6.6. In view of above I abridge my findings as under: a. The refund....
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....Addison. 30. 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 Excise Act for recovery of the duty refunded to the appellant once the orders granting refund of duty had attained finality. To examine this issue, it will be useful to refer to the relevant provisions of the Excise Act. 31. Section 11B of the Excise 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 may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence including the documents referred to in section 12A as the applicant may furnish to establish that the am....
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....****** (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of - (a) fraud; or (b) collusion; or (c) any wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, By any person chargeable with the duty, the Central Excise Officer, shall within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice. ***** ******* ****** Explanation 1 - For the purposes of this section and section 11AC - (a) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) "relevant date" means,- (i) in the case of excisable goods on which duty of excise has not been levied or paid or....
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....e outside the scope of an 'erroneous refund' contemplated under section 11A of the Act. The relevant paragraph is reproduced below : "16. ............ A careful analysis of the Sections 11A and 11B of the Act would leave no manner of doubt that there is an adjudication process involved in the processing of the applications made under Sections 11A and 11B of the Act and further the orders passed under Sections 11A and 11B of the Act are appealable. The determination of an application made under Section 11B of the Act would result in the entitlement of an applicant for refund of any excise duty paid. If a very determination does not result in declaration of entitlement of refund any money paid in obedience to an order by an authority in the process of adjudication of such claims cannot be termed as granting of erroneous refund. Such payment would fall in the category of implementation of an order, subject to finality of such order. In other words, such refund would be outside the scope of the erroneous refunds contemplated under Section 11A of the Act. In a way Section 11A and 11B of the Act operate in two different streams." 39. The Madras High Court in Everyday Industri....
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....an order of adjudication. 34. Once it is seen that an order of adjudication has been validly passed under Section 11B and a refund has also been made on 29-9-1998, then the next question that would fall for consideration is as to whether Section 11A can be invoked thereafter. We have already extracted the provisions of Section 11A. Interestingly, the authority, given under Section 11A(1) for recovery of any refund erroneously paid, is upon the Central Excise Officer. The expression used in Clause (a) in sub-section (1) of Section 11A is "Central Excise Officer". ***** 48. Insofar as the decision of the Andhra Pradesh High Court is concerned, one observation made in Paragraph 16 of the said decision is of prime importance. In Paragraph 16, the Andhra Pradesh High Court has made it clear, after analysing Sections 11A and 11B that there is an adjudication process involved in the processing of applications made under Sections 11A and 11B. The Andhra Pradesh High Court held that orders passed under Sections 11A and 11B are appealable. Therefore, the decision of the Andhra Pradesh High Court, especially the observations in Paragraph 16, should be made use of by....
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....be appropriated against outstanding Government dues. Later on after the said order was implemented another show cause notice came to be issued calling upon the respondent to show cause as to why the refund claim of Rs. 2,42,110/- sanctioned and erroneously refunded by appropriating against the outstanding Government dues should not be rejected and amount so appropriated should not be recovered under Section 28 read with Section 27 of the Customs Act, 1962 in absence of proof regarding burden of duty being not passed on. The very frame of the show cause notice indicates that the adjudicating authority was reviewing the earlier order inasmuch as the respondent had been called upon to show cause as to why the refund granted by the earlier order should not be rejected. 8. Sub-section (2) of Section 129D empowers the Commissioner of Customs to 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 to direct such authority to apply to the Commissioner (Appeals) for the determination....
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....tion 11B of the Excise Act on an application filed for refund of duty attained finality for the simple reason that it cannot fall in the category of 'duty erroneously refunded'. 43. The show cause notice dated 30.08.2017 seeking recovery of the duty refunded to the appellant is without jurisdiction. The order passed on such a show cause notice, therefore, deserves to be set aside. 44. The submission made by the learned counsel for the appellant that the proceedings cannot be re-opened on the basis of a subsequent judgment of the Supreme Court also deserves to be accepted in view of the decision of the Supreme Court in Deputy Commissioner of Income Tax and others vs. Simplex Concrete Piles (India) Limited [(2013) 11 Supreme Court Cases 373]. The relevant observations are as follows: "In any event, at the relevant time, when the assessment order got completed, the law as declared by the jurisdictional High Court, was that the civil construction work carried out by the assessee would be entitled to the benefit of Section 80HH of the Act, which view was squarely reversed in the case of Commissioner of Income-Tax vs. N.C. Budharaja and Co. and Another, reported in [1993] ....