2001 (8) TMI 249 - AT - Central Excise

Summary

Issues involved: Refund claim admissibility, validity of show-cause notice u/s 11A, unjust enrichment, appellate review of refund order.

Refund Claim Admissibility: The appellant filed a refund claim for duty paid at 10% ad valorem instead of the actual rate of 8% ad valorem for Glass and Glassware. The Assistant Commissioner sanctioned the refund claim, allowing the credit in RG 23A Part II. However, the Revenue later issued a show-cause notice u/s 11A for recovery of the refund, contending it was inadmissible due to duty burden passed to buyers. The appellate authority upheld the demand of duty.

Validity of Show-Cause Notice u/s 11A: The appellant argued that the show-cause notice under Section 11A was invalid as the Assistant Commissioner's refund order was not appealed against. Citing precedent, it was noted that a show-cause notice under Section 11A should precede proceedings under Section 35E(2) and must be issued within six months from the date of actual refund. Failure to appeal against the refund order rendered the show-cause notice invalid, as per legal interpretation.

Unjust Enrichment: The appellant contended that the excess duty recovered from customers was refunded through credit notes, thus unjust enrichment did not apply. However, this argument was not accepted by the authorities, leading to the confirmation of the duty demand.

Appellate Review of Refund Order: The Tribunal emphasized the procedural requirement for the Department to initiate proceedings under both Section 11A and Section 35E(2) for recovery of erroneous refunds. In this case, as no appeal was filed against the refund order and the show-cause notice was issued without seeking to set aside the refund order, the proceedings were deemed invalid. Consequently, the impugned order was set aside solely on procedural grounds, leading to the allowance of the appeal and disposal of the Stay Petition.