2010 (4) TMI 169 - HC - Central Excise

Refund of education cess department rejected a refund of education cess of Rs.5.52 lakhs as inadmissible to the company - Ispat had moved an application for a rebate in respect of the component both of the basic excise duty and the education cess initially on 8 September 2004. The claim for rebate to the extent of education cess was rejected on 30 November 2004. The claim for rebate was allowed only in respect of the basic excise duty. Ispat had moved four other applications in which the same view was taken by the Assessing Authority and, as a matter of fact, cheques were received by Ispat representing the quantum of rebate only in respect of the component of basic excise duty. Ispat chose not to challenge the order passed by the Deputy Commissioner of Central Excise on 30 November 2004 rejecting the claim of rebate in respect of education cess. No appeal was filed against that order. Ispat received and accepted the cheques in the other claims and did not challenge the denial of the rebate qua education cess. On 20 December 2005, over a year after passing of the first order an application was moved before the Assessing Authority seeking a rebate in respect of education cess. Held that if a petitioner has disabled himself from availing himself of a statutory remedy by his own fault in not doing so within the prescribed time, he cannot certainly be permitted to urge that as a ground for the Court dealing with his petition under Article 226 to exercise its discretion in his favour - In these circumstances, this Court in the exercise of its jurisdiction under Article 226 would be duty bound to correct what would otherwise have been a manifest failure of justice originating in an abuse of the process of law by Ispat. The challenge by Ispat to the order dated 30 November 2004, addressed before the Court in a petition filed on 6 March 2010, suffers from unexplained delay. Apart from the reasons, which we have already indicated, we do not consider it appropriate to exercise the writ jurisdiction under Article 226 in favour of a petitioner, who is guilty of an abuse of process and of unexplained delay.

Summary

Issues Involved:
1. Validity of the order dated 30 November 2004 rejecting the rebate of education cess.
2. Legality of the order dated 11 September 2009 by the revisional authority granting rebate of education cess.
3. Timeliness and maintainability of the application for rebate filed on 20 December 2005.
4. Alleged abuse of process by Ispat Industries Limited in seeking rebate.

Detailed Analysis:

1. Validity of the Order Dated 30 November 2004:
Ispat Industries Limited (Ispat) challenged the order passed on 30 November 2004 by the Deputy Commissioner of Central Excise, which denied a rebate of education cess amounting to Rs.5.52 lakhs. The Deputy Commissioner allowed the rebate of basic excise duty but held that education cess was admissible for rebate only from 6 September 2004 under Notification No.19/2004NT, and since the goods were exported prior to that date, the rebate could not be granted. Ispat did not appeal against this order at the time, leading to its finality.

2. Legality of the Order Dated 11 September 2009:
The Union of India contested the order dated 11 September 2009 by the Joint Secretary to the Government of India, which granted Ispat a rebate on the education cess paid on exported goods. The Union argued that Ispat had not filed any appeal against the earlier orders and that the fresh claim filed on 20 December 2005 was beyond the limitation period specified under Section 11B of the Central Excise Act, thus barred by limitation.

3. Timeliness and Maintainability of the Application for Rebate:
Ispat filed an application on 20 December 2005 seeking a refund of education cess for the same transactions for which the rebate was earlier denied. The application was rejected by the Assistant Commissioner and affirmed by the Commissioner (Appeals). The revisional authority, however, allowed the rebate on 11 September 2009. The Union of India issued a show cause notice on 22 December 2009, questioning the maintainability of the application filed beyond the limitation period and without disclosing the previous rejection.

4. Alleged Abuse of Process by Ispat Industries Limited:
The Court noted that Ispat did not disclose the rejection of its rebate claim on 30 November 2004 in its subsequent application filed on 20 December 2005. This omission led the authorities to treat the application as if it were the first. The Court observed that Ispat's failure to disclose this material fact constituted a serious abuse of process. The Court emphasized that a person seeking a refund must make a full and candid disclosure of all material facts, and Ispat's conduct in suppressing the earlier rejection was a significant lapse.

Conclusion:
The Court held that the petition filed by Ispat was an abuse of process and suffered from unexplained delay. Consequently, the writ petition filed by the Union of India was allowed, setting aside the order dated 11 September 2009 by the Joint Secretary to the Government of India. The writ petition filed by Ispat was dismissed, and no order as to costs was made.