2019 (1) TMI 772 - HC - Central Excise

Recovery of amount of Excise duty received back by it as refund - Held that - Petitioner with all bona fides paid Excise Duty for second supply as per law and then proceeded to claim refund for first supply. When department found that no Excise Duty was payable for second supply it ought to have refunded that amount to him without going into technical aspects of the matter - the interest of justice can be met with by directing respondents to treat the refund already made to petitioner as refund of Excise Duty paid by it on second supply. Accordingly amount already paid to petitioner be adjusted and there shall not be any recovery from petitioner on said count - appeal allowed in part.

Summary

Issues:
1. Challenge to the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT).
2. Refund claim of Excise Duty paid by the petitioner.
3. Interpretation of Rule 173L and Section 11B of the Excise Act.
4. Responsibility of the State in charging and collecting revenue.
5. Adjustment of the refund amount already paid to the petitioner.

Analysis:

1. The petitioner challenged the order passed by CESTAT on 26-2-2004, which allowed the appeal filed by the department, requiring the petitioner to return the Excise Duty refunded earlier. The High Court stayed this requirement, noting the absence of the petitioner during the proceedings.

2. The petitioner, a manufacturer of steel coils, paid Excise Duty when the coils were supplied to Railways and other customers. Upon the return of the coils, the petitioner cut them into smaller pieces and supplied them to other consumers, paying Excise Duty again. A refund claim was made under Rule 173L, which was accepted after an appellate order.

3. CESTAT's decision was based on the finding that no manufacturing occurred when the coils were returned and cut into smaller bundles for the subsequent supply. This led to the conclusion that Excise Duty was not required for the second supply, rendering the refund claim under the wrong provision and not within the six-month limit of Section 11B.

4. The High Court emphasized the State's responsibility in revenue collection and criticized CESTAT for taking a technical view when no excisable transaction occurred during the second supply. The Court noted that the duty paid for both supplies was the same, indicating the petitioner's compliance with the law.

5. In the interest of justice, the High Court directed the respondents to treat the refund already made to the petitioner as pertaining to the Excise Duty paid for the second supply. The Court ordered the adjustment of the amount already paid to the petitioner, relieving them from any further recovery on that account. The writ petition was partly allowed without costs.