TaxTMI 
TaxTMI 
2023 (1) TMI 693
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....wing has been held: "ORDER 1. I have confirmed 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/- ....
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....se duty on account of PP model cars converted into taxis, for which cheques were issued in favour of the taxi owners but the amounts 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.....
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....nts on seven dealers. 2.10. Aggrieved by the order-in-original dated 29.3.2007, Appellant 1, M/s. PAL and other 5 dealers preferred appeals before Hon'ble CESTAT. The Hon'ble CESTAT vide Order A/853-859/07/C-I/EB dated 19.11.07 set 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 ....
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....y of the above transactions and have paid the entire amounts to PAL in the first instance. However subsequently when appellant came to know that PAL has not made the payments to ultimate taxi owners, they paid the amount again to the ultimate taxi owners. They themselves were the victim of fraud and no case can been made against them for imposition of penalty 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 impos....
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....vidual taxi owners after issue of show cause notice i.e. from October, 2001 (b) If on above verification on any amount is found to have not been refunded, then the same is to be confirmed. (c) Penalties, if any, required to be imposed should also be determined afresh. A. Verification of the evidence provided by M/s. FIL regarding payment of amount to individual taxi owners after issue of show cause notice i.e. from October, 2001 (i) M/S. FIL during the course of personal hearing on 7.2.2011 submitted 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. ....
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....Citibank vide their letter Ref #S-110503 - 005426-C/SM dated 16th July, 2011 addressed to Kurla Division had stated that they are in the process of retrieving the details of 101 instruments. M/s. FIL vide letter dated 4th Aug, 2011 have provided the certificates of Citibank covering the said 101 cases. The veracity of the said certificates issued by Citibank cannot be doubted. However in certain cases it is noticed that the name of the beneficiary mentioned in Show cause Notice and that shown in the said certificates issued by Citibank are not tallying. As per the CESTAT 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 2....
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....efunded an amount Rs. 15,92,889.50 (Rs. 17,81,001.62 (amount of refund sought to be denied in SCN)-Rs. 1,88,112.12 (amount not refunded to Taxi Owners). M/s. FIL have requested to adjust the said amount sought to be demanded. This submission of the assessee cannot be accepted in as much as duty is demanded under Section 11A of Central Excise Act, 1944 and refund is governed Section 11B of Central Excise Act, 1944. Further the powers of sanction of refund lies with the Assistant/Deputy Commissioner having jurisdiction over the unit as per Section. 11B ibid. Therefore, M/s. FIL is required to file refund claim with jurisdictional Assistant/Deputy Commissioner. vii. As regards penalty I find that neither the dealers nor M/s. PAL is responsible for fraudulent claim of refund 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 re....
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....ted 01.03.1997 34. If,- (a) the manufacturer at the time of clearance of motor vehicle mentioned against S. No. 195 in column (3) of the said Table (hereinafter in this condition referred to as the said motor vehicle) has paid excise duty calculated at the rate of 40% ad valorem; (b) the manufacturer furnishes to the Assistant Commissioner of Central Excise a certificate from an officer authorised by the concerned State Transport Authority, to the effect that the said motor vehicle has been registered for use solely as a taxi or ambulance, as the case may be, within three months of the clearance of the said motor vehicle from the factory of manufacture or such extended period as the said Assistant Commissioner may allow; (c) the manufacturer had not collected from the person, group of 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....
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....Government or a Union Territory Administration or a local authority." 4.4. In the case of the appellant the notifications were considered by the tribunal twice. In first round of litigation, interpreting the said conditions tribunal has vide the order No. A/466 to 504/WZB/05/C-II dated 27.10.2004/17.06.2005 observed as follows: "1.10 Since the issue revolves around the interpretation and procedure of 'Taxi Registration Refunds' under the excise notifications, all these appeals are being disposed by this common order. 2.1. Comparison of the conditions under which the procedure was prescribed for the duty adjustment after clearance and Registration as Taxi or Ambulance vide notification 4/97 and 5/98 dt 1.6.98 indicate that- i) Duty on clearance of such Motor Vehicles was required to be made on Tariff Rates as applicable. ii) Subsequent to such clearances, on Registration 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 o....
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....to "return" the excess amounts to any other person, then the buyer of the manufacturer, then there can be no penalty on such persons or others, for having produced or not produced photocopies of the cheques which are encashed or not encashed. Material not relevant or and required for establishing a claim under the Central Excise Law cannot be a reason for calling for penalty even if such material is found to be indicating taunt on subsequent enquiries. The persons who got/or did not get the return of amounts have a recourse to law to enforce their rights, it cannot be cause for penalty under the Central Excise Act. 2.5 In view of the findings, the orders are set aside and appeals allowed for denovo adjudication by determining the demands/recovery of erroneous refunds as per findings herein above. 3.1 All appeals allowed as Remand in above terms." Thus by the order dated 27.10.2004/17.06.2005, tribunal has specifically held that in terms of the 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....
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....mittedly the order dated 27.10.2004/17.06.2005 was not challenged by the revenue before any appellate authority and had thus acquired finality. Appellant have submitted before the Commissioner the details of the refund claims filed by them in terms of the notification 5/98-CE. The said details were produced before us which are reproduced below: The refund claims filed by the appellant in terms of the Notification 5/98-CE have been correctly allowed by the jurisdictional Assistant/deputy Commissioners in terms of the order of the tribunal dated 27.10.2004/17.06.2005 and demands in respect of these refund claims to the extent indicated above needs to be set aside. Sr. No . Name of the party Engine Number Claim Details Claim Number Claim Date Claim Amount 1 2 3 4 5 6 1 AshokS Bilose 52188 14 28.04.1998 25381.35 2 Sheikh Mo Yusuf Abdulla 50919 15 28.04.1999 28664.55 3 Shankar Bhiku Jadhav 52341 21 05.05.1999 26100.90 4 Shamsuddin M Umar 52275 23 05.05.1999 25050.60 5 Romraj SPal 52435 47 16.06.19....
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.... 39 Sayed Mehboob Hasan 50974 131 01.12.1998 27854.55 40 Majbool Hussain Tejmal 3160 168 14.01.1999 29694.60 41 Jainath Tiwari 51411 184 27.01.1999 25381.35 42 Mulchand B. Mali 3211 33 18.05.1999 27750.00 43 Shaikh A Kadi 52326 36 27.05.1999 25050.60 44 Shaikh Abdul Aziz A Kadir 1619 1 29.07.2000 26873.28 45 Mohd.Amil Afzal hmed 1634 1 29.07.2000 26873.28 46 Aslam.M Thakkar 51764 170 14.01.1999 25381.35 47 DiwakarD Singh 3202 6 28.04.1999 27750.60 48 Shamim Ahmed 51538 160 28.12.1999 25381.35 49 Rajesh Singh 51508 162 04.01.1999 25381.35 50 Nizamuddin K Ahmed 51648 161 04.01.1999 25381.35 51 Jarman Singh 51564 134 01.12.1998 25381.35 52 Mohd Isreal 51159 126 12.11.1998 25381.35 53 Shaikh Mustafa 51389 125 12.11.1998 25381.35 54 Rajkumar Udharan 50626 82 03.08.1998 27854.60 55 Kishor Yeotikar 51782 203 10.03.1999 28664.55 56 R. B. D....
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.... ****Pg. No. 684 to 687 of the Appeal. 8 Mohd Sadique Mahd S K Papamiya 25,381.35 362492 ****Pg. No. 688 to 691 of the Appeal. 9 Rajendra H Chourasiya Champadevi R Chourasiya 25,381.35 000024 ****Pg. No. 692 to 707 of the Appeal. 10 Mohd Zahir Khan M M Zahir 26,720.64 000064 ****Pg. No. 708 to 717 of the Appeal. 22 Gulhasan M Ali JG Hasan 26,720.64 000023 ****Pg. No. 718 to 740 of the Appeal. 286186.33 *Typing error in the order issued. Correct Ch. No. 362437 issued to beneficiary (i.e., Anwar Husain Abdulla) Copy of Bank Certificate attached for the same. **Ch. No. 363290 issued to Mir Ali Ch. No. 363190 issued to Nazeer I. Khan correct name of beneficiary shown by Citibank. ***Bank has not given beneficiary name in the certificate ****Amount refunded to Legal Heir as per Affidavit. During the course of hearing and taking note of the fact that the this is third round of litigation in respect of the proceedings initiated vide SCN of 2001, the said document were taken up for sample verification by us and having ....
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.... the extent of three claims indicated in para 4.6 above i.e. to the extent of Rs. 80,169.75. However we also take note of the fact and the submission made by the counsel for the appellants, that none of the refund orders made against the refund claim filed by the appellant revenue has sought to challenge the said orders by way of filling the appeal before the Commissioner (Appeals). It is settled law that the refund orders made in terms of the Section 11B of the Central Excise Act, 1944 are judicially determined, the same needs to be set aside in the manner as provided in law. Having not filed any appeal against the said refund orders those order had acquired finality and could not have been challenged by way of the proceedings initiated under Section 11A. 4.9. In the case of Eveready Industries India Ltd., [2016 (337) ELT 189 (Mad)] Hon'ble Madras High Court has held as follows: "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....
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....3. In simple terms, the refund that the appellant got was and should have been only after an adjudication under Section 11B and not without an adjudication. It must be pointed out that if an authority has done something, it must be presumed that he has done it in accordance with law. Therefore, we would give the benefit of doubt to the Assistant Commissioner and presume that before according sanction in September, 1998 for refund, he had actually followed the procedure under Section 11B and passed 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'. 35. The expression 'Central Excise Officer' is defined in Section 2(b) to mean the Chief Commi....
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.... Authority to file an appeal against the order of refund under Section 11B, to the Commissioner of Appeals under Section 35. This was not done in this case. On the contrary, the authorities allowed the order to be passed in Appeal No. 206/98, dated 30-11-1998 on the basis of the refund already made. 40. Now, coming to the decisions, on which, heavy reliance is placed by the learned standing counsel for the Department, it is seen from the decision of the Supreme Court in Jain Shudh Vanaspathi Ltd., that the whole proceedings were held by the Supreme Court to be vitiated by fraud. The decision of the Supreme Court in Jain Shudh Vanaspathi Ltd., will not go to the rescue of the Department in view of the fact that there was a clear finding that the assessee got the goods cleared for home consumption under Section 47 of the Customs Act by playing a fraud upon the Department. Therefore, when an objection was taken that after clearance under Section 47, the provisions of Section 124 cannot be invoked, the Supreme Court pointed out that fraud vitiates all solemn acts. That is not the type of case that we are dealing here. 41. Insofar as the decision of the Full Bench of t....
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.... the two questions of law referred was as to whether the amount erroneously refunded could not be recovered by filing an appeal under Section 35E without issuing a demand notice under Section 11A. That is not the situation in this case. 46. In this case, an order of refund was passed on an application under Section 11B. The appeal against the finalisation of the assessment was closed on the basis of the refund order. There can be no doubt about the fact that the statutory right of appeal is a valuable right conferred upon the assessee. That right was actually altered on the basis of an order of refund. Suppose there had been no order of refund, the appeal could have been pursued against the finalisation of the assessment. 47. In other words, two valuable rights, one in the form of right of appeal and another in the form of order of refund, are now sought to be taken away indirectly by taking recourse to Section 11A. What cannot be done directly cannot be done indirectly also. 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 Andh....
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....by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices is without jurisdiction and is liable to be struck down." 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 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....
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....ecovery of any refund, Central Excise Officer is defined in Section 2(b) of the Act, to mean Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or any other officer of Central Excise Department invested by Central Board of Excise and Customs constituted under Central Board of Revenue Act, 1963 with any of powers of a Central Excise Officer under the Act. Thus, an order of recovery can be passed under Section 11A by an Assistant Commissioner, as he happens to be a Central Excise Officer in terms of Clause (a) of sub-section (1) of Section 11A, though an application under sub-section (2) of Section 11B can be made and an order for refund can either be passed by Assistant Commissioner or by Deputy Commissioner. Meaning thereby that a Deputy Commissioner can pass an order for refund under Section 11B(2) and an Assistant Commissioner can invoke proceedings for recovery under Section 11A(1). 38. This could lead to a situation where power of recovery under Sec....