2007 (8) TMI 575 - AT - Central Excise

Summary

Issues involved: Recovery of erroneous refund from the appellant based on a show cause notice issued by the revenue department.

Summary:

The appeal was filed against the order-in-appeal dated 31-1-2006 seeking recovery of an erroneous refund granted to the appellant. The appellant contended that the show cause notice for recovery was time-barred as the refund was sanctioned in 1998-99. Both the adjudicating authority and the Commissioner (Appeals) upheld the recovery of the refund.

The main issue raised by the appellant was the limitation period for recovery. The appellant argued that corrective action should have been taken promptly after the refund was sanctioned, citing Section 11A and Board Circular No. 423/56/98. The Commissioner (Appeals) relied on the Supreme Court's judgment in Woodcraft Products Ltd. to support the recovery of the refund.

The Commissioner (Appeals) held that the plea of time-bar was not sustainable based on the Woodcraft Products Ltd. case. However, the appellant argued that the facts of the present case differed from the Woodcraft case, emphasizing that the revenue should have issued the show cause notice promptly after the refund was granted in 1998-99, as per the CBE & C Circular No. 423/56/98.

The Circular clarified the requirement for timely demands to be raised within the specified period under Section 11A. The Tribunal set aside the impugned order, stating that the revenue was obligated to follow the Circular, and allowed the appeal in favor of the appellant.

The judgment was pronounced on 27-8-2007.