2009 (11) TMI 69 - HC - Central Excise

Refund Unjust enrichment captive consumption - refund amount was paid to the dealer-respondent - the appellant issued a show cause notice dated 8.6.2000(Annexure A.3) for recovery of the refund amount on the ground that captive consumption also amounted to undue enrichment and proceedings under Section 11-A of the Act were initiated. The aforesaid recovery proceedings eventually reached the Tribunal. The Tribunal vide impugned order dated 15.7.2008 has rightly taken the view that once order dated 24.8.1998 has attained the finality and has not been set aside in appeal, the parallel proceedings under Section 11-A of the Act cannot again be initiated.

Summary

Issues:
1. Challenge to order passed by the Custom, Excise & Service Tax Appellate Tribunal under Section 35(G) of the Central Excise Act, 1944.
2. Interpretation of the application of unjust enrichment in cases of captive consumption.
3. Validity of initiating recovery proceedings under Section 11-A of the Act after the finality of a previous order.
4. Consideration of the principle of res judicata in the context of refund sanctioning orders.

Analysis:

1. The appeal challenged the order passed by the Custom, Excise & Service Tax Appellate Tribunal under Section 35(G) of the Central Excise Act, 1944. The Tribunal had taken a view on the application of the principle of unjust enrichment in cases of captive consumption, following a previous judgment of the Bombay High Court. However, the Supreme Court later reversed the Bombay High Court's view on the appeal filed by the Union of India. This reversal led to the initiation of recovery proceedings by the appellant under Section 11-A of the Act, which reached the Tribunal for consideration.

2. The Tribunal, in its impugned order dated 15.7.2008, correctly held that once a previous order had attained finality and had not been set aside on appeal, parallel proceedings under Section 11-A of the Act could not be initiated again. The Tribunal emphasized that the order sanctioning refund could not be challenged successfully unless the earlier order was set aside. Therefore, the proceedings were set aside, and the appeal of the dealer-respondent was allowed based on the principle of res judicata.

3. Upon hearing the arguments, the High Court found no grounds to interfere with the Tribunal's view. It was noted that no question of law, let alone a substantial question of law, arose for determination by the court. The counsel for the appellant did not raise any such question either. Consequently, the appeal was dismissed by the High Court, affirming the Tribunal's decision.

4. The judgment, delivered by Hon'ble Mr. Justice M.M. Kumar and Hon'ble Mr. Justice Jaswant Singh, concluded on November 30, 2009, with a clear dismissal of the appeal. The High Court's decision upheld the principle of finality in legal proceedings and the importance of adhering to the doctrine of res judicata in matters concerning the sanctioning of refunds and the initiation of recovery proceedings under the Central Excise Act, 1944.