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2021 (12) TMI 673 - AT - Central ExciseRefund of Additional Excise Duty (AED) - applicability of amended Section 11AB (effective 11 May 2001) on account of an erroneous refund of the AED - period April 2000 to May 2001 - HELD THAT - Section 11AB was inserted in the statute book only with effect from 28 September 1996. Intention to evade was an essential concomitant under the pre-amended Section 11AB(1), however, the said requirement was done away with under the amended Section 11AB(1). In the instant case, it is an undisputed position clearly forthcoming from the case records that the erroneous refund of AED to the respondent was not attributable to any mala fide or intent to evade on the part of the respondent thereby ruling out the applicability of the pre-amended Section 11AB(1). The Board vide Circular dated 26 June 2002 taking note of the decision of the Hon ble Supreme Court in the case of MP Tapesrendered in the context of Section 11AB, clarified that the date of passing of the adjudication orders have no bearing in the matter of interpretation of the expression duty become payable or ought to have been paid - the contentions of the revenue as regards passing of the adjudication orders holding the refund as erroneous in February 2002 does not allow them to take recourse to amended Section 11AB(1) in view of the restrictions contained in the amended Section 11AB(2). The proposal in the Notice to recover interest from the date of grant of erroneous refund as evident from the annexure thereof itself militates against the revenue s contention of the interest liability accruing under the amended Section 11AB basis the date of the adjudication order. The amended Section 11AB(1) shall apply in the matter of recovery of interest on such erroneous refund in respect of April 2001 and May 2001 and to that extent the OIA dated 25 November 2010 deserves to be modified - the alternate contention of the Respondent as regards lack of any substantive provision for recovery of interest in the statute charging AED , cannot be accepted. The provision of Section 133(3) of the Finance Act, 1999 incorporates by reference, all such provisions of the Central Excise Act in relation to levy and collection of AED . The expression collection is wide enough to include collection of erroneous refund of AED . The Appeal filed by the Revenue is partly allowed.
Issues:
- Applicability of Section 11AB of the Central Excise Act on an erroneous refund of Additional Excise Duty (AED) granted to the respondent. - Interpretation of amended Section 11AB(2) in relation to the recovery of interest on erroneous refunds. - Consideration of judicial decisions and circulars in determining the liability for interest under Section 11AB. - Dispute regarding the recovery of interest on the erroneous refund of AED granted to the respondent. Analysis: 1. The case involved an appeal by the Revenue against an Order-in-Appeal setting aside an Order-in-Original and dropping the demand for interest on an erroneously refunded amount of AED under Section 11AB of the Central Excise Act. The respondent, a Public Sector Undertaking, was erroneously refunded AED and subsequently made good the entire amount in two tranches. The Revenue initiated proceedings for the recovery of interest under Section 11AB, which was confirmed by the adjudicating authority. However, the Commissioner (Appeals) allowed the appeal based on the non-applicability of Section 11AB due to the absence of intent to evade payment of duty. 2. The Revenue contended that the amended Section 11AB should apply to demand interest on the erroneously refunded amount, even though the adjudication orders were passed before the amendment. They argued that the recovery of the refund was covered by the amended Section 11AB and cited relevant tribunal decisions and circulars to support their position. 3. In response, the respondent argued that the erroneous refund was not due to any intent to evade and therefore, the pre-amended Section 11AB did not apply. They also highlighted that the amended Section 11AB(2) carves out exceptions and does not extend to cases where the duty had become payable before a specific date. They referenced judicial decisions and circulars to support their interpretation of the law. 4. After hearing both parties and examining the case records, the Tribunal concluded that the amended Section 11AB(1) should apply to the recovery of interest on the erroneous refund for the months of April and May 2001, as the liability to pay back the refund arose after the amendment date. The Tribunal rejected the Revenue's argument that the amended Section 11AB did not cover erroneous refunds, emphasizing that the refund of AED falls within the scope of Section 11AB. Additionally, the Tribunal dismissed the respondent's argument regarding the lack of a specific provision for the recovery of interest in the statute charging AED, stating that the provisions of the Central Excise Act apply mutatis mutandis in such cases. 5. Ultimately, the Tribunal partly allowed the appeal filed by the Revenue, modifying the Order-in-Appeal to reflect the application of the amended Section 11AB in recovering interest on the erroneous refund for specific months. The judgment was pronounced on 16 December 2021 by the members of the Appellate Tribunal CESTAT Kolkata.
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