1990 (8) TMI 240 - AT - Central Excise

Summary

Issues Involved:

1. Provisionality of the rebate granted on excess sugar production.
2. Applicability of the time bar to the demand for repayment.
3. Correctness of the Collector (Appeals)' decision to order de novo adjudication.

Detailed Analysis:

1. Provisionality of the Rebate:

The core issue was whether the rebate of Rs. 6,17,890.92 granted to the appellants was provisional. The Assistant Collector initially sanctioned this rebate without indicating it was provisional. However, in a later order, the Assistant Collector stated that the rebate was provisional. The Collector (Appeals) found no indication in the original sanction order that the rebate was provisional. The Tribunal supported this finding, noting that the order dated 28-10-1978 did not specify provisionality. It was highlighted that the rebate was subject to certain conditions, such as ensuring the entire quantity produced was cleared and adjusting for any losses. However, these conditions did not make the rebate provisional in the context of the present dispute. The Tribunal cited previous cases (Jagatjit Sugar Mills Co. and Malwa Sugar Mills Co. Ltd.) to support the view that the rebate was not provisional.

2. Applicability of the Time Bar:

The appellants argued that the demand for repayment issued on 18-5-1979 was barred by time. The Tribunal agreed, referencing Section 11A of the Central Excise Act, which prescribes a time limit for such demands. The Tribunal noted that if the rebate was not provisional, the demand for repayment was issued beyond the permissible period. The Tribunal emphasized that if the Department considered the rebate an erroneous refund, it should adhere to the time limit under Section 11A. The Tribunal also referenced the Supreme Court's judgment in the Doaba Co-operative Sugar Mills case, which underscored that departmental authorities must follow the statutory time limits for recovery actions.

3. Correctness of the Collector (Appeals)' Decision to Order De Novo Adjudication:

The Collector (Appeals) ordered de novo adjudication on the ground that the Assistant Collector's order confirming the demand did not specify the provision of the Central Excise Rules under which the demand was confirmed. The Tribunal found this unnecessary since the primary issue of provisionality was already resolved. The Tribunal concluded that the Collector (Appeals) should have set aside the Assistant Collector's order based on the time bar alone, without ordering a remand. However, a dissenting opinion by Member (T) argued that the remand was justified due to confusion about the facts and the need for a clear indication of the applicable rules. The dissenting opinion also emphasized that the rebate was given as an advance credit, subject to final clearance of the excess production, and thus, the time limit should be reckoned from the date of such clearance.

Majority Decision:

The majority opinion held that the rebate was not provisional and the demand for repayment was time-barred. Consequently, the Tribunal set aside both the Collector (Appeals)' order and the Assistant Collector's order, allowing the appeal on the ground that the entire demand was time-barred.