TaxTMI 
TaxTMI 
2022 (9) TMI 675
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....e 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 Offtake 50-35 Offtake 35< Select 5.75% 5.75% 5.00% 5.00% &nb....
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....iled 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 provisions of section 11A of the Excise Act. The Department has filed an appeal before the High Court of Madhya Pradesh at Indore against the dec....
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....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 showrooms like Air Conditioned Customer waiting space, adequate space for reception, separate space for washroom for customers, computer based accounting software, parking facility for customers....
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....nality 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 of Central Excise, Madras vs. Addison and Company Ltd. [2016(339)ELT177 (SC)] alleging that the appellant had passed the burden of duty to the ultimate customers through dealers. 17. The reply filed by t....
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.... 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 counsel for the appellant is that as the proceedings for Block I had been concluded by the Tribunal in favour of the appellant by order dated 04.06.2015 and the Department has also granted refund, it is not open to the Department to re-open the concluded issues by issuing notices under section 11A of the Excise Act merely....
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....nd 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 claims of the appellant are not hit by Doctrine of Unjust Enrichment. b. The appellant are entitled for deduction of Early Bird Discount and COD discount from the assessable value and hence entitled for consequential refund of duty already paid to that extent. c. The additional discounts given to B shops, Bridgestone Select Dealers, Bridgestone Super Se....
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....n 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 amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person. (2) If, on receipt of any (2) such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisf....
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.... 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 has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder; (ii) in the case of excisable goods on which duty of excise 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; in any other case, the date on which duty of excise is required to be paid under this Act or the rules ma....
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.... 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 Industries India Ltd. vs. CESTAT, Chennai [2016 (337) E.L.T. 189 (Mad.)] followed the view taken by Andhra Pradesh High Court and also observed that once an application for refund is allowed under section 11B, the amount refunded will not fall under the category of 'erroneous refund' so as to enable the order of refund to be revoked under section11A of the Excise 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 admi....
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....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 the assessee to contend that since there was no appeal against the order under Section 11B, the Department cannot take recourse to Section 11A. ****** 51. We are of the considered view that the paragraph extracted above is a complete answer to the question of law now raised. Unfortunately, in none of the decisions relied upon by the learned standing counsel, the Courts were confronted with an 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 or....
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....ondent 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 of such points arising out of the decision or order as may be specified by the Commissioner in his order. Sub-section (4) thereof provides for preferring an appeal against the order of the concerned authority. In the circumstances, if the adjudicating authority was of the view that the doctrine of unjust enrichment had not been examined while making the order of refund, the proper course to adopt was to take recourse to the provisions of Section 129D. A perusal of the order-in-original dated 15-2-2006 shows that the adjudicating authority has held that the refundable amount of Rs. 2,42,110/- is required to be credited to the Consumer Welfare Fund established....