2017 (6) TMI 417 - AT - Central Excise

Recovery of excess paid rebate - Department was of the view that excess rebate was paid to the Appellants since the quantity of sugar exported without payment of duty was not deducted from the quantum of excess production based on which the rebate was paid - time limitation - Held that - the rebates were granted on 15.09.1977 as well as on 17.10.1978, whereas the relevant show cause notices were issued on 13.07.1982, 27.08.1982 and 13.07.1982 - On a perusal of case records, we find that the refunds involved in the present case were sanctioned by the Departmental authorities after scrutiny of records and details submitted by the Appellants. The details regarding the production as well as exports made by the Appellants were already reflected in records and returns submitted to the Department. Accordingly, we are of the view that the charge of wilful suppression is unsustainable. The Department cannot recover excess production rebate on the ground of time bar u/s 11-A - appeal allowed - decided in favor of assessee.

Summary

Issues:
Claim for incentive rebate on excess production under specific notifications; Allegation of erroneous refund leading to recovery proceedings; Confirmation of demand by original authority and Commissioner (Appeals); Appeal against the order.

Analysis:
The Appellants were involved in the manufacture of sugar & molasses and claimed incentive rebate on excess production under Notification No. 257/76-CE and Notification No. 108/78-CE. The Department alleged that excess rebate was paid as the exported sugar quantity without duty payment was not deducted from the excess production. Consequently, proceedings were initiated for recovery of the excess rebate considered as erroneously refunded. The original authority and Commissioner (Appeals) upheld the demand of ?2,03,635. The Appellants challenged this order through the present appeal.

During the hearing, the Appellants argued that the period of sugar export preceded the excess production period in all show cause notices, justifying the granted refund. They contended that the demands should be set aside due to the limitation period, as production and exports were duly recorded and rebate claims were scrutinized by the Department. Legal precedents, including CCE, Chandigarh vs Jagatjit Sugar Mills and Basti Sugar Mills Co. Ltd. vs CCE, were cited in support.

On reviewing the records, it was observed that the Appellants claimed rebate under specific notifications, which the lower authorities deemed inappropriate. The rebates were granted in 1977 and 1978, while the show cause notices were issued in 1982, alleging suppression and invoking extended limitation. The refunds were sanctioned after scrutiny of submitted details and records, making the charge of wilful suppression unsustainable.

The Appellants' reliance on legal cases, such as CCE, Allahabad vs Kashi Sahkari Chini Mills, was considered. The decision of the Apex Court in a similar case upheld by the CESTAT concluded that the Department cannot recover excess production rebate under Section 11-A due to time limitations. Following this precedent, it was determined that the demands were time-barred, leading to setting aside of the impugned order and allowing the appeal.

In conclusion, the appeal filed by the assessee-Appellants was allowed based on the time-barred nature of the demands, as per the decision following the legal precedents and the Supreme Court's ruling.