2008 (9) TMI 875 - HC - Central Excise

Refund of duty paid by the petitioner under the order-in-original dated 30-11-1995 denied - Held that - The narrow meaning assigned to the words such duty appeared in Rule 156B(2) is absolutely incorrect and not tenable at law. The petitioner cannot be denied refund on such ground. We accordingly hold and declare that the action of the respondents of denying the refund of duty paid by the petitioner under the order in original dated 30-11-1995 is unreasonable unconstitutional inequitable illegal and void. We therefore quash and set aside the order dated 7-11-2005 passed by CESTAT and allow the refund claim of the petitioner. We therefore direct the respondents to refund the amount of 1, 11, 93, 757/- along with interest at the rate at which interest was charged and claimed from the petitioner on the delayed payment of such duty to the petitioner within 30 days from the date of receipt of writ of this Court or from the date of receipt of certified copy of this order whichever is earlier. It is made clear that the amount so directed to be paid if not paid the concerned Officer shall be personally liable to pay the interest so charged for the period exceeding 30 days as indicated above.

Issues Involved:
1. Denial of refund of duty paid by the petitioner.
2. Applicability of Rule 156B of the Central Excise Rules, 1944.
3. Legitimacy of the order dated 30-11-1995 by the Commissioner of Central Excise.
4. Jurisdiction and scope of remand orders.
5. Maintainability of the writ petition under Article 226 of the Constitution of India.

Detailed Analysis:

1. Denial of Refund of Duty Paid by the Petitioner:
The petitioner, Indian Oil Corporation Limited, filed a petition under Article 226 of the Constitution of India seeking a declaration that the denial of a refund of duty paid under the order-in-original dated 30-11-1995 was unreasonable, unconstitutional, inequitable, illegal, and void. The petitioner also sought the quashing of the order dated 7-11-2005 by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and requested a direction to refund Rs. 1,11,93,757/- along with interest.

2. Applicability of Rule 156B of the Central Excise Rules, 1944:
The petitioner argued that the duty was paid under Rule 156B due to the non-production of rewarehousing certificates within 90 days. Upon receiving the certificates, the petitioner filed a refund application under Rule 156B. The authorities, however, rejected the refund claim, asserting that the duty was confirmed under Rule 9(2) read with Section 11A and not under Rule 156B. The court found that the order dated 30-11-1995 was effectively an order directing recovery of duty under Rule 156B and that the petitioner was entitled to a refund upon presenting the rewarehousing certificates.

3. Legitimacy of the Order Dated 30-11-1995:
The Commissioner of Central Excise, in the order dated 30-11-1995, directed the recovery of duty on the grounds that the petitioner had not established procurement by proper consignees despite producing CT-2 certificates. The court noted that the Commissioner's order was based on the assumption that the goods were diverted and not used for the intended purpose, which was erroneous once the rewarehousing certificates were presented.

4. Jurisdiction and Scope of Remand Orders:
The Commissioner (Appeals) had remanded the matter for verification of factual details regarding the rewarehousing documents, not for re-examining the entire issue. The Deputy Commissioner exceeded his jurisdiction by issuing a show-cause notice and re-adjudicating the matter, ultimately rejecting the refund claim. The court held that the subsequent orders, including the one by CESTAT, were beyond the scope of the remand and without jurisdiction.

5. Maintainability of the Writ Petition under Article 226:
The respondents argued that the petition was not maintainable due to the availability of an alternative remedy under Section 35G of the Central Excise Act. The court, however, held that in cases where the order is without jurisdiction, violates principles of natural justice, or contravenes fundamental rights, the High Court can exercise its jurisdiction under Articles 226 and 227. Given that the Deputy Commissioner's order was beyond the scope of the remand and the petitioner's legitimate claim for a refund was denied, the court found it appropriate to intervene.

Conclusion:
The court concluded that the denial of the refund was unreasonable, unconstitutional, inequitable, illegal, and void. The order dated 7-11-2005 by CESTAT was quashed, and the respondents were directed to refund Rs. 1,11,93,757/- along with interest within 30 days. The court emphasized that if the amount was not paid within the stipulated period, the concerned officer would be personally liable for the interest on the delayed payment. The petition was allowed, and the rule was made absolute without any order as to costs.

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