1995 (7) TMI 194 - AT - Central Excise

Summary

Issues Involved:
1. Whether the SCN is time-barred?
2. If it is within time, whether it can disturb the fait accompli nature of the refund already sanctioned so as to construe it to be a case of pending refund for applying the amended provisions of Section 11B.
3. Whether the decision of the Supreme Court in the case of Jain Spinners and ITC Ltd. would stand attracted in this case?

Detailed Analysis:

1. Whether the SCN is time-barred?
The Tribunal examined the relevant date for the issue of demand under Section 11A in the case of erroneous refund. It concluded that the relevant date is the date on which the cheque was issued, not the date of preparation or sanction. The cheque dated 20-11-1989 was issued on 18-12-1989. Therefore, the SCN issued on 4-5-1990 was within six months, making it timely. The Tribunal emphasized that Section 11A and 11B are independent provisions for recovery of short levy of duty or erroneous refund or for grant of refund of excess duty paid, and hence, review under Section 35E is not necessary.

2. If it is within time, whether it can disturb the fait accompli nature of the refund already sanctioned so as to construe it to be a case of pending refund for applying the amended provisions of Section 11B.
The Tribunal considered whether a demand issued within the parameters of Section 11A for recovery of erroneous refund could be construed as a pending claim. It concluded that an appeal is a continuation of the original proceedings, and if a demand has been issued within the time limit, the assessments get reopened and the issue remains open until adjudication is concluded. Therefore, the refund originally sanctioned cannot be said to have acquired finality if a timely demand has been issued for its recovery.

3. Whether the decision of the Supreme Court in the case of Jain Spinners and ITC Ltd. would stand attracted in this case?
The Tribunal analyzed the applicability of the Supreme Court judgments in Jain Spinners and ITC Ltd. In Jain Spinners, the Supreme Court held that a refund application pending before the Assistant Collector must be considered in light of the amended provisions of Section 11B. The Tribunal noted that the decision did not explicitly give retrospective effect to the amended provisions but applied them to pending cases to do complete justice.

In ITC Ltd., the Supreme Court held that the amended provisions of Section 11B apply to all pending refund claims, even if the refund has been granted based on an interim order. The Tribunal concluded that the ratio of the ITC judgment applies to the present case. Since the refund was sought to be recovered as erroneous within the time limit, it could not be said to have acquired finality. Therefore, the amended provisions of Section 11B could be applied during the pendency of adjudication.

The Tribunal dismissed the appeal, holding that the Assistant Collector was justified in ordering recovery and credit to the Consumer Welfare Fund, following the Supreme Court's approach in ITC Ltd.

Conclusion:
The Tribunal dismissed the appeal, affirming that the SCN was issued within the time limit, the refund had not acquired finality, and the amended provisions of Section 11B applied. The Assistant Collector's order for recovery and credit to the Consumer Welfare Fund was upheld.