2024 (5) TMI 1337 - HC - Central Excise

Recovery of refund granted twice - grant of refund again by suppressing fact of suo moto availment of credit - Levy of penalty u/s 11AC - existence of mens rea or not - HELD THAT - A bare reading of Section 11AC of the Act, 1944 shows that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, for any reasons other than the reason of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or of Rules made thereunder with intention to evade payment of duty, he shall be liable to pay penalty. Meaning thereby that there should be an intention to evade the payment of duty and in the present case, the mens rea of the appellant is proved from his conduct since it took the benefit of refund twice by suppressing fact of suo moto availment of credit. There are no error much less perversity in the order impugned, warranting intervention by this Court - appeal dismissed.

Summary

Issues Involved:
1. Refund Claim Rejection and Time Bar.
2. Suo-Moto Credit and Show Cause Notice.
3. Double Refund and Penalty Imposition.

Summary:

1. Refund Claim Rejection and Time Bar:
The appellant, engaged in manufacturing rolled steel products, filed a refund claim of Rs. 1,98,148.67 on 10.07.1989, arguing that duty was paid on products exempted from duty as per the Supreme Court's ruling. The Assistant Commissioner rejected the refund claim on 25.10.1989, citing it as time-barred. The appellant challenged this in CWP No. 773 of 1990, and the court ordered the refund with costs. The respondent-Department's challenge was rejected up to the Supreme Court.

2. Suo-Moto Credit and Show Cause Notice:
In another demand case, CEGAT set aside a demand of Rs. 31,448/- on 17.07.1992, deeming the Show Cause Notice time-barred. The appellant took suo-moto credit of Rs. 1,98,148.67 and Rs. 31,448/- in their PLA account on 02.07.1993. A Show Cause Notice dated 23.12.1993 was issued for recovery of Rs. 2,30,596/- due to the suo-moto credit without refund orders. The Deputy Collector directed a decision on the refund application within a month, maintaining status quo until then.

3. Double Refund and Penalty Imposition:
The appellant filed refund applications without disclosing the suo-moto credit. Two Show Cause Notices were issued, and the Adjudicating Authority rejected the refund claim of Rs. 31,448/- and credited Rs. 1,99,148.67/- to the consumer welfare fund. The appellant's appeal was partly allowed by CEGAT, ordering a refund with interest, but the fact of suo-moto credit was not disclosed. The appellant encashed cheques for the refunds again, leading to a Show Cause Notice for recovery. The Adjudicating Authority confirmed the demand and imposed a penalty of Rs. 2,30,596/- u/s 11AC of the Act, citing suppression of facts and fraudulent conduct.

The court found no error in the impugned order, noting the appellant's mens rea was evident from the double refund by concealing facts, justifying the penalty under section 11AC of the Central Excise Act, 1944. The appeal was dismissed, and all pending miscellaneous applications were disposed of.