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2019 (11) TMI 1012 - AT - Central ExciseRecovery of erroneous refund - Benefit of N/N. 39/2001-CE Dated 31.7.2001 - grant of exemption to all new units set up on or after 31.07.2001 - scope of the expression set up - benefit of exemption in respect of cement cleared from grinding unit - demand of interest and penalty - extended period of limitation - HELD THAT - The exemption is available to new industrial unit and same is also defined under the notification. Further, notification provided that the assessee shall produce eligibility certificate from the Committee consisting of Chief Commissioner and Principal Secretary Industry Mines Department who shall issue certificate as to (a) Original value of investment in plant machinery (b) As to date commencement of commercial production by the unit - Notification further provides that in event such declaration as regards to Original investment in plant machinery is found to be incorrect or is less than rupees 20 crore then recovery mechanism along with interest is also provided under clause 3(v)(a) (b). It is an admitted fact that two certificates in terms of para 3(ii) and 3(iv) dated 22.6.2004 were issued after proper deliberation and verification and after obtaining full report from the jurisdictional Commissioner office. Thus, the Appellants cleared the goods under valid certificate - Once, an admitted fact is that the Appellants were holding eligibility certificate issued by the Committee as per the notifications, proceedings initiated to deny exemption are bad in law and same is liable to be set aside. In the facts of the present case where the Committee already applied its mind before issuing the certificate and nearly took one year to grant the same after seeking full verification report from the jurisdictional excise office, the jurisdictional excise office including investigating agency has no jurisdiction whatsoever to initiate fresh inquiry and deny the benefit of notification. Impugned order is thus contrary to law and is liable to be set aside. Power of review - HELD THAT - It is well settled that no court or authority has inherent power of review. The power of review has to be specifically conferred on the authority. There is no such power conferred on committee under the notification to review such certificate. Cancellation of certificate is thus bad in law. In any case, Ld. Chief Commissioner of Central Excise had no power to cancel such certificate as same was required to be cancelled by Committee alone - In any case, Notification No.39/2001-CE does not provide for cancellation of certificate once issued. In other words there is no power of review conferred on the Committee to revoke certificate subsequently. Entire basis of investigation is mis-placed. Civil construction work started in grinding unit only after 31.7.2001. In any case, notification does not impose any condition of any kind of civil construction work to start only after 31.7.2001. Entire genus of case made out against the Appellants is that the civil construction work at grinding unit started much prior to 31.7.2001 i.e. before the date of publication of Notification No.39/2001-CE Dated 31.7.2001 in official gazette and therefore the appellants are not eligible for benefit of the said notification - HELD THAT - The said contention of the department is not acceptable and is wholly mis-placed. Notification No.39/2001-CE Dated 31.7.2001 provides that the benefit of this notification shall apply only to new industrial units. Explanation to the notification further provides that the expression set up on or after the date of publication of this notification in the Official Gazette shall mean that any civil construction work on its factory premises and any installation of plant and machinery therein commences only on or after the date of publication of this notification in the Official Gazette. Extended period of limitation - HELD THAT - There is no suppression of facts by the Appellants. Certificate was issued by Committee after due deliberation and verification. Further, all the facts were within the knowledge of the department. Extended period cannot be invoked. Recovery of erroneous refund - Section 11B of the Central Excise Act, 1944 - HELD THAT - Section 11B of the Central Excise Act, 1944 provides for grant of refund of any duty of excise paid. Section 11A of the Central Excise Act, 1944 provides for recovery of erroneous refund. Though Section 11A does not refer to Section 11B but the phrase erroneous refund suggests refund granted under Section 11B. Therefore, provision of Section 11A provides recovery of refund erroneously granted under Section 11B of the Act and not otherwise. CBEC vide Circular No.842/19/2006-CX Dated 8.12.2006 had clarified Section 11B of the Central Excise Act, 1944 would not apply to refund granted under Notification No.39/2001-CE Dated 31.7.2001 - Thus, entire proceedings to recover erroneous refund by invoking Section 11A of the Central Excise Act, 1944 is incorrect. The recovery if any has to be strictly in accordance with the machinery provided under Notification. Since the cancellation of certificate is not with the authority of law on that basis demand was not sustainable - the demand of refund confirmed by the adjudicating authority is upheld on the concession made by Ld. Senior Counsel, the penalty imposed under Section 11AC and interest demanded under Section 11AB are set aside. Penalty u/r 26 of CER, 2002 - HELD THAT - There is no malafide on the part of the appellant company in taking the benefit of Exemption Notification, the director for the same reasoning cannot be penalized - Hence the penalty imposed upon him under Rule 26 of Central Excise Rules, 2002 is set aside and appeal of Director is allowed. Appeal allowed in part.
Issues Involved:
1. Eligibility for exemption under Notification No. 39/2001-CE. 2. Validity of eligibility certificates issued by the Committee. 3. Allegations of misrepresentation and fraud. 4. Invocation of extended period of limitation. 5. Legality of the cancellation of eligibility certificates. 6. Imposition of penalty and demand of interest. Detailed Analysis: 1. Eligibility for Exemption under Notification No. 39/2001-CE: The appellant, engaged in the manufacture of cement, claimed exemption under Notification No. 39/2001-CE, which provided benefits to new units set up after 31.07.2001. The appellant argued that their grinding unit was a new unit and commenced civil construction after the specified date. The department contended that the grinding unit was part of an existing unit, and construction began before the cutoff date, making it ineligible for exemption. 2. Validity of Eligibility Certificates Issued by the Committee: The appellant received eligibility certificates from a Committee consisting of the Chief Commissioner of Central Excise and the Principal Secretary of the Gujarat Government. The certificates were issued after thorough verification and deliberation. The Tribunal held that once the competent authority issued the certificates, they were final and binding. The decision of the Committee could not be questioned by the Commissioner of Central Excise, Rajkot, who had no jurisdiction to deny the exemption. 3. Allegations of Misrepresentation and Fraud: The department alleged that the appellant obtained the eligibility certificates by submitting false declarations and manipulated documents. The Tribunal found that the certificates were issued after a thorough investigation and verification by the Committee, and there was no substantial new fact unearthed by the DGCEI investigation. Therefore, there was no suppression of facts or misrepresentation by the appellant. 4. Invocation of Extended Period of Limitation: The Show Cause Notice was issued on 14.11.2007 for the recovery of refunds granted from November 2003 to March 2007, invoking the extended period of limitation. The Tribunal found that all relevant facts were within the knowledge of the department, as the eligibility certificates were issued after thorough verification. Hence, the extended period could not be invoked, and the demand was time-barred. 5. Legality of the Cancellation of Eligibility Certificates: The certificates were canceled by the Chief Commissioner of Central Excise, which the Tribunal found to be arbitrary and without following the due process of law. The Tribunal held that the cancellation of certificates was not valid as it was not done by the competent Committee and lacked the authority of law. Moreover, the Notification No. 39/2001-CE did not provide for the cancellation of certificates once issued. 6. Imposition of Penalty and Demand of Interest: Since the demand was found to be time-barred and the cancellation of certificates was invalid, the imposition of penalty under Section 11AC and the demand for interest under Section 11AB were also not sustainable. The Tribunal set aside the penalties and interest, holding that the appellant acted in accordance with the valid certificates issued by the competent authority. Conclusion: The Tribunal upheld the demand for recovery of refunds based on the concession made by the appellant but set aside the penalties and interest. The appeal of the company was partly allowed, and the penalty imposed on the Director was also set aside.
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