2012 (5) TMI 406 - CGOVT - Central Excise

Revision application - show cause notice was issued to the applicants for recovery of erroneously refund amount under rebate claim Held that - sanction of refund claim involves an administrative adjustment of funds disbursed as rebate for statistical purposes. Government observes that applicant cannot be penalized by ordering recovery of already sanctioned rebate claims on the grounds for a mistake committed by ACCE who sanctioned the claim without having jurisdiction. Since the payment of duty and export of goods is not in dispute, the rebate cannot be denied on merit also, show cause notice was time barred and therefore proceeding initiated under said SCN is liable to be dropped, revision application succeeds

Summary

Issues involved:
Recovery of erroneously refunded duty, interest, and penalty under the Central Excise Act, 1944; Jurisdiction for sanctioning rebate claims; Time limitation under Section 11A for recovery proceedings; Mis-statement of facts in rebate claims; Imposition of penalty under Section 11AC; Charging interest under Section 11AB.

Analysis:

1. Recovery of Erroneously Refunded Duty, Interest, and Penalty:
The case involved the recovery of duty paid bought out goods exported by mis-declaring them as manufactured, leading to an erroneously refunded amount of Rs. 34,19,623. The original adjudicating authority confirmed the demand and imposed interest and penalty under the Central Excise Act, 1944. The applicant appealed against this order, which was rejected by the Commissioner (Appeals).

2. Jurisdiction for Sanctioning Rebate Claims:
The applicant argued that the excisable goods exported were not materials used in manufacturing but were cleared in original packing condition, making them eligible for rebate under Rule 18 of the Central Excise Rules. The question of which authority should sanction the rebate was deemed procedural, and the Tribunal's decision in a similar case was cited to support this argument.

3. Time Limitation under Section 11A:
The applicant contended that the demand covered by the show cause notice was time-barred under Section 11A due to the absence of evidence of wilful misstatement or suppression of facts. The applicant had declared details of procured goods in export documents, and the department was aware of the procurement and export process, indicating no misdeclaration.

4. Mis-Statement of Facts and Imposition of Penalty:
The applicant maintained that there was no wilful misstatement or misdeclaration of facts, as evidenced by the documents filed along with rebate claims. The Commissioner (Appeals) was criticized for upholding the penalty under Section 11AC, which was deemed incorrect and unsustainable.

5. Charging Interest under Section 11AB:
The applicant argued that the question of charging interest under Section 11AB did not arise, as there was no wilful misstatement or misdeclaration. The imposition of interest was deemed incorrect and unsustainable.

6. Government's Observations and Decision:
Upon review, the Government noted that the show cause notice for recovery was time-barred under Section 11A, as there was no suppression of facts by the applicant. The Government also observed that the sanctioning of rebate claims by an authority without proper jurisdiction could not render the claims illegal, especially when the goods were duly exported and duty paid. Consequently, the Government set aside the impugned order, allowing the revision application and dropping the recovery proceedings initiated under the show cause notice.

7. Conclusion:
The Government's decision was in favor of the applicant, ruling that the recovery proceedings were time-barred and should be dropped. The revision application succeeded based on the above observations.

This comprehensive analysis covers the issues of recovery of erroneously refunded duty, jurisdiction for sanctioning rebate claims, time limitation under Section 11A, mis-statement of facts, imposition of penalty, and charging interest under the Central Excise Act, 1944, culminating in the Government's decision to drop the recovery proceedings.