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2021 (10) TMI 128 - HC - Central ExciseRecovery of erroneous refund / irregular Cenvat credit availed - Demand of duty with interest - allegation of misuse of Area based exemption - benefit of N/N. 32/99-CE, dated 8th July, 1999 - HELD THAT - It is palpably evident, on the face of the record itself, that there is no substantial question of law involved in this appeal. A bare reading of section 11A of the Act (as amended), clearly shows that the stipulation under this provision, can be exercised only if certain conditions precedent are present, as spelt out in section 11A, itself. On examination of provision of section 11A of Central Excise Act, it clearly shows that the case at hand, is not one concerning conditions as given in section11A, but the issue concerns refunds made purportedly under the entitlements claimed by the respondent under the exemption notification, which, the Appellant/Revenue seeks to recover by taking recourse to section 11A which is not admissible. There are no infirmity in the impugned judgment and order and no substantial question of law is involved - appeal dismissed.
Issues Involved:
1. Misuse of exemption notification No. 32/99-CE. 2. Wrongful availing of refunds and irregular Cenvat credit. 3. Application of Section 11A of the Central Excise Act, 1944. 4. Validity of the Tribunal's (CESTAT) findings and order. Detailed Analysis: 1. Misuse of Exemption Notification No. 32/99-CE: The respondent was accused of misusing the exemption notification No. 32/99-CE, dated 8th July, 1999, which provided for the refund of excise duty for units located in North East India. It was alleged that the respondent availed wrong refunds amounting to ?9,45,67,825/- during the period from October 2002 to December 2004 by fraudulent claims of manufacturing and clearance of goods. The investigation revealed that the respondent did not have the requisite plant and machinery to manufacture the subject goods and resorted to mis-declaration and mis-representation with the intention of passing irregular Cenvat Credit to various customers. 2. Wrongful Availing of Refunds and Irregular Cenvat Credit: The respondent was also alleged to have availed irregular Cenvat credit amounting to ?53,05,582/-. The show cause notice issued on 28th February, 2006, demanded the recovery of the wrong refunds and irregular Cenvat credit along with penalties and interest. The Commissioner, by an order dated 31st March, 2014, confirmed the duty demand and imposed penalties on the respondent and other co-noticees. 3. Application of Section 11A of the Central Excise Act, 1944: The Tribunal (CESTAT) held that since there was no manufacture of goods as per the show cause notice and impugned order, there could be no levy of excise duty, and hence, no requirement to recover any duty under Section 11A(1) of the Act. The Tribunal found that the refund orders were not challenged by the department during the period of refund, making the proceedings under Section 11A unsustainable. The High Court agreed with this interpretation, emphasizing that Section 11A could not be invoked for recovery of refunds made under the exemption notification, as the conditions for its application were not met. 4. Validity of the Tribunal's (CESTAT) Findings and Order: The Tribunal's order was based on the finding that the respondent was eligible for exemption under the said notification and that the refund of duty paid was based on this exemption. The High Court upheld the Tribunal's decision, noting that the refund orders were not challenged by the department and that the cited case of Commissioner of Central Excise, Shillong Vs. Jellalpore Tea Estate supported the Tribunal's position. The High Court found no substantial question of law involved in the appeal and dismissed it, affirming the Tribunal's order. Conclusion: The High Court dismissed the appeal, finding no substantial question of law and upholding the Tribunal's order that the respondent was eligible for the exemption and that the department's attempt to recover the refunds under Section 11A was not admissible. The court noted that the refund orders were not challenged during the relevant period, and the Tribunal's findings were based on a thorough examination of the records and documents. The appeal was dismissed, but the court allowed for the possibility of other lawful actions by the appellant.
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