9911796707
TMI Blog2022 (9) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal - In the present case, the amount was refunded to the appellant pursuant to an order dated 04.06.2015 passed by the Tribunal and admittedly this order of the Tribunal has attained finality as an appeal was not filed by the Department before the High Court against the order of the Tribunal. Section 11A of the Excise Act does provide for recovery of duties erroneously refunded, but if duties have been refunded pursuant to orders passed under section 11B of the Excise Act, it is not possible to hold the powers under section 11A of the Act can still be exercised for refund of the amount as this will not fall in the category of duties erroneously refunded . It also needs to be noted that an appeal can be filed to the High Court against the order passed by the Tribunal and if this power has not been invoked, it will not be open to the Department to take recourse to the provisions of section 11A of the Excise Act - The Commissioner, therefore, could not have issued the show cause notice dated 30.08.2017. In the present case, as under section 11A of the Excise Act when the order passed by the Tribunal in proceedings arising out of section 11B of the Excise Act had attained finality. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RESIDENT AND MR. RAJU, MEMBER (TECHNICAL) Shri Tarun Gulati, Senior Advocate and Shri Ankit Sachdeva, Advocate for the appellant Shri Rakesh Agarwal, Authorized Representative for the Department ORDER M/s Bridgestone Pvt. Ltd. [the appellant] has filed this appeal to assail the order dated 16.11.2018 passed by the Commissioner, CGST and Central Excise Ujjain [the Commissioner], by which an amount of Rs. 19,09,56,371/- earlier sanctioned and refunded has been directed to be recovered from the appellant under section 11A of the Central Excise Act 1944 [the Excise Act] and thereafter credited to the Consumer Welfare Fund under section11A (2) of the Excise Act. The appellant has also been directed to pay interest on the said amount in terms of section 11AA/AB of the Excise Act. 2. The appellant is engaged in the manufacture of passenger cars, trucks, buses radial tyres and tubes. In the course of business, the appellant sells tyres directly to the original equipment manufacturers and pays central excise duty on the transaction value. The appellant also transfers the manufactured tyres to depots that later on sell the tyres to dealers. In this case, the appellant pays excise duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant but also filed an appeal before the Tribunal. This appeal of the Department was allowed by the Tribunal by order dated 23.02.2009 by way of remand and the appellant was directed to produce documentary evidence. After remand, the Deputy Commissioner, by an order dated 11.03.2010, held that the appellant was entitled to refund for the period from April 2001 to June 2004 and also for interest on account of delayed payment. Similar refund was granted to the appellant for the period from October 2008 to September 2011 by various order passed by the Department. 8. A show cause notice dated 30.01.2015 was, however, issued to the appellant by the Commissioner seeking to recover the amount refunded to the appellant for the period from April 2001 to June 2004 and from October 2008 to September 2011. The appellant filed a reply, but the Commissioner by order dated 15.02.2018 upheld the demand made in the show cause notice. The appellant filed an appeal before the Tribunal which was allowed by the Tribunal by order dated 30.01.2019. The Tribunal, after noticing that the orders under section 11B of the Excise Act by which refund was granted to the appellant had attained finality as n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of the removal. The duty is supposed to have passed on and collected inclusive in the value/price collected from the ultimate consumer; iii. That these incentives/discounts provided by the appellant are in the form of sales promotion expenses and therefore, is inclusive in the transaction value in terms of section 4 of the Excise Act; and iv. That the claim of refund under consideration is hit by the doctrine of unjust enrichment. 11. The appellant filed a reply to the said show cause notice. The Deputy Commissioner, by order dated 15.05.2013, rejected the refund applications. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals), who by order dated 17.07.2014 partly allowed the appeal holding that the claim of refund was not hit by the doctrine of unjust enrichment, but the matter was remanded to the adjudicating authority to assess the quantum of such eligible discounts before allowing the refund. 12. Feeling aggrieved by part of the aforesaid order passed by the Commissioner (Appeals), the appellant filed an appeal before the Tribunal and the Department also filed an appeal before the Tribunal. The Tribunal, by order dated 04.06.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such evidence produced by the Department. In view of this, following the judgment of the Hon'ble Rajasthan High Court in the case of A.K. Spintex Ltd. (supra), and the judgment of the Karnataka High Court in the case of Sudhir Papers (supra), we hold that there is no unjust enrichment and that the incidence of higher duty paid by the assessee and whose refund is being claimed has been borne by them and has not been passed on by them to their customers." (emphasis supplied) 13. A perusal of the aforesaid order passed by the Tribunal shows that the appellant was held entitled to refund and the contention of the Department that refund should be denied because of unjust enrichment was not accepted by the Tribunal. 14. It has been stated that the order dated 04.06.2015 passed by the Tribunal has attained finality as no appeal was filed by the Department. This factual position has not been controvertered by the Department. 15. On the basis of the aforesaid order dated 04.06.2015 passed the Tribunal, an amount of Rs. 2,34,99,027/- was refunded to the appellant for the period October 2011 to June 2012. Subsequently, further refund of Rs. 16,74,54,344/- was granted to the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the argument of the appellant that the show cause notice is hit by the principle of Res Judicata is not acceptable; f. No restriction regarding issuance of second show cause notice for subsequent period invoking provisions of normal period has been placed by the Supreme Court in Nizam Sugar v/s Collector of Central Excise, A.P. [2006 (197) ELT 465 (SC)]. g. That interest is leviable. 18. It is against this order of the Commissioner that the present appeal has been filed. 19. It would be convenient to categorize the refunds claimed by the appellant for various periods into four Blocks and they are as follows:- Block Period Date of Refund Amount (in Rs.) Block I October, 2011 to June, 2012 12.10.2015 2,34,99,027/- Block II July, 2012 to March, 2014 & October, 2015 to December, 2015 07.09.2015 to 08.06.2016 16,74,57,344/- Block III April 2001 to September 2003 & October 2008 to September 2011 _ _ Block IV January 2016 to June 2016 _ _ 20. The present proceedings relate to an amount of Rs. 2,34,99,027/- for Block I for the period from October 2011 to June 2012 and an amount of Rs. 16,74,57,344/- for Block II for the periods from July 2012 to Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized representative also submitted that the decision dated June 04, 2015 of the Tribunal only examined the issue of unjust enrichment up to the dealer and not up to the end customer. The submission is that the doctrine of unjust enrichment applies to the entire supply chain and the Supreme Court has held that if the burden of duty has been passed to the customer, the refunds are hit by the doctrine of unjust enrichment. In the present case the appellant has not produced any tangible evidence to prove that the incidence of duty was not passed to the end customer. Learned authorized representative also submitted that the proper course for recovery of an erroneous refund is to invoke the provisions of section 11A of the Excise Act. 25. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 26. As noticed above, the appeal is confined to Block I and Block II. The refund applications filed by the appellant for Block I were rejected by order dated 15.05.2013 passed by the Deputy Commissioner. The appeal filed by the appellant before the Commissioner (Appeals) was partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice was issued to the appellant by the Commissioner under section 11A(1) of the Excise Act on 30.08.2017 to show cause as to why the said amount of Rs. 19,09,56,371/-, earlier refunded to the appellant, may not be recovered and from the appellant and credited to Consumer Welfare Fund. This show cause notice, covers both Block I and Block II periods and has been issued on the basis of the Supreme Court judgment in Addison. 30. The first issue that needs to be decided is as to whether the show cause notice could have been issued by the Department under section 11A of the Excise Act for recovery of the duty refunded to the appellant once the orders granting refund of duty had attained finality. To examine this issue, it will be useful to refer to the relevant provisions of the Excise Act. 31. Section 11B of the Excise deals with claim for refund of duty and interest, if any, paid on such duty. Sub-sections (1) and (2), without the proviso, are reproduced below: "11B Claim for refund of duty and interest, if any, paid on such duty - (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of, - (i) his own ascertainment of such duty; or (ii) the duty ascertained by the Central Excise Officer," ***** ******* ****** (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of - (a) fraud; or (b) collusion; or (c) any wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, By any person chargeable with the duty, the Central Excise Officer, shall within five years from the relevant date, serve notice on such person requiring 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" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also examined by the Andhra Pradesh High Court in CC and CE, Tirupati vs. Panyam Cements & Minerals Industries Ltd. [2016 (331) E.L.T. 206 (AP)] and it was held that where an order under section 11B of the Act attains finality, the refund allowed would be outside the scope of an 'erroneous refund' contemplated under section 11A of the Act. The relevant paragraph is reproduced below : "16. ………… A careful analysis of the Sections 11A and 11B of the Act would leave no manner of doubt that there is an adjudication process involved in the processing of the applications made under Sections 11A and 11B of the Act and further the orders passed under Sections 11A and 11B of the Act are appealable. The determination of an application 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law. Therefore, we would give the benefit of doubt to the Assistant Commissioner and presume that before according sanction in September, 1998 for refund, he had actually followed the procedure under Section 11B and passed an order of adjudication. 34. Once it is seen that an order of adjudication has been validly passed under Section 11B and a refund has also been made on 29-9-1998, then the next question that would fall for consideration is as to whether Section 11A can be invoked thereafter. We have already extracted the provisions of Section 11A. Interestingly, the authority, given under Section 11A(1) for recovery of any refund erroneously paid, is upon the Central Excise Officer. The expression used in Clause (a) in sub-section (1) of Section 11A is "Central Excise 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority after duly considering the claim of the respondent rejected part of the claim and allowed the claim to the extent of Rs. 2,42,110/- and directed that the same should be appropriated against outstanding Government dues. Later on after the said order was implemented another show cause notice came to be issued calling upon the respondent to show cause as to why the refund claim of Rs. 2,42,110/- sanctioned and erroneously refunded by appropriating against the outstanding Government dues should not be rejected and amount so appropriated should not be recovered under Section 28 read with Section 27 of the Customs Act, 1962 in absence of proof regarding burden of duty being not passed on. The very frame of the show cause notice indicates that the adjudicating authority was reviewing the earlier order inasmuch as the respondent had been called upon to show cause as to why the refund granted by the earlier order should not be rejected. 8. Sub-section (2) of Section 129D empowers the Commissioner of Customs to 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 purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Excise Act cannot be resorted to by the Department for recovery of duty which it believes was erroneously refunded if the order passed for refund of duty under section 11B of the Excise Act on an application filed for refund of duty attained finality for the simple reason that it cannot fall in the category of 'duty erroneously refunded'. 43. The show cause notice dated 30.08.2017 seeking recovery of the duty refunded to the appellant is without jurisdiction. The order passed on such a show cause notice, therefore, deserves to be set aside. 44. The submission made by the learned counsel for the appellant that the proceedings cannot be re-opened on the basis of a subsequent judgment of the Supreme Court also deserves to be accepted in view of the decision of the Supreme Court in Deputy Commissioner of Income Tax and others vs. Simplex Concrete Piles (India) Limited [(2013) 11 Supreme Court Cases 373]. The relevant observations are as follows: "In any event, at the relevant time, when the assessment order got completed, the law as declared by the jurisdictional High Court, was that the civil construction work carried out by the assessee would be entitled to the benefit of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
