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TMI Blog1993 (7) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty in rupees Penalty in rupees E-196/91 (1) 23(68)C.E.11A/89-Collr. 3/91 37,498.26 8,000.00 E-197/91 (2) 24(68)C.E.-11A/89-Collr. 2/91 9,145.40 2,500.00 E-198/91 (3) 21(68)C.E.-11A/89-Collr. 5/91 64,414.89 15,000.00 E-199/91 (4) 21(68)C.E.-11A/89-Collr. 4/91 48,099.99 10,000.00 The impugned orders have been passed by the Collector holding that the appellants had obtained refunds from the Assistant Collector concerned under Rule 173L in respect of returned Refractory Bricks in contravention of the said Rules as they had, under no circumstances, declared that only a portion of the returned goods were mixed with fresh raw-materials for processing and had knowingly and deliberately maintained the relevant Register to show that the actual processes had been completed which was not a fact, resulting in erroneous refunds. In the Collector s view the Register maintained by them was a manipulated one prepared to suit their requirements. He held that the proviso to Section 11A was attracted and they were also liable to penal action for contravention of the said Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the Collector (Appeals). Without following such a procedure, it was not permissible to recover the refund by issue of demand under Section 11A. Shri Bhowmik contended that they had followed the requirements of Rule 173L correctly and the Assistant Collector had sanctioned the refund after due verification. There is no evidence for the Collector to come to a contrary conclusion. He pleaded that the appeals be allowed with consequential relief to them as they had paid back the refund amounts received by them. 3. Shri N.K. Mandal, learned Departmental Representative replied to the arguments of the learned Consultant. He supported the orders and contended that the appellants had not satisfied the conditions for grant of refund under Rule 173L. He took us through the appropriate paragraphs of the Collector s order to make his point that they had not satisfied the required conditions. Section 11A with its proviso permits the proper officer or the Collector to issue notice for recovery of erroneous refund. Resort to Section 35E(2) is not necessary in such cases. He pleaded that the orders passed by the Collector be sustained and the appeals dismissed. 4. We have considered the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r officer who had attended the hearing. The reply to the show cause notice and the note of written submissions only contest the inverse formula of 70 : 30 alleged in the show cause notice. No alternate formula had been given. However, they had stated in their reply to the show cause notice that the nature of the material in question is such that the process cannot be carried out in isolation using only the returned material. They had also stated that other ingredients in small quantities are mixed according to the requirements, particulars of which are given in the Form V Account. In the face of this categoric reply, the reported admission of the Liaison Officer about 70% of returned goods being mixed with 30% of fresh materials for the purpose of reprocessing/remanufacture appears to be an erroneous one, even if such a statement had, in fact, been made. Any such formula, whether it is 30:70, or any other combination will have relevance only when the returned goods are mixed with other required materials and processed separately. The contention in their reply to the show cause notice is that the manufacturing process cannot be carried out in isolation, pointing to the possibility t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antity as arising from the reprocessing/remanufacture in the Form V Register which was easily possible. The goods returned constitute a small quantity when compared with their regular and continuous production. According to the Collector, the short accounted quantities of the returned materials were 14.28, 15.05, 20.34 and 26.54 Metric Tonnes in the four cases. As the appellants are large-scale manufacturers of these materials, it would not have been difficult for them to show clearances of more quantities of reprocessed materials corresponding to the alleged short accounted quantities of the returned goods and avoided all the hassles that have ensued. The fact that they did not do so but instead showed certain quantities as what had been received after reprocessing in their Form V Register and proceeded to claim the refund would only point to a stand by them that the reprocessing of the returned goods had been completed since, only then, could a claim under Rule 173L be considered. The claim that the reprocessing was completed also accords with the fact that the quantity of goods received after reprocessing also corresponds closely to the quantity of goods returned. This, in turn, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-7-1984 and he did not raise any such objection. Subsequently also the Assistant Collector, Central Excise, Rourkela had sanctioned the refund. Statutory account in Form-V has also been maintained. I find that there is no statutory or regulatory requirements to indicate the date on which the re-making or re-processing was started or completed. I also find that there is no basis to suggest that they fed 30% of the rejected refractories with the 70% of the fresh raw materials to the grinder and claimed that they have received 100% re-processed refractories. It is mentioned in Form-V that at the time of re-making, dead burnt Magnesite were mixed according to the requirement. I also do not find any evidence to suggest that in the instant case the re-processing was not completed within the 6 months from the date of return of the damaged/rejected goods. ORDER In view of the above, I hold that the allegations of wilful suppression of the fact of actual processing of the returned goods and wilfully mis-stated to the department about the completion of the processing by not maintaining detailed account of the returned goods and the processes to which they were subjected after their retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncalled for. Hence the appeal succeeds on the ground of limitation also, as contended by the appellants. 7. A plea had been advanced in the appeals which was reiterated by Shri Bhowmik in the hearing that the refunds having been sanctioned by the Assistant Collector, the same could have been reopened only through an appeal filed before the Collector (Appeals) for setting aside the orders of the Assistant Collector and, without doing so, it was not permissible to issue a notice under Section 11A. Two decisions have been cited in support of this contention. These are - (i) Akola Oil Industries Ltd. v. Collector of Central Excise reported in 1991 (53) E.L.T. 136; and (ii) Sree Digvijay Cement Co. Ltd. v. Collector of Central Excise reported in 1991 (52) E.L.T. 631. In the former case, it was held that Section 11A did not authorise the Collector to reopen, suo motu or otherwise, orders or decisions made or taken by officers subordinate to him. In the latter case, it was held that the order of erroneous refund can be set aside only by following the procedure under Section 35E(2) of the Act and that an order under that provision should be followed by a show cause notice under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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