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TMI Blog2019 (3) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... en from the records that the Appellant had initially filed 13 claims under Section 11B of the Act for refund of ₹ 1,90,53,661/- for the period commencing April, 2001 to June, 2004. Subsequently, 11 refund claims were filed for periods from October 2008 to September 2011. Section 11B provides that the refund application has to be accompanied by documentary evidence and if the Authority is satisfied that the whole or any part of the duty paid by the Applicants is refundable, it may make an order accordingly and the amount so determined shall be credited to the Appellant. It is, therefore, after scrutiny of the relevant documents that the Adjudicating Authority passes an order - In the instant case, the Adjudicating Authority had passed detailed orders after examining the documents on record and the various pleas, including the plea of unjust enrichment raised by the Department. Sub-section (4) of Section 35E provides that the Adjudicating authority may make an application to the Appellate Tribunal or the Commissioner (Appeals) pursuant to an order passed under sub-section (1) or sub-section (2) of Section 35E within a period of one month from the date of communication of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Appellant sells tyres to Original Equipment Manufacturers and Replacement Market. Under the Replacement Market format, the Appellant offers various discounts and incentives to dealers for being elite dealers of the Appellant. The discounts offered by the Appellant vary on the basis of dealer type and dealer agreement. The Appellant calculates on a quarterly basis the percentage of discount a dealer is eligible for and prepares a quarterly report specifying the discount available to a dealer. The Appellant was facing difficulty in calculating the correct excise duty payable on tyres sold in the Replacement Market as the discount were given after sales and at the end of the scheme by way of credit notes. The Appellant, therefore, filed an application dated 03 June, 2002 before the Commissioner for making a provisional assessment under Rule 7 of the Central Excise Rules, 2002. This application was, however, rejected by order dated 26 July, 2002 on the ground that excise duty can be paid on Normal Transaction Value under Rule 7 of the Central Excise Valuation Rules, 2000 and the Appellant could file a refund claim under Section 11B after expiry of the scheme. 3. The Appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 2010 to June 2010 30 November, 2010 7. July 2010 to September 2010 09 March, 2011 8. October 2009 to June 2010 21 October, 2010 9. October 2010 to December 2010 08 July, 2011 10. January 2011 to March 2011 26 September, 2011 11. April 2011 to June 2011 19 April, 2011 12. July 2011 to September 2011 15 March, 2012 It needs to be stated at this stage that pursuant to the aforesaid orders, the refund amount were either paid or credited in favour of the Appellant. It also needs to be stated that the Department did not take recourse to the provisions of Section 35E(2) of the Act, as a result of which no direction could be given for filing appeals under Section 35A of the Act against the aforesaid orders nor appeals were filed. Thus, the aforesaid orders passed by the Original Authority granting refund attained finality. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate should not be recovered under the provision of Section 11AB/ 11 AA of Central Excise Act, 1944. iii) The penalty should not be imposed upon them under the provisions of Section 11AC the Central Excise Act, 1944. iv) Under the circumstances, refund is found liable for sanction but the incidence of duty of Central Excise / Interest passed on then, why the refund amount of ₹ 8,67,17,675/- for the quarters ending October 2008 to June 2011 should not be recovered in cash and be credited to Consumer welfare fund. 6. The Appellant submitted a reply dated 30 April, 2015 to the aforesaid show cause notice dated 30 January, 2010 and in addition thereto also filed Written Submissions dated 06 October, 2017. In the Written Submissions, apart from stating the factual position, the Appellant also pointed out that since the orders passed for refund by the Original Authority had attained finality as appeals had not been filed by the Department, no show cause notice could have been issued under Section 11A of the Act. The Appellant also submitted that, even otherwise, the notice was time barred as there was no suppression of facts on the part of the Appellant. In this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice was hopelessly barred by time. In this context, he submitted that the first refund was granted on 21 August, 2006 and so the show cause notice could not have been issued on 30 January, 2015 as it was even beyond the extended period of five years provided for in Section 11(A)(4). In regard to the refunds made between 21 October, 2010 and 15 May, 2012, learned counsel submitted that the notice could not have been issued beyond the period of one year in the absence of fraud or collusion or wilful mis-statement or suppression of facts. 11. Shri R.K. Mishra, learned Departmental Representative, however, submitted that nothing prevented the Department from issuing the show cause notice under Section 11A of the Act for the reason that the amount was erroneously refunded and there was no reason for the Department to have filed an appeal against the order of the Original Authority and in support of his contentions he placed reliance upon the contents of the notice. It has also been submitted that the notice was not barred by limitation. 12. We have considered the submissions advanced by the learned counsel for the Appellant and the learned Representative of the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Committee of Chief Commissioners of Central Excise may, of its own motion, call for and examine the record of any proceeding in which a Principal Commissioner of Central Excise or Commissioner of Central Excise as an Adjudicating Authority has passed any decision or order under the Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners in the order. Sub-section (2) of Section 35E provides that the Principal Commissioner of Central Excise or Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an Adjudicating Authority subordinate to him has passed any decision or order under the Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such Authority or any Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch further inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against : Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order: Provided further that where the Commissioner (Appeals) is of opinion that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, no order requiring the appellant to pay any duty not levied or paid, short-levied or short-paid or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 11A to show cause against the proposed order. (4) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision. (4A) The Commissioner (Appeals) shall, where it is possible to do so, hear and decide every appeal within a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice. ***** ******* ****** Explanation 1 - For the purposes of this section and section 11AC - (a) refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) relevant date means,- (i) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder; (ii) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid and the return has been filed, the date on which such return has been filed; (iii) in any other case, the date on which duty of excise is required to be paid under this Act or the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11B provides that the refund application has to be accompanied by documentary evidence and if the Authority is satisfied that the whole or any part of the duty paid by the Applicants is refundable, it may make an order accordingly and the amount so determined shall be credited to the Appellant. It is, therefore, after scrutiny of the relevant documents that the Adjudicating Authority passes an order. In the instant case, as noted above, the Adjudicating Authority had passed detailed orders after examining the documents on record and the various pleas, including the plea of unjust enrichment raised by the Department. Section 35E(2) empowers the Principal Commissioner of Central Excise to, of its own motion, call for and examine the record of any proceeding in which an Adjudicating Authority subordinate to him has passed any decision or order for the purpose of satisfying himself as to the legality or propriety of any such decision or order and he may, by order, direct such Authority or any other Central Excise Officer subordinate to him to apply to the Commissioner (Appeals) for the determination of such points specified in the order. 23. Sub-section (4) of Section 35E provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication made under Section 11B of the Act would result in the entitlement of an applicant for refund of any excise duty paid. If a very determination does not result in declaration of entitlement of refund any money paid in obedience to an order by an authority in the process of adjudication of such claims cannot be termed as granting of erroneous refund. Such payment would fall in the category of implementation of an order, subject to finality of such order. In other words, such refund would be outside the scope of the erroneous refunds contemplated under Section 11A of the Act. In a way Section 11A and 11B of the Act operate in two different streams. The Madras High Court in Everyday Industries India Ltd. followed the view taken by Andhra Pradesh High Court and also observed that once an application for refund is allowed under Section 11B, the amount refunded will not fall under the category of erroneous refund so as to enable the order of refund to be revoked under Section11A of the Act. The relevant paragraphs are reproduced below : 28. But, a careful look at the scheme of Sections 11A, 11B and 35E would show that an application for refund is not to be dealt w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Officer . 48. Insofar as the decision of the Andhra Pradesh High Court is concerned, one observation made in Paragraph 16 of the said decision is of prime importance. In Paragraph 16, the Andhra Pradesh High Court has made it clear, after analysing Sections 11A and 11B that there is an adjudication process involved in the processing of applications made under Sections 11A and 11B. The Andhra Pradesh High Court held that orders passed under Sections 11A and 11B are appealable. Therefore, the decision of the Andhra Pradesh High Court, especially the observations in Paragraph 16, should be made use of by the assessee to contend that since there was no appeal against the order under Section 11B, the Department cannot take recourse to Section 11A. 51. We are of the considered view that the paragraph extracted above is a complete answer to the question of law now raised. Unfortunately, in none of the decisions relied upon by the learned standing counsel, the Courts were confronted with an order of adjudication passed under Section 11B on an application. Once an application for refund is allowed under Section 11B, the expression erroneous refund appearing in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order under the Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and to direct such authority to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner in his order. Sub-section (4) thereof provides for preferring an appeal against the order of the concerned authority. In the circumstances, if the adjudicating authority was of the view that the doctrine of unjust enrichment had not been examined while making the order of refund, the proper course to adopt was to take recourse to the provisions of Section 129D. A perusal of the order-in-original dated 15-2-2006 shows that the adjudicating authority has held that the refundable amount of ₹ 2,42,110/- is required to be credited to the Consumer Welfare Fund established under Section 12C of the Central Excise Act, 1944 and that the same cannot be refunded to the party by appropriating against outstanding Government dues of ₹ 2,75,306/- of Customs Duty vide O-I-O dated 3-2-2004. Thus in effect and substance the adjudicating authority, has set aside its earlier order dated 13- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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