1996 (5) TMI 170 - AT - Central Excise

Summary

Issues:
1. Validity of the show cause notice for recovery of erroneously sanctioned refund.
2. Application of amended provisions of Section 11B to refund claims.
3. Authority's power to scrutinize refund applications after a decision has been taken.

Analysis:

Issue 1:
The appeal was against an order-in-appeal setting aside an order-in-original that dropped a show cause notice for demands raised due to allegedly erroneous refund grants. The dispute arose from provisional assessments finalized on 23-8-1983, with refund claims filed later. The Collector (Appeals) held the claims were time-barred and directed recovery. The appellant argued that as assessments were provisional, the refund claims were within the limitation period. The Tribunal agreed, finding the show cause notice invalid and setting aside the demand.

Issue 2:
The Department argued that amended Section 11B applied to the refund issue, citing the Madras High Court case. However, the appellant contended that the refund claim was valid as it was filed within six months of final assessment. The Tribunal agreed with the appellant, rejecting the Department's argument and holding that the refund claims were not time-barred under Section 11B.

Issue 3:
In a separate order by another Member, the issue of the Department's right to invoke amended Section 11B post-refund sanction was discussed. The Member referenced a Calcutta High Court case, emphasizing that once a refund decision is made, the authority cannot revisit the merits. The Member distinguished a Madras High Court case where a refund application was pending, unlike in the present case where the refund was sanctioned and encashed. Therefore, the Department's reliance on amended Section 11B was deemed unnecessary.

In conclusion, the Tribunal found in favor of the appellant, ruling that the show cause notice for recovery was invalid, the refund claims were not time-barred, and the Department could not invoke amended Section 11B post-refund sanction. The appeal was allowed, setting aside the order confirming the demand.