TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 693
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....ed the demand of Rs. 20,88,391/- (Rupees Twenty Lakhs Eighty Eight Thousand Three Hundred Ninety One Only) erroneously refunded to M/s. Fiat India Ltd. Under proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944. 2. The assessee is eligible for refund claim of Rs. 15,92,889/- (Rupees Fifteen Lakhs Ninety Two Thousand Eight Hundred Eighty Nine Only), which they should claim with the jurisdictional Assistant/Deputy Commissioner in terms of Section 11B of Central Excise Act, 1944 3. I impose Penalty of Rs. 20,88,391/- on M/s. Fiat India Ltd. Under Section 11AC of Central Excise Act, 1944 4. I charge and demand interest at appropriate rate per annum from M/s. Fiat India Ltd. on the entire amount of duty erroneously refunded to them under Section 11AB of Central Excise Act, 1944. 5. I impose a penalty of Rs. 10,00,000/- on M/s. PAL under Rule 209 A of the Central Excise Rules, 1944. 6. I impose following penalties on dealers under Rule 209A of Central Excise Rules, 1944. i M/s Bombay Cycle & Motor Agency Ltd. 534,S.V.P. Road Mumbai-400070 Rs.6,00,000/- ii M/s Credit Line Motors Ltd. Shahaney Kirkwood Compound 27,Kiro! Road, Vidyavihar (W) Mumbai....
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....s mentioned on the cheques had not been actually passed on to the taxi owners, investigations were undertaken by the revenue authorities. 2.5. On completion of investigations a show cause notice dated. 23.7.2001 was issued to the appellant 1:- i. demanding the duty amounting to Rs. 3,07,83,604/- erroneously refunded under proviso to Section 11A(1) of the Central Excise Act, 1944; ii. proposing rejection of refund claims amounting to Rs. 17,81,002/- under Rule 173S of Central Excise Rules, 1944 read with Section 11B of Central Excise Act, 1944; iii. charging and demanding interest @ 20% p.a. under Section 11AB of the Central excise Act, 1944 on the entire amount of duty erroneously refunded to them. 2.6. The said show cause notice also proposed imposition of penalty on M/s. PAL, a merchant manufacturer, and the dealers, under Rule 209A and/or Rule 210 of erstwhile Central Excise Rules, 1944 and/or Rule 26 of the Central Excise (No. 2) Rules, 2001/Central Excise Rules, 2002 for their active role in aiding and abetting M/s. FIL for committing the said offence by willfully submitting false and misleading information/documents. 2.7. The said Show Cause Notice was adjudicated by....
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.... aside the Order dated 29.3.2007 and remanded the case to Commissioner, Central Excise, Mumbai-II for de-novo adjudication. 3. Commissioner has by the impugned order adjudicated the matter in remand proceeding. Aggrieved by the impugned order Appellants have preferred theses appeals: 3.1. We have heard Ms Kanupriya Bhargava with Ms. Divya Bhardwaj, Advocates for Appellant 1, None for Appellant 2 and Shri Mihir Mehta and Shri Mohit Rawal, Advocates for Appellant 3 and Appellant 4. We have also heard Shri Amrendra Kumar Jha, Deputy Commissioner and Shri Dhirendra Kumar, Joint Commissioner, Authorized Representatives for the revenue. 3.2. Arguing for the Appellant 1 learned counsel submits:- * Undisputedly the Refund claims filed by the appellant for Rs. 3,07,83,604/- were after due consideration were sanctioned by the jurisdictional authorities in the favour of Appellant 1. None of the order sanctioning the refund claim was ever reviewed by the revenue authorities for filing an appeal to the appellate authorities, and the Show Cause Notice dated 23.07.2001 was issued to them by the Commissioner for recovery of the erroneous refund by invoking extended period as per Section 11A o....
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....lty under Section 11AC. * Appeal of Appellant 1 be allowed. 3.3. Arguing for the Appellant 3 and Appellant 4, learned counsel submits: * The order sanctioning the refunds to the appellant 1 has not been reviewed/challenged by the revenue before appropriate appellate authority. In absence of any such challenge the proceedings initiated against the Appellant 1 and on Appellant 3 and 4 are bad in law. * Appellant 3 & 4 understand that the entire amount due to the taxi owners have been refunded by the Appellant 1. In absence of any erroneous refund claimed by the Appellant 1, there is no question of aiding and abetting erroneous sanction of refund. * Appellants have suffered huge losses due to non receipt of the amounts to be refunded from PAL. * Ingredients for imposition of penalty under rule 209A are absent in the present case and hence penalty imposed under the said section cannot be justified as have been held by the larger bench of tribunal in the case of Steel tubes of India Ltd. * Impugned order has been passed in violation of the principles of natural justice. * Interestingly by the order dated 29.03.2007, when the amount of erroneous refund was determined as Rs....
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....ed that the evidence in the form of 25 volumes of document to show that they had paid Rs. 2,91,38,720.21/- to the owner of the vehicle registered as Taxi are available for verification by the department. M/s. FIL requested that the said documents may be verified by the department and they undertook to pay the balance amount of around Rs. 17 Lakh (approx) to the Government for the reason that they were not able to trace the persons in whose name the vehicles have been registered as taxi. This payment is apart from the amount already paid to PAL, for whom they had manufactured the vehicles in question. (ii) The Deputy Commissioner vide letter F. No. V.Adj(30)Kurla/CR-10/Commr/2006/M-II/1113 dated 14/3/2011 was directed to carry out the verification of the documents produced by M/S. FIL. (iii) The Assistant Commissioner, Central Excise, Kurla Division vide letter F. No. V(Adj)Misc-Kurla/2/10/1563 dated 14/10/2011 submitted the verification report wherein it was reported that M/s. FIL has produced the records/documents in the form of 25 volumes each containing 50 original receipts and Xerox copies of other supporting documents in each volume alongwith a statement of pending Taxi Re....
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....ESTAT order dated 19.11.07 (supra) only if the amounts are actually refunded to the individual taxi owners, the conditions of notification No. 4/97 and 5/98 ought to be considered as fulfilled. Therefore, it is essential for satisfying the conditions the names of the beneficiary provided in the Show Cause Notice and the certificates are not tallying. In one case no confirmation is available from Citibank. The details are as under:- Sr. no. Name of Beneficiary as per SCN Name of Beneficiary as per Citi Bank Amount cheque no. 1 Anwar Hussain Abdulla Haridya S Shukla 29694.60 362433 2 Ramraj Prajapati M Kalpana Ramraj Prajapati 25381.35 362560 3 Nazeer Iqbaluddin khan MIR Ali 25381.35 363290 4 Ramkhilawan S Yadav Anilkumar S Yadav 25381.35 362555 5 I N Sharma Smt. Ratnadevi 25381.35 362417 6 Khaja Sarfoo N Nisa 25381. 362418 7 Mohd Sadique Mahd S K Papamiya 25381.35 362492 8 Rajendra S Chourasiya Champadevi R Chourasiya 25381.35 24 9 Mohd Zahir Khan M M Zahir 26720.64 64 10 Gulshan M Ali J G Hasan 26720.64 23 11 Janardhan D Mayekar 25381.35 No confirmation a....
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....nd in these cases. The actions of M/S. FIL in claiming fraudulent refund claim by misdeclaration satisfies the necessary ingredients to impose penalty under Section 11AC of Central Excise Act, 1944, Therefore, They are liable for penalty under Section 11AC of the Central Excise Act, 1944 in the amount sought to be confirmed. viii. As this case has been decided as per the directions of Tribunal. On reexamination, it is found that the duty erroneously refunded works out to Rs. 20,88,391/- as against the duty demanded and confirmed by my predecessor which is Rs. 2,68,38,851/-. Accordingly the penalties are proposed to be imposed on all the co-noticees commensurating with amount of demand confirmed. In respect of refunds claimed, the dealers were party to the submission of cheques for claiming refund against vehicles, which they knew that the said amounts was not passed on to the persons in whose name these vehicles were registered. Those cheques were forwarded to M/S. FIL by M/s. PAL. M/s. PAL also knew that, though they were forwarding cheques as an evidence for having paid the amount to ultimate buyers, in fact such amount was not paid to the buyers. This is because of simple fact....
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....persons, anybody or organisation, as the case may be, in whose name the said motor vehicle has been registered as a taxi or ambulance, as the case may be, or in case had collected, has refunded to such person, group of persons, anybody or organisation, the amount equivalent of such exemption of duty; (d) the exemption in case of ambulance is only applicable for registered hospitals, nursing homes and sanitoriums and such other organisations as the Central Government may notify, in this behalf, in the Official Gazette; and (e) the manufacturer files a claim for refund of duty paid in excess of that specified against S. No. 195 in column (4) of the said Table, in terms of section 11B of the Central Excise Act, 1944 (1 of 1944)." Notification No. 5/98-CE dated 02.06.1998 43. (a) The manufacturer pays excise duty at the rate of 30% ad valorem in the case of motor vehicle falling under subheading No. 8702.10 and 40% ad valorem in the case of motor vehicle falling under sub-heading No. 8703.90, as the case may be, at the time of clearance of the vehicle; (b) The manufacturer files the claim for refund of duty paid in excess of that specified under this exemption, in the proform....
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....egistration of the Motor Vehicles, as a Taxi by a person, within the lime prescribed or as extended was required to be produced by the manufacturer. iii) The claim for Refund of the difference between the Tariff Rate of duty as paid on clearance and the rate notification on Registration of a Taxi was to be made by the manufacturer along with evidence of having paid such person, in whose name the Taxi was registered, the differential amount as per notification 4/97. No specific form for claim of Refund was prescribed in the notification. iv) Vide notification 5/98, the claim was to be made by the manufacturer in form 'R' prescribed under rule 173S of Central Excise Rules 1944 along with evidence of registration of the Motor Vehicle as Taxi by any person and of having effected "Return" of the excess amount to the buyer of the manufacturer. The noticeable amendment, vide notification 5/98 dt 1.6.98 which eliminated the production of evidence of the excess amount having been refunded to the actual person in whose name the motor vehicle was registered as a Taxi and the requirement of only having made a 'return' to the buyer of the manufacturer cannot be ignored. ....
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....he condition prescribed by the notification 5/98-CE, the only requirement that was to be fulfilled in respect of the said notification was to show that the manufacturer had refunded the excess amount collected and claimed as refund to their buyer i.e. their dealer. However vide order dated 19.11.2007, Tribunal while remanding the matter back to original authority has observed as follows: "15. We have considered the submissions. We find that the appellants have taken a positive plea that in addition to return of the amount of PAL, they have returned the amount sanctioned as refund to them to the individual taxi owners by contacting the Mumbai Taximen Union who confirmed the name of the persons who purchased the Premier Padmini model motor cars., the registration number, dealer from whom the vehicle was purchased, engine number, chassis number, driving licence, evidence of purchaser etc. Once the amount has been actually refunded to the individual taxi owners, the conditions of notification No. 4/97 and 5/98 ought to be considered and accordingly the demand cannot stand. However, since there is no verification carried out by the Commissioner, the matter is remanded back to th....
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....1999 26100.90 4 Shamsuddin M Umar 52275 23 05.05.1999 25050.60 5 Romraj SPal 52435 47 16.06.1999 26720.64 6 Triloknath Sukhai Vishwakarma 52459 57 20.08.1999 26720.64 7 Limbadri Ashok Gojullu 52468 62 04.09.1999 26720.64 8 Abdul Sattar Sheikh 50657 113 09.11.1998 26157.60 9 Shaikh Kamal Maqdoom 51039 115 09.11.1998 24630.45 10 Annasaheb Dahifale 51170 142 14.12.1998 25381.35 11 Haroon S Taya 51525 145 18.12.1998 25381.35 12 Limbaji Satpute 3053 147 16.10.1998 29694.60 13 Rajendra prasad H Gupta 51244 148 18.12.1998 25381.35 14 Kamruddin Md Idris 50993 156 18.12.1998 24630.45 15 Raju Dinkar Shinde 51371 157 18.12.1998 25381.35 16 AbdulR Shaukat Puleel 51015 167 11.01.1999 28664.55 17 Avinash Raut 51665 175 14.01.1999 27102.60 18 Shrirang Tukaram B 52023 189 23.02.1999 25381.35 19 RumyDarab Sidhwa 51957 190 23.02.1999 25381.35 20 Shrinath B Tiwari 3178 206 10.03.1999 29694.60 21 Chandrakant G Padale 51951 257 23.02.1999 25381.35 22 Chandrakant B Raut 52036 262 10.03.1999 25381.35 23 KK Nimbalkar 50064 75 24.07.....
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.... admissible to the appellant in terms of the interpretation placed by the tribunal in earlier orders. Details of the said refund claims are reproduced below: S No Name of the party Engine No Claim details Number Date Amount 1 P.T. Dhere 43519 12 15.04.1999 26157.60 2 N S Patil 43493 4 10.04.1999 26157.60 3 Dinesh Ghadge 42989 43 12.05.1999 27854.55 Total 80169.75 4.6. In respect of the demand of amount of Rs. 2,86,186.39/- in respect of the refund of claims filed in case of 11 taxi owners appellants have produced the evidence in respect of the payment of the refund claim to the individual taxi owner or their legal heirs the details as produced are reproduced below: S. No. Name of Beneficiary as per SCN Name of Beneficiary as per CitiBank Amount Cheque No. Remark Refer Appeal 1 2 3 4 5 6 1 Anwar Husain Abdulla Haridya Shukla 29,694.60 362433 *Pg. No. 607 to 617 of the Appeal 2 Nazeer Iqbaluddin Khan Mir Ali 25,381.35 363290 **Pg. No. 631 to 658 of the Appeal. 3 Janarden D Mayekar 25,381.35 362549 ***Pg No 741 to ....
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....0 4 M/s Credit Line Motors Ltd. 51831 06.12.00 25381.35 51837 **Pg. No. 764 to 770 5 52151 25381.00 52051 ***Pg. No. 91 & 94 of SCN & for Documents Pg. No. 778 to 784 6 M/s Shaman Automobiles 3143 06.12.00 29694.60 3148 ***Pg. No. 80 & 95 of SCN & for Documents Pg. No. 772 to 777 Total 157320.55 *Matched **Typographical Error of a single digit ***Engine No. appeared twice in the SCN We verified the documents as reflected in the remarks column above and having satisfied ourselves that the mismatches as stated are very minor in nature. Further we also note that there are errors in recording the engine number in the show cause notice whereby same engine number appeared twice in the show cause notice which is practically impossible. The verification as undertaken in these cases cannot be reason for denial and the verification has to be caused by referring to all other details. Having satisfied with correctness of these claims we hold that demand made in respect of these claims needs to be set aside. 4.8. On the basis of the sample verification of the documents produced as indicated in the previous paragraphs and on the basis of ....
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....der Section 11B not only regulates the manner and form, in which, an application for refund is to be made, but also prescribes a period of limitation, method of adjudication as well as the manner, in which, such refund is to be made. In simple terms, Section 11B is a complete code in itself. 31. Therefore, it is clear that what is required of an Assistant Commissioner or Deputy Commissioner under sub-section (2) of Section 11B is to adjudicate upon the claim for refund. The expression 'Adjudicating Authority' is also defined in Section 2(a) to mean any authority competent to pass any order or decision under this Act, but does not include the Central Board, Commissioner of Excise (Appeals) or the Appellate Tribunal. Hence, the power exercised under Section 11B is that of an adjudicating authority and the order passed is certainly one of adjudication. 32. It is only when an order of adjudication is passed under Section 11B that a person, who makes a claim for refund, will get his money back. This assumes significance in the light of the fact that by the proceedings dated 29-9-1998, the appellant/assessee was informed of the sanction granted by the Assistant Commissioner t....
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....and an Assistant Commissioner can invoke the proceedings for recovery under Section 11A. 37. In other words, by reading the provisions of Section 11A in such a manner as the learned standing counsel would request us to do, we would be recognizing a power in a Subordinate Authority to invoke the power of recovery under Section 11A, despite the fact that a refund application has been adjudicated upon by a Superior Authority under Section 11B. We should keep this fact in mind before dealing with the interplay between Sections 11A and 35E. 38. As we have seen from the language employed in Section 35E, which we have extracted above, a limited revisional jurisdiction is conferred upon the Principal Commissioner and Commissioner of Excise in sub-section (2) of Section 35E. This power is not actually to correct any error directly, on the part of an adjudicating authority. This power is available only for directing the Competent Authority to take the matter to the Commissioner (Appeals). 39. Therefore, it was always open to the Principal Commissioner or the Commissioner of Central Excise to examine the order of the adjudicating authority namely the Assistant Commissioner in the procee....
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.... consideration in Asian Paints (India) Limited. 43. The decision of this Court in Sivanandha Pipe Fittings Ltd., was also on the point as to whether it is open to the authorities to take recourse to one remedy where several remedies are available. It is not the contention in this case that there are plural remedies available to the Department. The contention in this case is as to whether, after having allowed an adjudication under Section 11B to attain finality, there was any remedy open to the Department at all under Section 11A. Therefore, the decision in Sivanandha Pipe Fittings Ltd., is also of no assistance to the Department. 44. Insofar as the decision of the Jharkhand High Court in Gillooram Gaurishankar is concerned, the question that was referred to the High Court was whether the statutory remedies under Section 11A(1) will have to be exercised, to the exclusion of the remedies available under Section 35E(2) or not. In Paragraph 4 of the decision, the Jharkhand High Court rightly held that there was no necessity to issue a show cause notice under Section 11A, when recourse has already been taken to Section 35E. 45. Insofar as the decision of this Court in PRICOL Ltd.....
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....raph 11 of the decision, the contention of the assessee was that Section 11A does not contain a non obstante clause and that therefore, it cannot be invoked to nullify the appeal remedy available to the Department under Section 35E(2). 50. The very same argument now advanced by the Department to the effect that Sections 11A and 35E operate in two different independent fields was raised by them. After considering the issue elaborately and also after taking note of the decision in Asian Paints (India) Limited approved by the Supreme Court, this Court came to the conclusion in Paragraph 23 as follows: "In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time-to-time on executing B-8 security bond and on furnishing a bank guarantee. The Department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the Competent Authority, by following the pro....
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....l or Court or any other provision of the Act, no refund shall be made except as provided in Sub-section (2). Thus, the procedure prescribed under Section 11B not only regulates the manner and form in which an application for refund is to be made but also prescribes period of limitation as well as method of adjudication in which refund has to be made. 35. Thus, Section 11B assumes great significance, as any order of refund of excise duty and interest is made only after the adjudication as envisaged under scheme of Section 11B. In the present case, petitioner-company had made an application for refund which was adjudicated on 5-11-2015 and it was directed to refund excise duty to tune of Rs. 1,02,75,633/- which was in excess. This order was never challenged by revenue in appeal and it attained finality. 36. Thus, once the order of adjudication has been validly passed under Section 11B and a refund has been made on 5-11-2015, the next question which crops up for consideration is as to whether Section 11A can be invoked thereafter. 37. As Section 11A(1)(a) uses the word "Central Excise Officer" who is empowered for recovery of any refund, Central Excise Officer is defined in Sect....
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....ged any fraud upon the petitioner-assessee. 41. Further reliance placed by counsel for revenue on the decision of Addison and Company (supra), wherein it was held that recovery under Section 11A can be made where excise duty was refunded erroneously, but the Apex Court had also held that where the incidence of duty was not passed on and the assessee had borne burden of duty, thus he was entitled for the refund. Thus, both the cases relied upon by the department are not applicable in the present case, as it is neither a case of fraud, nor where incidence of duty was passed on. 42. Secondly, the argument of alternative remedy under Section 35 is concerned, the said fact is of no rescue to the department as specific case of petitioner is that show cause notice dated 17-8-2017 was issued after more than two years from finalisation of assessment order dated 24-7-2015, and where there is change of opinion by issuance of show cause notice, writ petition is maintainable as held in Shahnaaz Ayurvedics (supra), Simplex Concrete Piles (supra) and Samsung India Electronics Pvt. Ltd. (supra). 43. As seen above that Section 35E and 11A operate in different fields and are invoked for differ....