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TMI Blog2002 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel did not press the challenge to the said show cause notice dated 5-12-1988 (Exhibit-N in Writ Petition No. 2857/89) which pertain to rejecting the refund claim of the Petitioners. 3.Thus, the challenge in these petitions are restricted to various show cause notices issued by the Respondents under Section 11A of the said Act, seeking to recover the amounts erroneously refunded to the Petitioners. 4.The facts relevant for the purpose of the present petitioners are :- FACTS 5.The Petitioners are a public limited company and are engaged in the manufacture and processing inter alia of dyes and chemicals. The goods manufactured by the Petitioners are liable to excise duty under the said Act. 6.By an order dated 11th September, 1984 the Asstt. Collector of Central Excise, Kalyan Division inter alia held that post manufacturing expenses like interest charges and additional sales tax were not includible in the assessable value of the goods. In view of the reduction in the assessable value, the Petitioners became entitled to refund of excise duty on past clearances. As the amount of excise duty refundable on account of reduction in assessable value were not cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany." 9.Thus, it is clear that on the date when refund was granted and paid to the Petitioners, both the parties accepted the position that the issue of refund was not finalised and that the revenue would be entitled to recover the amount refunded, if the decision of the Apex Court was in favour of the revenue. 10.Accordingly, the Respondents after granting and paying the refund amount issued show cause notices under Section 11A of the said Act dated 31-10-1988 (Exhibit-K in Writ Petition No. 5770 of 1988), show cause notice dated 3-2-1989 (Exhibit-P in Writ Petition No. 2857 of 1989) and show cause notice dated 22-4-1989 (Exhibit-T in Writ Petition No. 3172 of 1989) and sought to recover the amounts refunded to the Petitioners on the ground that the refund granted was erroneous because (i) the review petition in the case of M.R.F. Ltd. was pending before the Apex Court and (ii) in view of the decision of this Court in Roplas (India) Ltd., refund cannot be allowed where duty is collected from the customer. The validity of these show cause notices are the subject matter of challenge in these three Writ Petitioners. SUBMISSIONS 11.Mr. Nankani, learned Counsel appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition, as reported in M.R.F. case as reported in 1989 (41) E.L.T. 703 by recalling its earlier decision reported in 1987 (27) E.L.T. 553 and finally decided the issue in favour of the manufacturers, as reported in 1995 (77) E.L.T. 433. It was submitted that when the issue was finally settled by the Apex Court in the year 1995, it could not be said that the show cause notices issued u/s. 11A of the said Act in the year, 1988 were without jurisdiction. It was submitted that during the pendency of these show cause notices, Section 11B of the said Act has been amended and in view of overriding provisions contained in Section 11B of the said Act, the issue of erroneous refund which are subject matter of these show cause notices have to be dealt with in the light of amended provisions of Section 11B of the said Act. 13.With these facts on record, the issues that arise for consideration in these petitions are :- ISSUES (i) When the order-in-original dated 11-9-1984 had attained finality and refund was granted as consequential relief, whether the Central Excise Officer had jurisdiction to issue notices u/s. 11A of the said Act to recover the refund without challenging the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A is a primary and fundamental requirement for recovery of any money erroneously refunded. Section 11A is the fountain head of all the powers for recovery of any money erroneously refunded. There are no preconditions attached for issuance of notice under Section 11A for recovery of the amount erroneously refunded. There is no requirement of passing an adjudication order and if adjudication order is passed, there is no need to initiate appellate proceedings before issuing notice under Section 11A. Second proviso to Section 35A(3) which states that no order-in-appeal requiring the appellant to pay any duty erroneously refunded shall be passed unless the Appellant is given show cause notice within the time limit prescribed in Section 11A also shows that Section 11A is a independent substantive provision and it is a complete code in itself for realisation of excise duty erroneously refunded. Under the circumstances, the contention of the Petitioner that notice under Section 11A could not be issued without challenging the order-in-original is without any merit. 16.Mr. Nankani, learned Counsel for the Petitioners relied upon the decision of the Apex Court in the case of Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court, in the case of M.R.F. Ltd. had upheld the case of the revenue, then the only course open to the revenue to recover the amount was by invoking jurisdiction under Section 11A of the said Act. In that event, even the undertaking given by the Petitioners could be enforced subject to the limitation prescribed under Section 11A. Therefore, the conditional refund orders passed in the matter, the undertaking given by the Petitioners and the conduct of the parties in treating the issue of refund to be pending and could be recovered by the revenue, subject to the decision of the Apex Court, clearly justify the action of the revenue in invoking jurisdiction u/s 11A of the said Act. The Petitioners having accepted the conditional refund order and having received the amount by giving an undertaking to refund the amount in case the decision of the Apex Court in the case of M.R.F. goes in favour of the revenue, cannot now turn around and say that the issue of refund had attained finality and there were no grounds to invoke jurisdiction under Section 11A of the Act. In this view of the matter, we are of the opinion that there were sufficient grounds for invoking the jurisdiction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (1). The first provision expressly declares that "where an application for refund has been made before the commencement of the Central Excise and Customs (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act". In the face of this proviso, it is idle to contend that sub-sections (1) and (2) of Section 11B do not apply to pending proceedings. They apply to all proceedings where the refund has not been made finally and unconditionally. Where the duty has been refunded under the orders of the Court pending disposal of an appeal, writ or other proceedings, it would not be a case of refund finally and unconditionally, as explained in Jain Spinners and I.T.C. It is, of course, obvious that where the refund proceedings have finally terminated - in the sense that the period prescribed for filing the appeal against such order has also expired - before the commencement of the 1991 (Amendment) Act [September 19, 1991], they cannot be reopened and/or be governed by Section 11B(3) [as amended by the 1991 (Ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation. Again, while summarising the proposition, the Apex Court held in para 99(xi) as follows :- "99(xi) Section 11B applies to all pending proceedings notwithstanding the fact that the duty may have been refunded to the petitioner/plaintiff pending the proceedings or under the orders of the Court/Tribunal/Authority or otherwise. It must be held that Union of India v. Jain Spinners [1992 (61) E.L.T. 321 (S.C.) = 1992 (4) S.C.C. 389] and Union of India v. I.T.C. [1993 (67) E.L.T. 3 (S.C.) = 1993 Suppl. (4) S.C.C. 326] have been correctly decided. It is, of course, obvious that where the refund proceedings have finally terminated - in the sense that the appeal period has also expired - before the commencement of the 1991 (Amendment) Act [Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Para 95 of the aforesaid Judgment itself held that if the final orders passed under Rule 9B(5) are appealed against or questioned in a Writ or Suit and on account of those decisions any refund arises as a consequence, then the same will be governed by Section 11B. The Apex Court has further clarified as follows :- "if an independent refund claim is filed after the final decision under Rule 9B(5) reagitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation." 21.Apart from that, the Apex Court in the case of Serai Kella Glass Works Pvt. Ltd. v. Collector of C.E., Patna reported in 1997 (91) E.L.T. 497 has further clarified that on finalisation of the assessment, if there is any deficiency in duty, show cause notice under Section 11A is not required because as per Rule 173F read with Rule 173-I of Central Excise Rules, 1944, such duty is required to be paid by adjustment in current account within ten days of receipt of the copy of the monthly return. Therefore, if the duty payable on final as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions of this Court and submitted that the plea of unjust enrichment is not applicable to the authorities created under the statute. It was submitted that the decision of this Court in the case of Roplas (India) Ltd. v. Union of India reported in 1988 (38) E.L.T. 27 which has been relied upon in the show cause notices, is not applicable to the case of the Petitioners. Mr. Nankani sought to make distinction between the refund claims made before the Excise authorities and the refund claim made directly by way of a writ. In our opinion, all these arguments are now academic in view of the amendment to Section 11B in 1991 and in view of the decision of the Apex Court in the case of Mafatlal Industries Ltd. (supra). As stated hereinabove, once it is held that the show cause notices issued are valid and the issue of refund was pending on the date when the amendment came into force, then the said show cause notices are liable to be adjudicated as per the amended provisions of Section 11B of the Act. 24.Mr. Nankani finally contended that what is challenged in the petition is the validity of show cause notices issued under Section 11A of the said Act. It was submitted that if the not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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