2001 (10) TMI 614 - AT - Central Excise

Summary

Issues:
1. Whether the show cause notice for recovery of refunded duty based on unjust enrichment under Section 11B of the Central Excise Act was valid.
2. Whether the order of the Assistant Collector dated 20-12-1991, implementing the refund order of the Collector (Appeals), was final and binding, preventing the issuance of the show cause notice.

Analysis:

Issue 1:
The case involved a dispute regarding the validity of a show cause notice issued by the department to recover a refunded duty amount based on unjust enrichment under Section 11B of the Central Excise Act. The Assistant Collector had initially rejected a refund claim, but the Collector (Appeals) allowed the refund, which was implemented by the Assistant Collector. Subsequently, the department issued a show cause notice to recover the refunded amount, invoking the bar of unjust enrichment. The lower appellate authority upheld the department's claim, relying on the Supreme Court's decision in Union of India v. Solar Pesticide Ltd. However, the Tribunal found that the show cause notice was issued contrary to law as laid down by the Supreme Court in Mafatlal Industries. The Tribunal held that the refund proceedings had terminated before the unjust enrichment provisions came into force, making the show cause notice invalid and all subsequent proceedings null and void. The appeal was allowed, and the impugned order was set aside.

Issue 2:
Regarding the order of the Assistant Collector dated 20-12-1991, which implemented the refund order of the Collector (Appeals), the appellant argued that since this order was not appealed against by the department, it became final and binding, preventing the issuance of the show cause notice. However, the Tribunal disagreed with this argument, stating that the Assistant Collector's order was for implementation purposes and not an order in adjudication, making it non-appealable. Therefore, the claim of finality and binding nature of the Assistant Collector's order was deemed unsubstantiated. The Tribunal set aside the impugned order and allowed the appeal based on the findings related to the first issue.

In conclusion, the Tribunal found that the show cause notice for recovery of the refunded duty based on unjust enrichment was invalid, as the refund proceedings had terminated before the relevant provisions came into force. Additionally, the order of the Assistant Collector dated 20-12-1991, being for implementation purposes, did not prevent the issuance of the show cause notice. The appeal was allowed, and the impugned order was set aside.