2004 (7) TMI 227 - AT - Central Excise

Summary

Issues:
1. Inclusion of the cost of gunny bags in the assessable value of Portland Cement.
2. Requirement of issuing a show cause notice under Section 11A for recovery of erroneously refunded amount.

Analysis:

Issue 1:
The appeal revolved around the inclusion of the cost of gunny bags in the assessable value of Portland Cement. The appellants contended that the gunny bags were durable and returnable, supported by the appointment of agents to collect second-hand gunny bags. They argued that the statutory condition regarding returnability was met, citing a Tribunal decision distinguishing 'returnable' from 'return'. The Central Board of Excise and Customs' Circular was referenced to support the argument that no show cause notice was issued after the refund sanction. The revenue argued that the refund was sanctioned after a show-cause notice, and as the original order was under dispute, no separate notice under Section 11A was necessary. The Tribunal analyzed the submissions and found that the appellants failed to prove the returnability of the gunny bags, ultimately upholding the Commissioner (Appeals) decision to include the packing cost in the assessable value.

Issue 2:
Regarding the requirement of a show cause notice under Section 11A for recovery of the erroneously refunded amount, the Tribunal examined the sequence of events. The refund claim was sanctioned after adjudication of a show cause notice proposing rejection. The Commissioner (Appeals) set aside the Assistant Commissioner's order sanctioning the refund, directing the appellants to repay the amount. However, as no show cause notice under Section 11A was issued within the stipulated time, the Tribunal held that the Department could not recover the amount already paid to the appellants. Citing relevant Board Circulars and precedent cases, the Tribunal concluded that the order directing repayment was not legally sound and set it aside.

In conclusion, the Tribunal upheld the inclusion of packing cost in the assessable value of Portland Cement due to the lack of evidence supporting the returnability of gunny bags. Additionally, the Tribunal ruled that the Department could not recover the erroneously refunded amount as a valid show cause notice under Section 11A was not issued within the required timeframe.