1992 (4) TMI 142 - AT - Central Excise

Summary

Issues Involved:
1. Mis-conceived Cross Objection
2. Eligibility for Refund
3. Department's Right to Recover Erroneously Refunded Amount
4. Limitation Period under Section 11A of the Central Excises & Salt Act, 1944

Issue-wise Detailed Analysis:

1. Mis-conceived Cross Objection:
At the outset, the Cross Objection was dismissed as mis-conceived in law since the respondent was not aggrieved against any part of the impugned order.

2. Eligibility for Refund:
The appeal was filed by the Department against the order of the Collector of Central Excise (Appeals), Madras, dated 13-9-1989. The respondent had filed two refund applications, one on 6-5-1987 for Rs. 18,46,536 and another on 10-2-1987 for Rs. 2,33,200. The Assistant Collector of Central Excise, Trichur, granted a refund of Rs. 12,10,937.40 for the first application and the entire amount for the second application. The Assistant Collector appropriated a sum of Rs. 13,77,398.40, which was due to the Department from the same party, and after appropriation, granted Rs. 66,739.

3. Department's Right to Recover Erroneously Refunded Amount:
The Department issued a show cause notice on 4-2-1988 to recover an erroneous refund of Rs. 1,81,640.60. The Department's right to recover the amount was negated by the lower appellate authority on grounds of limitation under Section 11A of the Central Excises & Salt Act, 1944. The Department contended that the time should be reckoned from 22-9-1987, when the Assistant Collector explained the partial acceptance and disallowance of the refund claim.

4. Limitation Period under Section 11A of the Central Excises & Salt Act, 1944:
The primary issue was whether the limitation period should start from 17-7-1987 or 22-9-1987. The judgment held that the refund was sanctioned on 17-7-1987, and the appropriation would arise only after the sanction of the refund. Therefore, the time for recovery of the erroneously refunded amount would start from 17-7-1987 in terms of Section 11A(3)(c) of the Act. The subsequent order dated 22-9-1987 was deemed clarificatory and inconsequential for reckoning the limitation period. Consequently, the Department's claim to recover the amount was barred by limitation, and the appeal was dismissed.

Separate Judgment Delivered by V.P. Gulati, Member (T):
V.P. Gulati agreed with the conclusions but provided additional reasoning. He emphasized that the limitation period should run from 17-7-1987 when the refund was sanctioned and appropriated. The letter dated 17-7-1987 informed the respondents about the sanctioned refund amounts and their appropriation. The subsequent detailed order dated 22-9-1987 was only clarificatory and did not affect the legality of the earlier sanction. Therefore, the limitation period for raising the demand should be reckoned from 17-7-1987, making the Department's demand barred by limitation.