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TMI Blog2023 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... und orders made in terms of the Section 11B of the Central Excise Act, 1944 are judicially determined, the same needs to be set aside in the manner as provided in law. Having not filed any appeal against the said refund orders those order had acquired finality and could not have been challenged by way of the proceedings initiated under Section 11A. In the case of M/S. EVEREADY INDUSTRIES INDIA LTD. VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, THE COMMISSIONER OF CENTRAL EXCISE [ 2016 (4) TMI 688 - MADRAS HIGH COURT ] Hon'ble Madras High Court has held that Once an application for refund is allowed under Section 11B, the expression 'erroneous refund' appearing in sub-section (1) of Section 11A cannot be applied. If an order of refund is passed after adjudication, the amount refunded will not fall under the category of erroneous refund so as to enable the order of refund to be revoked under Section 11A(1). One authority cannot be allowed to say in a collateral proceeding that what was done by another authority was an erroneous thing. In case of M/S. HONDA SIEL POWER PRODUCTS VERSUS UNION OF INDIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of duty erroneously refunded to them under Section 11AB of Central Excise Act, 1944. 5. I impose a penalty of Rs. 10,00,000/- on M/s. PAL under Rule 209 A of the Central Excise Rules, 1944. 6. I impose following penalties on dealers under Rule 209A of Central Excise Rules, 1944. i M/s Bombay Cycle Motor Agency Ltd. 534,S.V.P. Road Mumbai-400070 Rs.6,00,000/- ii M/s Credit Line Motors Ltd. Shahaney Kirkwood Compound 27,Kiro! Road, Vidyavihar (W) Mumbai- 400086 Rs.3,00,000/- iii M/s Spectra Automobiles Shiv Anand, Near St. John High School, S.V.Road, Goregaon(West), Mumbai- 400062 Rs.3,00,000/- iv M/s Nav Bharat Motor Agency Railway Lines, P.B.No.58 Solapur-413001 Rs.1,00,000/- v M/s Shamam Automobiles Pvt. Ltd. Madhu Kunj, Sayani Road Prabhadevi Mumbai-400 025 Rs.1,00,000/- vi M/s Ashwamegh Auto Ltd. 685/1,Bibewadi Pune Sata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act, 1944; ii. proposing rejection of refund claims amounting to Rs. 17,81,002/- under Rule 173S of Central Excise Rules, 1944 read with Section 11B of Central Excise Act, 1944; iii. charging and demanding interest @ 20% p.a. under Section 11AB of the Central excise Act, 1944 on the entire amount of duty erroneously refunded to them. 2.6. The said show cause notice also proposed imposition of penalty on M/s. PAL, a merchant manufacturer, and the dealers, under Rule 209A and/or Rule 210 of erstwhile Central Excise Rules, 1944 and/or Rule 26 of the Central Excise (No. 2) Rules, 2001/Central Excise Rules, 2002 for their active role in aiding and abetting M/s. FIL for committing the said offence by willfully submitting false and misleading information/documents. 2.7. The said Show Cause Notice was adjudicated by the then Commissioner of Central Excise, Mumbai-II vide Order-In-Original No. 05/2002 dated 5.2.2002 and passed the following order:- (a) Confirmed the demand of Rs. 3,07,83,604/- erroneously refunded to M/s. FIL under proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 along with interest under Section 11AB of the Central Excise Act. 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardwaj, Advocates for Appellant 1, None for Appellant 2 and Shri Mihir Mehta and Shri Mohit Rawal, Advocates for Appellant 3 and Appellant 4. We have also heard Shri Amrendra Kumar Jha, Deputy Commissioner and Shri Dhirendra Kumar, Joint Commissioner, Authorized Representatives for the revenue. 3.2. Arguing for the Appellant 1 learned counsel submits:- Undisputedly the Refund claims filed by the appellant for Rs. 3,07,83,604/- were after due consideration were sanctioned by the jurisdictional authorities in the favour of Appellant 1. None of the order sanctioning the refund claim was ever reviewed by the revenue authorities for filing an appeal to the appellate authorities, and the Show Cause Notice dated 23.07.2001 was issued to them by the Commissioner for recovery of the erroneous refund by invoking extended period as per Section 11A of the Central Excise Act, 1944. The show cause notice issued to them in terms of the Section 11A, without review of the orders sanctioning the refund claim is bad in law as have been held by Hon'ble Madras High court in the case of Eveready Industries India Ltd. [2016-TIOL-676-Mad-CX] The total amount of demand confirmed agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs initiated against the Appellant 1 and on Appellant 3 and 4 are bad in law. Appellant 3 4 understand that the entire amount due to the taxi owners have been refunded by the Appellant 1. In absence of any erroneous refund claimed by the Appellant 1, there is no question of aiding and abetting erroneous sanction of refund. Appellants have suffered huge losses due to non receipt of the amounts to be refunded from PAL. Ingredients for imposition of penalty under rule 209A are absent in the present case and hence penalty imposed under the said section cannot be justified as have been held by the larger bench of tribunal in the case of Steel tubes of India Ltd. Impugned order has been passed in violation of the principles of natural justice. Interestingly by the order dated 29.03.2007, when the amount of erroneous refund was determined as Rs. 2.69 crores, the penalty imposed on appellant 3 was Rs. 55,000/- which has been now by the impugned order has been increased to Rs. 1,00,000/- The appeals filed by the appellant 3 and 4 be allowed. 3.4. Arguing for the revenue, learned authorized representative while reiterating the findings recorded in the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook to pay the balance amount of around Rs. 17 Lakh (approx) to the Government for the reason that they were not able to trace the persons in whose name the vehicles have been registered as taxi. This payment is apart from the amount already paid to PAL, for whom they had manufactured the vehicles in question. (ii) The Deputy Commissioner vide letter F. No. V.Adj(30)Kurla/CR-10/Commr/2006/M-II/1113 dated 14/3/2011 was directed to carry out the verification of the documents produced by M/S. FIL. (iii) The Assistant Commissioner, Central Excise, Kurla Division vide letter F. No. V(Adj)Misc-Kurla/2/10/1563 dated 14/10/2011 submitted the verification report wherein it was reported that M/s. FIL has produced the records/documents in the form of 25 volumes each containing 50 original receipts and Xerox copies of other supporting documents in each volume alongwith a statement of pending Taxi Refund cases as per Annexure B and C of the related SCN. On receipt of the said statements, the same was forwarded to the concerned Citibank, Fort, Mumbai-400001 and requested them to report whether the cheques given to various Taxi owners has been realized or not. The said bank submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provided in the Show Cause Notice and the certificates are not tallying. In one case no confirmation is available from Citibank. The details are as under:- Sr. no. Name of Beneficiary as per SCN Name of Beneficiary as per Citi Bank Amount cheque no. 1 Anwar Hussain Abdulla Haridya S Shukla 29694.60 362433 2 Ramraj Prajapati M Kalpana Ramraj Prajapati 25381.35 362560 3 Nazeer Iqbaluddin khan MIR Ali 25381.35 363290 4 Ramkhilawan S Yadav Anilkumar S Yadav 25381.35 362555 5 I N Sharma Smt. Ratnadevi 25381.35 362417 6 Khaja Sarfoo N Nisa 25381. 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57,321/- Total Rs 20,88,391/- vi. M/s. FIL has submitted that In respect of Annexure C to the show cause notice trey had already refunded an amount Rs. 15,92,889.50 (Rs. 17,81,001.62 (amount of refund sought to be denied in SCN)-Rs. 1,88,112.12 (amount not refunded to Taxi Owners). M/s. FIL have requested to adjust the said amount sought to be demanded. This submission of the assessee cannot be accepted in as much as duty is demanded under Section 11A of Central Excise Act, 1944 and refund is governed Section 11B of Central Excise Act, 1944. Further the powers of sanction of refund lies with the Assistant/Deputy Commissioner having jurisdiction over the unit as per Section. 11B ibid. Therefore, M/s. FIL is required to file refund claim with jurisdictional Assistant/Deputy Commissioner. vii. As regards penalty I find that neither the dealers nor M/s. PAL is responsible for fraudulent claim of refund in these cases. The actions of M/S. FIL in claiming fraudulent refund claim by misdeclaration satisfies the necessary ingredients to impose penalty under Section 11AC of Central Excise Act, 1944, Therefore, They are lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s specified in the said notifications. Condition 34 of Notification 4/97-CE and 43 of Notification No. 5/98-CE are reproduced below: Notification No. 4/97-CE dated 01.03.1997 34. If,- (a) the manufacturer at the time of clearance of motor vehicle mentioned against S. No. 195 in column (3) of the said Table (hereinafter in this condition referred to as the said motor vehicle) has paid excise duty calculated at the rate of 40% ad valorem; (b) the manufacturer furnishes to the Assistant Commissioner of Central Excise a certificate from an officer authorised by the concerned State Transport Authority, to the effect that the said motor vehicle has been registered for use solely as a taxi or ambulance, as the case may be, within three months of the clearance of the said motor vehicle from the factory of manufacture or such extended period as the said Assistant Commissioner may allow; (c) the manufacturer had not collected from the person, group of persons, anybody or organisation, as the case may be, in whose name the said motor vehicle has been registered as a taxi or ambulance, as the case may be, or in case had collected, has refunded to such person, group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritory Administration or a local authority, or are registered as such with any Department of the Central Government, State Government or a Union Territory Administration or a local authority. 4.4. In the case of the appellant the notifications were considered by the tribunal twice. In first round of litigation, interpreting the said conditions tribunal has vide the order No. A/466 to 504/WZB/05/C-II dated 27.10.2004/17.06.2005 observed as follows: 1.10 Since the issue revolves around the interpretation and procedure of 'Taxi Registration Refunds' under the excise notifications, all these appeals are being disposed by this common order. 2.1. Comparison of the conditions under which the procedure was prescribed for the duty adjustment after clearance and Registration as Taxi or Ambulance vide notification 4/97 and 5/98 dt 1.6.98 indicate that- i) Duty on clearance of such Motor Vehicles was required to be made on Tariff Rates as applicable. ii) Subsequent to such clearances, on Registration of the Motor Vehicles, as a Taxi by a person, within the lime prescribed or as extended was required to be produced by the manufacturer. iii) The claim for Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of clearance of the vehicle keeping in mind that, if there were no liability to return the excess amounts to any other person, then the buyer of the manufacturer, then there can be no penalty on such persons or others, for having produced or not produced photocopies of the cheques which are encashed or not encashed. Material not relevant or and required for establishing a claim under the Central Excise Law cannot be a reason for calling for penalty even if such material is found to be indicating taunt on subsequent enquiries. The persons who got/or did not get the return of amounts have a recourse to law to enforce their rights, it cannot be cause for penalty under the Central Excise Act. 2.5 In view of the findings, the orders are set aside and appeals allowed for denovo adjudication by determining the demands/recovery of erroneous refunds as per findings herein above. 3.1 All appeals allowed as Remand in above terms. Thus by the order dated 27.10.2004/17.06.2005, tribunal has specifically held that in terms of the condition prescribed by the notification 5/98-CE, the only requirement that was to be fulfilled in respect of the said notification was to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the interpretation of the said notifications in the same case. Admittedly the order dated 27.10.2004/17.06.2005 was not challenged by the revenue before any appellate authority and had thus acquired finality. Appellant have submitted before the Commissioner the details of the refund claims filed by them in terms of the notification 5/98-CE. The said details were produced before us which are reproduced below: The refund claims filed by the appellant in terms of the Notification 5/98-CE have been correctly allowed by the jurisdictional Assistant/deputy Commissioners in terms of the order of the tribunal dated 27.10.2004/17.06.2005 and demands in respect of these refund claims to the extent indicated above needs to be set aside. Sr. No . Name of the party Engine Number Claim Details Claim Nu mber Claim Date Claim Amount 1 2 3 4 5 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.12.1998 24630.45 15 Raju Dinkar Shinde 51371 157 18.12.1998 25381.35 16 AbdulR Shaukat Puleel 51015 167 11.01.1999 28664.55 17 Avinash Raut 51665 175 14.01.1999 27102.60 18 Shrirang Tukaram B 52023 189 23.02.1999 25381.35 19 RumyDarab Sidhwa 51957 190 23.02.1999 25381.35 20 Shrinath B Tiwari 3178 206 10.03.1999 29694.60 21 Chandrakant G Padale 51951 257 23.02.1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.04.1999 27750..60 37 GobaiRam A Patel 52209 28 10.05.1999 26100.90 38 Appasaheb Bhiku T ankar 52340 28 10.05.1999 26100.90 39 Sayed Mehboob Hasan 50974 131 01.12.1998 27854.55 40 Majbool Hussain Tejmal 3160 168 14.01.1999 29694.60 41 Jainath Tiwari 51411 184 27.01.1999 25381.35 42 Mulchand B. Mali 3211 33 18.05.1999 27750.00 43 Shaikh A Kadi 52326 36 27.05.1999 25050.60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 R.A. Phutane 51284 164 04.01.1999 28664.55 T otal 1564714.98 4.5. In respect of the three refund claims for the amount Rs. 80,169.75/- which were filed in terms of the Notification No. 4/97-CE for which the appellants have not been able to file the proof of refund to the individual taxi owners as required in terms of the said notification, the refund claim would not be admissible to the appellant in terms of the interpretation placed by the tribunal in earlier orders. Details of the said refund claims are reproduced below: S No Name of the party Engine No Claim details Number Date Amount 1 P.T. Dhere 43519 12 15.04.1999 26157.60 2 N S Patil 43493 4 10.04.1999 26157.60 3 Dinesh Ghadge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the Appeal. 9 Rajendra H Chourasiya Champadevi R Chourasiya 25,381.35 000024 ****Pg. No. 692 to 707 of the Appeal. 10 Mohd Zahir Khan M M Zahir 26,720.64 000064 ****Pg. No. 708 to 717 of the Appeal. 22 Gulhasan M Ali JG Hasan 26,720.64 000023 ****Pg. No. 718 to 740 of the Appeal. 286186.33 *Typing error in the order issued. Correct Ch. No. 362437 issued to beneficiary (i.e., Anwar Husain Abdulla) Copy of Bank Certificate attached for the same. **Ch. No. 363290 issued to Mir Ali Ch. No. 363190 issued to Nazeer I. Khan correct name of beneficiary shown by Citibank. ***Bank has not given beneficiary name in the certificate ****Amount refunded to Legal Heir as per Affidavit. During the course of hearing and taking note of the fact that the this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atches as stated are very minor in nature. Further we also note that there are errors in recording the engine number in the show cause notice whereby same engine number appeared twice in the show cause notice which is practically impossible. The verification as undertaken in these cases cannot be reason for denial and the verification has to be caused by referring to all other details. Having satisfied with correctness of these claims we hold that demand made in respect of these claims needs to be set aside. 4.8. On the basis of the sample verification of the documents produced as indicated in the previous paragraphs and on the basis of the decisions of the tribunal in the present case in earlier two rounds of litigation we are of the view that demand at the most can be upheld only to the extent of three claims indicated in para 4.6 above i.e. to the extent of Rs. 80,169.75. However we also take note of the fact and the submission made by the counsel for the appellants, that none of the refund orders made against the refund claim filed by the appellant revenue has sought to challenge the said orders by way of filling the appeal before the Commissioner (Appeals). It is settled la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Section 2(a) to mean any authority competent to pass any order or decision under this Act, but does not include the Central Board, Commissioner of Excise (Appeals) or the Appellate Tribunal. Hence, the power exercised under Section 11B is that of an adjudicating authority and the order passed is certainly one of adjudication. 32. It is only when an order of adjudication is passed under Section 11B that a person, who makes a claim for refund, will get his money back. This assumes significance in the light of the fact that by the proceedings dated 29-9-1998, the appellant/assessee was informed of the sanction granted by the Assistant Commissioner to make a refund of a sum of Rs. 3,31,365/- arising as a consequence of the finalisation of assessment. 33. In simple terms, the refund that the appellant got was and should have been only after an adjudication under Section 11B and not without an adjudication. It must be pointed out that if an authority has done something, it must be presumed that he has done it 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 11A and 35E. 38. As we have seen from the language employed in Section 35E, which we have extracted above, a limited revisional jurisdiction is conferred upon the Principal Commissioner and Commissioner of Excise in sub-section (2) of Section 35E. This power is not actually to correct any error directly, on the part of an adjudicating authority. This power is available only for directing the Competent Authority to take the matter to the Commissioner (Appeals). 39. Therefore, it was always open to the Principal Commissioner or the Commissioner of Central Excise to examine the order of the adjudicating authority namely the Assistant Commissioner in the proceedings under Section 11B and to give a direction to the Competent Authority to file an appeal against the order of refund under Section 11B, to the Commissioner of Appeals under Section 35. This was not done in this case. On the contrary, the authorities allowed the order to be passed in Appeal No. 206/98, dated 30-11-1998 on the basis of the refund already made. 40. Now, coming to the decisions, on which, heavy reliance is placed by the learned standing counsel for the Department, it is seen from the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment at all under Section 11A. Therefore, the decision in Sivanandha Pipe Fittings Ltd., is also of no assistance to the Department. 44. Insofar as the decision of the Jharkhand High Court in Gillooram Gaurishankar is concerned, the question that was referred to the High Court was whether the statutory remedies under Section 11A(1) will have to be exercised, to the exclusion of the remedies available under Section 35E(2) or not. In Paragraph 4 of the decision, the Jharkhand High Court rightly held that there was no necessity to issue a show cause notice under Section 11A, when recourse has already been taken to Section 35E. 45. Insofar as the decision of this Court in PRICOL Ltd., is concerned, one of the two questions of law referred was as to whether the amount erroneously refunded could not be recovered by filing an appeal under Section 35E without issuing a demand notice under Section 11A. That is not the situation in this case. 46. In this case, an order of refund was passed on an application under Section 11B. The appeal against the finalisation of the assessment was closed on the basis of the refund order. There can be no doubt about the fact that the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Asian Paints (India) Limited approved by the Supreme Court, this Court came to the conclusion in Paragraph 23 as follows: In our opinion, there is no nexus between Section 11A and Section 35E. Section 11A does not indicate that the legislature intended to override Section 35E. Both sections have to be read harmoniously. In the present case, Annexure-I certificate has been issued in favour of the petitioners from time-to-time on executing B-8 security bond and on furnishing a bank guarantee. The Department has to follow the procedure under Section 35E for setting aside the Annexure-I certificate. Unless, the Annexure-I certificate is cancelled or rejected by the Competent Authority, by following the procedure under Section 35E, it is not permissible for the respondents to invoke Section 11A of the Act. Therefore, we are of the considered opinion that the issuance of show cause notices is without jurisdiction and is liable to be struck down. 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 conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly after the adjudication as envisaged under scheme of Section 11B. In the present case, petitioner-company had made an application for refund which was adjudicated on 5-11-2015 and it was directed to refund excise duty to tune of Rs. 1,02,75,633/- which was in excess. This order was never challenged by revenue in appeal and it attained finality. 36. Thus, once the order of adjudication has been validly passed under Section 11B and a refund has been made on 5-11-2015, the next question which crops up for consideration is as to whether Section 11A can be invoked thereafter. 37. As Section 11A(1)(a) uses the word Central Excise Officer who is empowered for recovery of any refund, Central Excise Officer is defined in Section 2(b) of the Act, to mean Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise or any other officer of Central Excise Department invested by Central Board of Excise and Customs constituted under Central Board of Revenue Act, 1963 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the department are not applicable in the present case, as it is neither a case of fraud, nor where incidence of duty was passed on. 42. Secondly, the argument of alternative remedy under Section 35 is concerned, the said fact is of no rescue to the department as specific case of petitioner is that show cause notice dated 17-8-2017 was issued after more than two years from finalisation of assessment order dated 24-7-2015, and where there is change of opinion by issuance of show cause notice, writ petition is maintainable as held in Shahnaaz Ayurvedics (supra), Simplex Concrete Piles (supra) and Samsung India Electronics Pvt. Ltd. (supra). 43. As seen above that Section 35E and 11A operate in different fields and are invoked for different purposes, we are merely concerned in this case with the interplay between Sections 11A and 35E. We are also concerned with what happened in the form of an adjudication under Section 11B. What happens in a case wherein adjudication takes place under Section 11B and authorities do not take recourse available to them, whether after having allowed adjudication under Section 11B to attain finality, was there any remedy available to depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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