2014 (9) TMI 805 - AT - Central Excise

Recovery of excess refund claim sanctioned - after grant of refund, tribunal modified the order and reduced the amount of refund - Commissioner (Appeals) observed that without issue of a show cause notice under Section 11A, the respondents are not liable to pay the excess refund sanctioned to them. - Held that - After the respondents lost the case before the Tribunal and this Tribunal decided that appeal filed by the Revenue was to be allowed, the respondents should have refunded the excess amount on their own. I find that not only they have not paid back the amount but they have put up a new argument that no notice has been issued under Section 11A. In fact the respondents did not even challenge the order of this Tribunal upholding the stand of the Department s appeal whereby the order of the Tribunal had attained finality and it is to be implemented. Therefore the observation of the Commissioner (Appeals) in the impugned order that a show cause notice should be issued is contrary to the law and he had no power to pass an order which was in contravention of an order which had attained finality in the absence of an appeal filed against the same - Decided in favour of Revenue.

Issues involved:
1. Refund claim for payment of interest under Section 11B of the Central Excise Act, 1944 (CEA) filed by the respondents.
2. Rejection of the refund claim as time-barred and subsequent appeal before the Commissioner (Appeals).
3. Claim of interest on delayed refund, rejection by Assistant Commissioner, and appeal before Commissioner (A), Hyderabad.
4. Appeal by the Department before CESTAT, Bangalore against the order passed by the Commissioner (Appeals).
5. Review of O-I-O No. 4/2006, dated 13-1-2006, and subsequent appeal filed by the Revenue.
6. Commissioner (Appeals) decision regarding the issuance of a show cause notice under Section 11A for recovery of erroneously sanctioned refund.

Analysis:
1. The respondents filed a refund claim for interest under Section 11B of the CEA due to reduced value/price of LPG cylinders supplied to the Oil Industry. The claim was initially rejected as time-barred but later sanctioned by the Assistant Commissioner after appeals. The appellants then claimed interest on the delayed refund, which was rejected by the Assistant Commissioner. The Commissioner (A), Hyderabad allowed the appeal, leading to the filing of a refund claim of &8377; 15,45,843/-, duly verified and recommended by the department.

2. The Department appealed before CESTAT, Bangalore against the Commissioner (A) order, seeking a stay and setting aside of the decision. The Assistant Commissioner sanctioned the refund of interest, which was paid, but later modified the order to align with Section 11BB of the CEA, leading to the Department's plea being allowed by CESTAT.

3. Following a review of O-I-O No. 4/2006, the Assistant Commissioner was directed to file an appeal before the Commissioner (Appeals), resulting in the impugned order. The Commissioner (Appeals) opined that a show cause notice under Section 11A should have been issued for recovery of erroneously sanctioned refund, and the Department's appeal should be allowed, requiring the respondents to pay back the excess amount subject to the show cause notice.

4. The Commissioner (Appeals) decision was based on the view that the Department should have issued a show cause notice under Section 11A for recovery of the excess refund. The absence of such notice led to the appeal being allowed in favor of the Department, as per the decisions cited by the learned AR, including the case of CCE, Shillong v. Woodcraft Products Ltd. The Commissioner (Appeals) was deemed to have acted contrary to the law by requiring a show cause notice after the Tribunal's decision had attained finality.

This detailed analysis covers the various issues and legal aspects involved in the judgment delivered by the Appellate Tribunal CESTAT BANGALORE, ensuring a comprehensive understanding of the case.

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