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2023 (3) TMI 1126 - SC - Central ExciseRecovery of erroneous refund - requirement of issuance of separate SCN - review of speaking order - whether the separate notice under Section 11A of the Central Excise Act is necessary for the recovery of the amount when an erroneous refund is granted through the speaking order is reviewed under Section 35E of the Act? - time limit prescribed under Section 11A. HELD THAT - In the present case the original authority while passing the O-I-O allowed the refund. That the order-in-original sanctioning the refund was the subject matter of review under Section 35E of the Act. On merits the Reviewing Authority set aside the order-inoriginal sanctioning the refund. Therefore, as such stricto sensu it can be said to be giving effect to the order passed under Section 35E of the Act. As such the assessee is claiming the refund on the basis of O-I-O sanctioning the refund which as such has been set aside in the proceedings under Section 35E of the Central Excise Act. Once the order in original sanctioning the refund came to be set aside in a proceeding under Section 35E of the Act and the proceedings under Section 35E was initiated within the time prescribed under Section 35E of the Act, thereafter there is no question of any further notice under Section 11A of the Central Excise Act as observed by the Tribunal affirmed by the High Court on quashing and setting aside the order in original sanctioning the refund in exercise of powers under Section 35E of the Act which otherwise is prescribed under the Act within the time stipulated under Section 35E of the Act, thereafter necessary consequence shall follow and thereafter there is no question of any refund pursuant to order in original. The impugned judgment and order passed by the High Court and that of the Tribunal are hereby quashed and set aside and the order passed by the Commissioner (Appeals), Mumbai dated 13.05.2005 is hereby restored - Appeal allowed.
Issues Involved:
1. Whether a separate notice under Section 11A of the Central Excise Act is necessary for the recovery of an erroneous refund when reviewed under Section 35E of the Act. 2. Whether the proceedings under Section 35E must precede a notice under Section 11A within the prescribed time limit. Summary: Issue 1: Necessity of Separate Notice under Section 11A The Supreme Court addressed whether a separate notice under Section 11A of the Central Excise Act is necessary for the recovery of an erroneous refund when the refund is reviewed under Section 35E of the Act. The Court noted that the original authority had allowed the refund, which was later set aside in a review under Section 35E. The Court emphasized that the issue is no longer res integra due to the precedent set by the case of Asian Paints (India) Ltd., where it was held that Sections 35E and 11A operate in different fields and are invoked for different purposes. Consequently, different time limits apply. The Court rejected the argument that recovery of excise duty cannot be made if the time limit under Section 11A has expired, as this would render Section 35E ineffective. Issue 2: Precedence of Section 35E Proceedings over Section 11A Notice The Court further examined whether proceedings under Section 35E must precede a notice under Section 11A within the prescribed time limit. It was held that once the order sanctioning the refund is set aside in proceedings under Section 35E, initiated within the time prescribed, there is no need for a further notice under Section 11A. The Court found that the High Court erred by not following the binding precedent set by the Supreme Court in Asian Paints (India) Ltd., and instead relied on its earlier decision in Bajaj Auto Ltd., which was prior to the Supreme Court's ruling. Conclusion: The Supreme Court quashed the impugned judgment and order passed by the High Court and the Tribunal, restoring the order of the Commissioner (Appeals) dated 13.05.2005. The Court concluded that no separate notice under Section 11A is required once the refund order is set aside under Section 35E, provided the proceedings under Section 35E are initiated within the stipulated time. The appeal was allowed with no order as to costs.
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