2015 (3) TMI 909 - CGOVT - Central Excise

Denial of rebate claim - Recovery of erroneously sanctioned rebate claim - Held that - It is clear that applicant has filed this revision application after 3 months and 13 days when the time period spent in proceedings before CESTAT is excluded. As per provisions of section 35 EE of Central Excise Act, 1944 the revision application can be filed within 3 months of the communication of Order-in-Appeal and the delay upto another 3 months can be condoned provided there are justified reasons for such delay - applicant has not disputed the factual position that rebate has to be granted at the rate fixed as per formula prescribed in the notification. Applicant has also not argued that the amount of ₹ 3073604/-demanded towards erroneously sanctioned rebate claim was wrongly determined. Since they have not disputed the revised rate of rebate and demand of duty determined by original authority, there is no force in contention of applicant that rebate initially sanctioned was in order. Applicant s contention initial sanction of rebate was legally correct is not acceptable - no infirmity in the impugned Order-in-Appeal - Decided against assessee.

Issues Involved:
1. Violation of principles of natural justice.
2. Non-supply of relied upon documents.
3. Legality of demand raised without reviewing the initial order.
4. Applicability of extended period of limitation.
5. Legality of interest and penalty imposition.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The applicant argued that the Order-in-Original was passed in gross contempt of the Order-in-Appeal dated 1st August 2006, which directed the original adjudicating authority to furnish all relevant relied upon documents to the applicant. The Commissioner (Appeals) failed to appreciate this and upheld the Order-in-Original, which was passed without providing the relied upon documents, thus violating the principles of natural justice. The Government observed that the Commissioner (Appeals) had reasoned that the documents from the processor, who had accepted their guilt, were not necessary for the applicant's perusal. The applicant had also failed to avail the opportunity to inspect the records or attend personal hearings.

2. Non-Supply of Relied Upon Documents:
The applicant contended that it was mandatory for the Additional Commissioner to supply the relied upon documents and provide a reasonable opportunity for written representation and personal hearing. The Commissioner (Appeals) upheld the decision of the lower authority, stating that the documents from the processor, who had not contested the demand, were not necessary for the applicant. The Government agreed with this reasoning, noting that the applicant had not availed the opportunity to inspect the records or attend personal hearings.

3. Legality of Demand Raised Without Reviewing the Initial Order:
The applicant argued that the department should have reviewed the initial Order-in-Original, which sanctioned the rebate, before initiating proceedings under section 11A of the Central Excise Act, 1944. The Government referred to the judgment of the Hon'ble High Court of Bombay in M/s. Indian Dye Stuff Industries Ltd. Vs. UOI, which held that section 11A is an independent substantive provision for the recovery of erroneously refunded amounts. The Government concluded that the department was justified in initiating proceedings under section 11A without first reviewing the initial order.

4. Applicability of Extended Period of Limitation:
The applicant contended that the extended period of limitation was inapplicable as there was no act of mis-declaration or suppression of facts by the applicant. The Government noted that the processor had clandestinely removed processed goods and suppressed production, which justified the invocation of the extended period for issuing the show cause notice.

5. Legality of Interest and Penalty Imposition:
The applicant argued that the demand for rebate was not sustainable, and therefore, no interest or penalty should be imposed. The Government observed that the revised rate of rebate and the demand of Rs. 30,73,604/- were not disputed by the applicant. The interest demanded under section 11AB and the penalty under section 11AC were upheld as the applicant had wrongfully claimed excess rebate.

Conclusion:
The Government found no infirmity in the impugned Order-in-Appeal and upheld the same. The revision application was rejected as devoid of merits.

← Previous Next →