2018 (5) TMI 1401 - AT - Central Excise

Recovery of erroneous refund - recovery on the premise that the zinc dross and flux skimming arising are exempted goods - Held that - initially the appellant paid the duty and the same has been entertained at the time of sanctioning the refund claim under Notification No. 56/2002-CE and refund claim was sanctioned. The said order has not been challenged by the Revenue. In that circumstances in the light of the decision of Priya Blue Industries 2004 (9) TMI 105 - SUPREME COURT OF INDIA the impugned show cause notice is not maintainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against erroneously refunded claim under Notification No. 56/2002-CE for zinc ash and zinc cyclone, challenge of show cause notice for recovery of refund, maintainability of show cause notice based on finality of refund order.

Analysis:

Issue 1: Erroneously refunded claim under Notification No. 56/2002-CE
The appellant, engaged in manufacturing M.S/G.I Pipes and Tubes, filed a refund claim for zinc ash and zinc cyclone under Notification No. 56/2002-CE. The adjudicating authority rejected the refund claim for zinc dross but allowed it for other items. The Revenue challenged this decision, leading to a show cause notice under Section 11A of the Act to recover the erroneously refunded amount. The appellant contended that the refund order had attained finality as it was not challenged by the Revenue, citing the decision in Priya Blue Industries Ltd. vs. Commissioner. The Tribunal observed that the initial duty payment and refund claim under the notification were not disputed by the Revenue, making the show cause notice not maintainable.

Issue 2: Challenge of show cause notice for recovery of refund
The appellant argued that since the refund order was not challenged, the show cause notice for recovery was not maintainable as per the decision in Priya Blue Industries Ltd. vs. Commissioner. The Tribunal, considering the submissions and previous decisions, held that without challenging the original refund order, the show cause notice for recovery was not sustainable, citing precedents such as Anant Wines & Spirits. The Tribunal emphasized that the show cause notice was not tenable, leading to the setting aside of the impugned proceedings against the appellant.

Issue 3: Maintainability of show cause notice based on finality of refund order
The Tribunal, after considering the arguments and legal precedents, concluded that the show cause notice issued to the appellant was not sustainable due to the finality of the refund order, as per the decision in Priya Blue Industries Ltd. vs. Commissioner and other relevant cases. Therefore, the Tribunal allowed the appeal, setting aside the impugned proceedings against the appellant based on the lack of merit in the show cause notice.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned proceedings, emphasizing the importance of challenging refund orders to maintain the validity of subsequent recovery notices.