2019 (3) TMI 849 - AT - Central Excise

Recovery of erroneous refund - recovery in cash invoking proviso to section 11(A)(4) of the Act along with interest and penalty - whether the show cause notice could have been issued by the Department under Section 11A of the Act for recovery of the duty refunded to the Appellant once the orders passed by the Adjudicating Authority granting refund of duty had attained finality? Held that - In the present case, the 12 orders passed by the Adjudicating Authority for refund of the excise duty under Section 11B of the Act had attained finality in as much as appeals were not filed under Section 35 of the Act by the Department - if the orders granting refund under Section 11B of the Act had attained finality, a show cause notice under Section 11A of the Act could not have been issued has to be examined. If this issue is decided in favour of the Appellant, then it may not be necessary to examine the alternative submissions advanced by the learned counsel for the Appellant regarding the show cause notice being barred by limitation or on the merits of the orders granting refund. It is seen from the records that the Appellant had initially filed 13 claims under Section 11B of the Act for refund of ₹ 1,90,53,661/- for the period commencing April, 2001 to June, 2004. Subsequently, 11 refund claims were filed for periods from October 2008 to September 2011. Section 11B provides that the refund application has to be accompanied by documentary evidence and if the Authority is satisfied that the whole or any part of the duty paid by the Applicants is refundable, it may make an order accordingly and the amount so determined shall be credited to the Appellant. It is, therefore, after scrutiny of the relevant documents that the Adjudicating Authority passes an order - In the instant case, the Adjudicating Authority had passed detailed orders after examining the documents on record and the various pleas, including the plea of unjust enrichment raised by the Department. Sub-section (4) of Section 35E provides that the Adjudicating authority may make an application to the Appellate Tribunal or the Commissioner (Appeals) pursuant to an order passed under sub-section (1) or sub-section (2) of Section 35E within a period of one month from the date of communication of the order and such application shall be heard by the Appellate Tribunal or the Commissioner (Appeals), as the case may be, as if such application was an appeal against the decision or order of the Adjudicating Authority and the provisions of the Act regarding appeals would apply - In the present case, neither was there any direction to the Adjudicating Authority by the Principal Commissioner of Central Excise or Commissioner of Central Excise to file an appeal nor any appeal was filed. In such circumstances, the order passed by the Adjudicating Authority under Section 11B for refund of duty, attained finality. Thus, Section 11A of the Act cannot be resorted to by the Department for recovery of duty which it believes was erroneously refunded if the order passed by the Adjudicating Authority for refund of duty under Section 11B of the Act on an application filed for refund of duty attained finality for the simple reason that it cannot fall in the category of duty erroneously refunded - Thus, the show cause notice dated 30 January, 2015 seeking recovery of the duty refunded to the Appellant was without jurisdiction. The order passed on such a show cause notice, therefore, deserves to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the show cause notice under Section 11A of the Central Excise Act, 1944 could be issued for recovery of duty refunded once the orders granting refund had attained finality.
2. Whether the show cause notice was barred by limitation.
3. Merits of the orders granting refund.

Issue-Wise Detailed Analysis:

1. Issuance of Show Cause Notice Under Section 11A:
The primary issue was whether the Department could issue a show cause notice under Section 11A for recovery of duty refunded to the Appellant after the orders granting refund had attained finality. The Tribunal examined the relevant provisions of the Central Excise Act, 1944, including Sections 11A, 11B, 35, and 35E. It was noted that Section 11B deals with the claim for refund of duty and interest, and once an adjudication order under this section attains finality, it cannot be reopened under Section 11A. The Tribunal referred to several High Court decisions, including those from Andhra Pradesh, Madras, Gujarat, and Gauhati, which consistently held that once an order under Section 11B attains finality, the refund allowed cannot be categorized as "erroneous refund" under Section 11A. The Tribunal concluded that the show cause notice dated 30 January 2015 was without jurisdiction and thus invalid.

2. Limitation of Show Cause Notice:
The Appellant argued that the show cause notice was time-barred. The Tribunal noted that the limitation period for issuing a show cause notice under Section 11A(4) is five years from the date of refund. The first refund was granted on 21 August 2006, and the show cause notice was issued on 30 January 2015, which was beyond the extended period of limitation. The Tribunal did not need to delve deeply into this issue as the primary issue regarding the jurisdiction under Section 11A was already decided in favor of the Appellant.

3. Merits of the Orders Granting Refund:
The Tribunal observed that the orders granting refund were detailed and passed after examining the documentary evidence and addressing the issue of unjust enrichment. The Tribunal reiterated that the Department had the option to challenge these orders under Section 35E but did not do so. Therefore, the orders granting refund had attained finality, and the merits of these orders could not be questioned through a show cause notice under Section 11A.

Conclusion:
The Tribunal set aside the order dated 15 February 2018 passed by the Commissioner of Central Excise, which had sought to recover the refunded amount. The appeal was allowed, and the show cause notice was declared without jurisdiction. The Tribunal emphasized that once an adjudication order under Section 11B attains finality, it cannot be reopened under Section 11A for recovery of the refunded amount.