Custom, Excise & Service Tax Tribunal
Johnson Matthey Chemicals India Pvt. ... vs Commissioner Cgst And Central ... on 16 November, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Excise Appeal No. 87391 of 2013
(Arising out of Order-in-Original No. Belapur/85/Tal/R-II/Commr/KA/12-13
dated 28.02.2013 passed by the Commissioner Central Excise and Customs,
Belapur)
M/s. Johnson Matthey Chemicals India P Ltd Appellant
Plot No. 6A, MIDC, Taloja,
Dist. Raigad 410 208.
Vs.
Commissioner of CGST & CE, Belapur Respondent
1st Floor, CGO Complex, CBD Belapur, Navi Mumbai 400 614.
Appearance:
Shri V. Sridharan, Senior Advocate with Shri Rajesh Ostwal, Advocate, for the Appellant Shri S.D. Deshpande, Special Counsel, for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Date of Hearing: 16.11.2022 Date of Decision: 16.11.2022 FINAL ORDER NO. A/86180/2022 PER: SANJIV SRIVASTAVA This appeal is directed against order in original No Belapur/85/Tal/R-II/Commr/KA/12-13 dated 28.02.2013 of the Commissioner Central Excise and Customs, Belapur. By the impugned order following has been held:
"ORDER
1. I confirm the demand of recovery of erroneous rebate of Rs. 7,25,34,077/-(Rupees Seven crore twenty five lakhs thirty four thousand seventy seven only) under the provisions of Section 11A(10){erstwhile 11A(2)} of the Central Excise Act, 1944 2 E/87391/2013
2. I order recovery of interest at appropriate rate under the provisions of Section 11AA(erstwhile 11AB) of the Central Excise Act, 1944
3. I impose a penalty of Rs. 7,25,34,077/- (Rupees Seven crore twenty five lakhs thirty four thousand seventy seven only) under the provisions of Section 11AC(a) (erstwhile 11AC) of the Central Excise Act 1944.
4. I impose a penalty of Rs.5,00,000/- (Rupees Five lakh only)on M/s.JMCIPL under the provisions of Rule 25 of the Central Excise Rules, 2002
5. I impose a penalty of Rs.1,00,000/- (Rupees One lakh only)on Shri. Amit Burman under the provisions of Rule 26 of the Central Excise Rules, 2002
6. I do not order confiscation of the impugned goods, as they are not available for confiscation. Consequently, I also do not impose any fine in lieu of confiscation of the goods."
2.1 Appellant are engaged in the manufacturing of Nickel Catalyst falling under Tariff Item 3815 11 00 and 3815 1210 of the First Schedule to the Central Excise Tariff Act, 1985.
2.2 Intelligence received, by the Officers of the Hqrs. Preventive Section of Central Excise, Belapur Commissionerate indicated that appellant were misutilising the Advance Licence Scheme by mis- declaring their export goods as Catalysts of Palladium and Platinum, thereby importing Platinum Sponge, Palladium Sponge, Acticarbone, Charcoal powder, Carbon powder, Sodium Clropall Solution, Pd.Chloride Solution and Chloroplatnic Acid Solution without payment of Customs Duty. Intelligence further indicated that they had obtained Advance Licences for import of the above items under DEEC Scheme of EXIM Policy 2002-2007 and 2004-2009 by availing exemption of Customs Duty under Notification Nos.43/02-Cus dated 19.4.2002 and 93/04-Cus dated 10.9.2004 for using the same in the manufacture and export of goods viz. Catalysts of Palladium and Platinum said to be manufactured out of imported/locally procured Palladium/Platinum sponge by adding necessary 3 E/87391/2013 additives and also by processing spent catalyst received from various pharmaceutical companies.
2.3 Acting on the above intelligence, investigations were undertaken and it was alleged that appellant had undertaken export of "Ash and residues" by fraudulently mis-declaring the export product as "Palladium/Platinum supported Catalysts"
under various Advance Licences and had imported various items duty free by mis-utilising the Advances Licences, 2.4 Show cause notice for mis-utilisation of Advance Licences and for recovery of duty on goods imported duty free was issued to M/s. JMCIPL by JNPT, Nhava Sheva on 21.5.2012.
2.5 In the event of having undertaken export of the goods, in terms of the provisions contained in Rule 18 of the Central Excise Rules, 2002 and Notification No-19/2004CE(NT) dated 6.9.2004 as amended, M/s JMCIPL were further entitled to various benefits, among others, to claim rebate of Central Excise duty, paid on the goods exported by them. M/s.JMCIPL had also undertaken export of goods in terms of the provisions, contained in Rule 19 of the Central Excise Rules 2002(Under Bond/LUT), read with Notification No.20/2004-CE(NT) dated 6.9.2004, as amended during the period from 2005-06 to 2010- 2011.
2.7 Appellant claimed rebate of the Central Excise duty paid by them on excisable goods, which were claimed to have been exported by them, by filing 27 applications of rebate claims which were sanctioned in their favour 2.8 Further on scrutiny of the Daily Stock Register(DSA) for the period January 2009 and for the period April'2010 to March 2011, submitted by appellant it was observed that the description of the goods mentioned therein is as 2% Palladium supported Catalyst- Type 900, Catalyst. powder(10% Palladium on Carbon/Charcoal), Catalyst Paste(10% Palladium on Carbon/Charcoal), Catalyst Type10T487 Paste (10% Palladium on Carbon/Charcoal), etc. There was no mention of "Ash and residues" in the said Daily Stock Register(DSA). Therefore, the "Ash and residues" which actually were exported were not 4 E/87391/2013 accounted for in the Daily Stock Register(DSA) which was in contravention of the provisions of Rule 10 of the Central Excise Rules, 2002, thereby rendering the goods exported liable to confiscation under Rule 25 of the Central Excise Rules, 2002. The details of all such exported goods mis-declared by M/s.JMCIPL as "Palladium/Platinum supported catalyst", detailed in Annexure-C to the show cause notice, were thereby liable to confiscation under Rule 25 of the Central Excise Rules, 2002. Therefore appellant were also liable for penal action under Rule 25 of the Central Excise Rules, 2002.
2.11 A show cause notice dated 30.08.2012 asking them to show-cause to the Commissioner of Central Excise, Belapur Commissionerate having office located at 1st Floor, CGO Complex, CBD Belapur, Navi Mumbai-400 614. as to why
1) the rebate of Central Excise duty amounting to Rs.7,25,34,077/- (Rupees Seven crores twenty five lakhs thirty four thousand seventy seven only) as indicated at Annexure-B to the show cause notice, which was erroneously sanctioned by the said Assistant Commissioner to them, in terms of their rebate claims, should not be recovered from them, in terms of Section 11A(4)) of the Central Excise Act, 1944/erstwhile proviso to Section 11A(1) read with Rule 18 of the Central Excise Rules,,2002 read with the provisions contained in the said Notification No. 19/2004-CE(NT).
2) as to why penalty should not be imposed on them in terms of Section 11AC(a)/erstwhile Section 11AC of the Central Excise Act 1944 and, the interest at appropriate rates should not be recovered from them under Section 11AA/erstwhile Section 11AB of the Central Excise Act, 1944.
3) the goods valued at Rs.91,25,31,616/- mentioned in Annexure- C to the show cause notice liable for confiscation under Rule 25 of the Central Excise Rules, 2002, should not be confiscated. However, since the goods 5 E/87391/2013 were not available for confiscation, why redemption fine in lieu of confiscation should not be imposed on M/s.JCMIPL, under Section 34 of the Central Excise Act, 1944.
4) penalty should not be imposed on M/s.JCMIPL under Rule 25 of the Central Excise Rules, 2002, for not accounting the export product "Ash and residues" in the Daily Stock Register(DSA)_as required under the provisions of Rule 10 of the Central Excise Rules, 2002 2.12 The show cause has been adjudicated as per the impugned order. Aggrieved appellants have preferred this appeal.
3.1 We have heard Shri V Sridharan, Senior Advocate with Shri Rajesh Ostwal, Advocate for the appellants and Shri S G Deshpande, Special Counsel for the revenue.
3.2 Arguing for the appellant learned counsel submits-
Once the goods have been exported the rebate cannot be denied.
o Telco [1993 Supp (1) SCC 361] The appellant have surrendered the benefit availed under the Customs Act, 1962. The present proceedings relating to rebate, should not be affected by the aforesaid mis declaration to avail the benefit under the Customs Act, 1962.
o Dr. TA Quereshi [(2006) (287) ITR 547 (SC)] o Thirumalaiswamy Naidu & Sons [(1984) 147 ITR 657 (Mad)] o State of Tamil Nadu [(1970) 25 STC 466 (Mad)] The impugned order travels beyond the scope of the show cause notice in alleging that the goods mentioned in the documents were not exported.
Ash/residue containing precious metal, generated during the process of recharging spent catalyst are not manufactured goods and therefore not liable to excise duty, hence the demand made under Section 11A is not maintainable.
o Indian Aluminium Co. [1980 (6) ELT 146 (Bom)] 6 E/87391/2013 o Tata Iron & Steel Co. Ltd. [2004 (165) ELT 386 (SC)] o Dhakad Metals [2010 (257) ELT 535 (Guj.)] affirmed in [2010 (257) ELT A139 (SC)] o Hindalco Industries [2015 (315) ELT 10 (Bom)] The recovery of erroneous refund is incorrect as excise duty is not leviable on exports.
o Chhotabhai Jethabhai Patel & Co. [1999 (110) ELT 118 (SC)] Extended period of limitation cannot be invoked As the demand cannot be sustained on merits and limitation there can be no question for imposition of fine and interest on the appellants.
o Tirupati Udyog [2011 (272) ELT 209 (AP)] 3.3 Arguing for the revenue learned special counsel while reiterating the findings recorded in the impugned order submits:
In case of Arun International [2015 (317) ELT 465 (T)] it has been observed that rebate of duty paid on goods can only be given as per the provisions of the Act and the rules made thereunder. Similar view has been expressed by the Hon'ble Punjab and Haryana High Court in case of Sarita Handa Exports 9P) Ltd [2015 (321) ELT 434 9P & H)]. In Uttam Steels {2015 9319) ELT 598 (SC) Hon'ble Supreme Court held that rebate of duty paid has to be give as per provisions of Rule 18 and Section 11 B of the Central excise Act, 1944.
No rebate can be given of duties paid on non excisable goods or exempted goods as have been held in the case of Vanasthali Textiles Ind Ltd [2015 (3210 ELT 89 (raj)], Mahindra & Mahindra Ltd. [2015 (321) ELT 61 (Bom)], Inductotherm (I) Pvt Ltd [2012 (283) ELT 359 (Guj)] No CENVAT Credit could have been allowed on inputs not shown to have been used in the manufacture of final products.
No refund is available of duties paid through CENVAT Credit account on goods which are exempted/ non 7 E/87391/2013 excisable because this would amount to refund of duties paid on raw material.
Fraud unravels all. Nobody should benefit from fraud as has been held in the following decisions:
o Price International [2014 (310) ELT 545 (T-del)] o Samsung India electronics Ltd. [2014 (307) ELT 160 (T-del)] o K I international [2012 (2820 ELT 67 9T-Chennai)] o DIC India Ltd. [2008 (226) ELT 545 (T-Kol)] No Cenvat credit is available in cases of fraud, as has been held in the following cases:
o Diwan Brothers [2014 (309) ELT 244 (Guj)] o Multiple Exports Pvt Ltd. [2013 (288) ELT 331 (Guj)] o Rivaa exports [2015 (316) ELT 26 (Guj)]
4.1 We have considered the impugned order along with the submissions made in appeals and during the course of arguments.
4.2 Commissioner has in the impugned order recorded as follows:
"Thus, the issues to be decided in this case are :
i. Whether the assessee actually exported
Palladium/Platinum supported catalysts (or) Ash and
Residues as claimed in the Notice i.e. whether the mis- declaration of the goods alleged in the notice is sustainable or not.
ii. If the mis-declaration is accepted, then whether the rebate of excise duty sanctioned on the mis-declared goods was in order or not.
iii. Whether extended period can be invoked or not. iv. Whether the goods are liable for confiscation or not. Also whether penalty is liable to be imposed for the mis- declaration with intention to avail erroneous rebate. v. Whether penalty is imposable for not accounting the export product "Ash and Residues" in the daily Stock Register under Rule 25 of the Central Excise Rules, 2002 8 E/87391/2013 vi. Whether penalty is imposable on Shri Amit Burman, General Manager(Process Catalyst) under Rule 26 and/or Rule 27 of the Central Excise Rules, 2002
30. Regarding the point (i) stated above, I find that L M/s.JMCIPL in all their export documents viz ARE1, shipping bills, bill of lading, mate receipt and the Invoice issued under Rule 11 of the Central Excise Rules, 2002, had declared the description of their product exported as "Platinum/Palladium supported catalyst" ranging from 1.5% to 10% i.e. the percentage of metal content in the said catalyst. However, the internal records in the form of Assay Analysis Reports clearly establish that the good exported were "Ashes and Residues". I find that the Assay Analysis reports contained the Reference Lot No, the input material, the output material and the metal contents i.e. the quantity of precious metals in the said output material. On co- relating the Reference lot Nos. with the Batch Nos. appearing in the ARE1s, under which the impugned goods were exported, I find that the description of the goods pertaining to Batch Nos. mentioned in the ARE1s and the Assay Analysis reports differ significantly. The description mentioned in each of the 27 ARE1s were "Platinum/Palladium supported catalyst" ranging from 1.5% to 10%, whereas the description in the Assay Analysis Reports were "Ash and Residues". It is therefore evident that though the description of the goods mentioned in the 27ARE1s were ""Platinum/Palladium supported catalyst", the goods actually exported were "Ash and residues". Shri. Sougata Goswami, Senior Officer- Metal Control and Shri. Amit Burman, General Manager (Process Catalysts) categorically admitted in their statements that the exported goods were residues containing precious metals and they had not exported any goods other than "Ash and Residues". From the statement of above said persons, I find that the goods exported were only "Ash and Residues". I find that the M/S. JMCIPL also does not dispute the claim of mis- declaration of the product. In their reply, they admitted that the exported goods were "Ash and Residues". But they claimed that the "Ash and Residues" contain some precious metal in them.
9 E/87391/2013 Hence, they contended that there is no bar in exporting the "Ash and Residues" containing some quantity of platinum/ palladium by declaring it as Platinum/ palladium supported catalyst". "I do not agree with the contention of M/s JMCIPL, *Ash and residues"
exported cannot and residues" exported cannot be called Platinum/Palladium supported catalyst". In view of the findings during the investigation and the statements given by the above officers, I hold that the goods actually exported were only "Ash and Residues". Even if the "Ash and Residues" contain some small traces of metal in it, it remains "Ash and Residues" only. /Hence, I hold that the mis-declaration of the goods "Ash and Residues" under the description "Platinum/Palladium supported catalysts" in the 27 ARE-1's and' Shipping Bills is proved beyond doubt.
31. The next point to be decided is even if there was a mis- declaration whether M/s.JMCIPL were entitled to rebate of the duty paid on the mis-declared goods or not. I find that M/s.JMCIPL had exported the goods in terms of Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004- CE(NT) dated 6.9.2004, as amended from time to time. Rule 18 of the Central Excise, 2002 read with the Notifications issued under the said rule, provides for granting of rebate of duty paid on such excisable goods which are exported. M/s.JMCIPL had claimed rebate of duty paid on "Platinum/Palladium supported Catalyst" which was shown to have been exported vide the 27ARE1s. However, investigations conducted by the department has proved that the goods actually exported were "Ash and residues" and not "Platinum/Palladium supported catalyst". This fact has not been disputed by M/s. JMCIPL. "M/s. JMCIPL had claimed rebate of duty paid on goods. which were never exported Under Rule 18 what is rebated is the duty paid on the goods exported. In this case, it has been proved beyond doubt that the goods exported was not 'Palladium/Platinum supported catalysts'. The goods actually exported was 'Ash and Residues'. There was no export of the goods Palladium/Platinum supported catalysts as declared in the ARE1's shipping Bills. Hence, the 10 E/87391/2013 duty said to have been paid on the goods which were not at all exported cannot be rebated.
31.1 In their submission, M/s JMCIPL stated that under Rule 18 of Central Excise Rules 2002, what is rebated is the duty paid. So, even if the goods were mis-declared, the duty paid was liable to be rebated. I do not agree with the argument put forth by M/s. JMCIPL. In this case M/s. JMCIPL had declared the goods as 'Palladium/Platinum supported catalysts" However, the goods exported were not Palladium/Platinum supported catalysts.. The goods actually exported were "Ash and Residues". M/s. JMCIPL cannot get rebate of the duty on the goods which were not exported. Hence, I hold that M/s. JMCIPL is not eligible for the rebate of duty paid on the goods "Palladium/Platinum supported catalysts" as there was no export of the said goods. Accordingly, the erroneous rebate sanctioned in respect of the 27 ARE1's /Shipping Bills is liable to be recovered alongwith interest.
32. The next point to be decided is whether extended period can be invoked in this case or not. To analyze this point, it is required to go through the full facts of this case. M/s.JMCIPL had imported various goods such as platinum sponge, palladium sponge, Acticarbone, charcoal powder, carbon powder, sodium chloropall solution, Pd. Chloride Solution arid Chloroplatimic acid solution without payment of customs duty under Notification Nos. 43/02-Cus dated 19.4.2002 and 93/04-Cus dated 10.9.2004 read with various Advance Licenses of DEEC issued by Joint DGFT, Mumbai. As per the Advance Licences, M/s.JMCIPL was a manufacturer exporter and the licence had been issued to them as Non-Transferable with actual user conditions. The various goods imported duty free against the Advance licences should have been utilized for manufacture of export goods viz.
"Palladium/Platinum supported catalysts" which have been declared as the export item under the said Advance Licences. To fulfill the conditions of Advance License, they had to export 'Palladium/Platinum supported catalysts'. However, they exported "Ash and Residues" and mis- declared it as
11 E/87391/2013 "Palladium/Platinum supported catalysts". It clearly establishes the fact that the mis-declaration was intentional. I also find that M/s.JMCIPL had deposited the duty on the goods imported duty free against the Advance Licences due to mis-declaration of the export products alongwith interest and 25% penalty amounting to Rs.11.66 crores. M/s.JMCIPL had stated in their reply that on the basis of internal review, they found out that they had mis declared/ misclassified the export product as "Platinum/ Palladium supported catalyst" instead of "Ash and Residue". However I find from the records that the Preventive Officers of Belapur Commissionerate had booked a case against M/s.JMCIPL in the month of March 2011 and during the course of investigation statement of Shri B.K.Srivastava, Deputy Operations Manager of M/s.JMCIPL was recorded on 17.3.2011, wherein he admitted the fact that the goods exported were actually ash mixed with impurities containing less than 5% metal content and not "Platinum/Palladium supported catalyst". It was only subsequent to 'the visit of the Preventive Officers and when the investigation was in progress that M/s.JMCIPL approached the Customs Department vide their letter dated 13.4.2011 and paid the Customs duty alongwith interest and 25% penalty amounting to Rs.11.66 crores. Therefore, the contention of M/s.JMCIPL that they had found out the mis-
declaration/misclassification of their export product at the time of internal review is an afterthought to mislead the department. I also find that M/s.JMCIPL were very well aware at the production stage itself that the batch nos. pertaining to the product exported were "Ash and residues", but with the deliberate and malafide intention to avail the benefit of import of duty free raw materials and to avail the benefit of rebate, mis- declared the export product as "Platinum/Palladium supported catalyst". So, the duty paid by them was not the duty payable on the Ash and Residues exported. This fact was suppressed as they have mis- declared the description of the goods. The rebate was sanctioned as if the duty was paid on the 'Palladium/Platinum supported catalysts". When it is proved that the goods exported 12 E/87391/2013 were not "Palladium/Platinum supported catalysts" the rebate sanctioned became erroneous. The actual goods exported namely 'Ash and Residues' were not declared by them as their final products manufactured in their factory. They have not entered the goods Ashes and Residues in their Daily Stock Register or RG-1. The Ash and Residues said to have manufactured in the factory was never even informed to the Department. Hence, the clearance of the Ashes and Residues was not recorded in the books of Accounts of M/s.JMCIPL. As the export of Ash and Residues was mis-declared as "Paladium/Platinum supported catalysts", the mis-declaration with intention to avail erroneous rebate has been established beyond doubt. Hence I hold that extended period has been rightly invoked to demand and recover the erroneous rebate sanctioned. Since the intention to claim erroneous rebate by mis-declaring the goods has been established, I hold that the M/s.JMCIPL is liable for penalty equivalent to the erroneous rebate sanctioned u/s 11AC(a)/ erstwhile Section 11AC of the CEA, 1944. M/s.JMCIPL is also liable to pay interest u/s 11AA of the CEA, 1944 (erstwhile section 11AB).
33. .....
34. As regards imposition of penalty on M/s.JMCIPL under Rule 25 of the Central Excise Rules, 2002, for not entering the details of the goods exported in the Daily Stock Register, I find that the Daily stock Register maintained by M/s JMCIPL contained description of goods mentioned therein as 2% palladium supported catalyst Type 900. Catalyst powder (10% palladium on Carbon/ Charcoal), Catalyst Paste(10% Palladium on Carbon/Charcoal), Catalyst Type10T487 Paste(10% Palladium on Carbon/Charcoal) etc. There was no mention of "Ash and residues" in the said Daily Stock Register. Rule 10 of the Central Excise Rules, 2002, provides that every assessee shall maintain proper records on a daily basis in a legible manner indicating the particulars of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, 13 E/87391/2013 quantity removed, assessable value, the amount of duty payable, and particulars regarding amount of duty actually paid. Though M/s.JMCIPL had produced and exported "Ash and Residues" the same were not entered/accounted for in the Daily Stock Register maintained by them which is a clear contravention of the provisions of Rule 10 of the Central Excise Rules, 2002 and as such M/s.JMCIPL are liable for penal action under Rule 25 of the Central Excise Rules, 2002
35. .....
4.3 The basic principle which govern the export of the goods from one jurisdiction to another is that "goods are exported and not the taxes and levies on them made in the jurisdiction from where they are exported." This principle of the international Trade across the borders is essential not only to promote the exports but is fundamental, basic levy of indirect taxes and for making the export goods competitive in the international market. Indirect taxes such as Central excise duty with which we are concerned is tax on the consumption of the goods and should be levied to the taxes in the jurisdiction were they are being consumed. Admittedly the goods exported are not consumed in the jurisdiction of the country from where it is exported but is consumed in the jurisdiction were it where it imported, hence should be levied to taxes leviable in that jurisdiction. In case of Chhotabhai Jethabahi Patel & Co [1999 (110) ELT 118 (SC)] Hon'ble Supreme Court observed:
13. .......
Under the Indian Constitution the scheme of division of the taxing powers between the Union and the States is not based on any criterion dependent on the incidence of the tax. Sir Maurice Gwyer in In re : Central Provinces and Berar Act XIV of 1938, 1939 FCR 18 at p. 40, speaking of the word "excise" as occurring in the legislative lists in the Government of India Act (and for this purpose there is no variation in the lists in Schedule VII of the Constitution) said :
14 E/87391/2013 "Its primary and fundamental meaning in English is that of a tax on articles produced or manufactured in the taxing country and intended for home consumption. I am satisfied that this is also its primary and fundamental meaning in India; and no one has suggested that it has any other meaning in Entry No. 45 (corresponding to Entry 84 in the Union List).
It was then contended on behalf of the Government of India that an excise duty is a duty which may be imposed upon home- produced goods at any stage from production to consumption; and that therefore the federal legislative power extended to imposing excise duties at any stage. This is to confuse two things, the nature of excise duties and the extent of the federal legislative power to impose them........ There can be no reason in theory why an excise duty should not be imposed even on the retail sale of an article, if the taxing Act so provides. Subject always to the legislative competence of the taxing authority, a duty on home-produced goods will obviously be imposed at the stage which the authority find to be the most convenient and the most lucrative, wherever it maybe; but that is a matter of the machinery of collection, and does not affect the essential nature of the tax. The ultimate incidence of an excise duty, a typical indirect tax, must always be on the consumer, who pays as he consumes or expends; and it continues to be an excise duty, that is, a duty on home-produced or home-manufactured goods, no matter at what stage it is collected."
4.4 To de-burden the goods of the excise duty paid in respect of the goods exported, Rule 18 of the Central Excise Rules, 2002 provide as follows:
18. Rebate of duty.-
Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.
15 E/87391/2013 Explanation.-"Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.
In terms of the rule 18, Central Government issued Notification No 19/2004-CE (NT) for prescribing the conditions and limitations along with the procedure for making the scheme envisaged under this rule operational. Notification 19/2004-CE (NT) inter alia provided as follows:
"In exercise of the powers conferred by rule 18 of the Central Excise Rules, 2002 and in supersession of the Ministry of Finance, Department of Revenue, notification No. 40/2001- Central Excise (NT), dated the 26th June 2001,[G.S.R.469(E), dated the 26th June, 2001] in so far as it relates to export to the countries other than Nepal and Bhutan, the Central Government hereby directs that there shall be granted rebate of the whole of the duty paid on all excisable goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), exported to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedures specified hereinafter,-
(2) Conditions and limitations: -
a) that the excisable goods shall be exported after payment of duty, directly from a factory or warehouse, except as otherwise permitted by the Central Board of Excise and Customs by a general or special order;
b) the excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture or warehouse or within such extended period as the Commissioner of Central Excise may in any particular case allow;
c) that the excisable goods supplied as ship's stores for consumption on board a vessel bound for any foreign port are in such quantities as the Commissioner of Customs at the port of shipment may consider reasonable;
16 E/87391/2013
d) the rebate claim by filing electronic declaration shall be allowed from such place of export and such date, as may be specified by the Board in this behalf;
e) that the market price of the excisable goods at the time of exportation is not less than the amount of rebate of duty claimed;
f) that the amount of rebate of duty admissible is not less than five hundred rupees;
g) that the rebate of duty paid on those excisable goods, export of which is prohibited under any law for the time being in force, shall not be made.
(3) Procedures:-
(a) Sealing of Goods and examination at the place of dispatch and export:-
i. The manufacturer exporters registered under the Central Excise Rules, 2002 and merchant-exporters who procure and export the goods directly from the factory or warehouse can exercise the option of exporting the goods sealed at the place of dispatch by a Central Excise Officer or under self-sealing;
ii. Where the exporter desires self-sealing and self-
certification, the manufacturer of the export goods or owner of the warehouse shall take the responsibility of sealing and certification;
iii. The merchant-exporters other than those procuring the goods directly from the factory or warehouse shall export the goods sealed at the place of dispatch by a Central Excise Officer;
iv. For the sealing of goods intended for export, at the place of dispatch, the exporter shall present the goods along with four copies of application in the Form ARE-I specified in the Annexure to this notification to the Superintendent or Inspector of Central Excise having jurisdiction over the factory of production or manufacture or warehouse;
17 E/87391/2013 v. The said Superintendent or Inspector of Central Excise shall verify the identity of goods mentioned in the application and the particulars of the duty paid or payable, and if found in order, shall seal each package or the container in the manner as may be specified by the Commissioner of Central Excise and endorse each copy of the application in token of having such examination done; vi. The said Superintendent or Inspector of Central Excise shall return the original and duplicate copies of application to the exporter;
vii. The triplicate copy of application shall be -
a. sent to the officer with whom rebate claim is to be filed, either by post or by handing over to the exporter in a tamper proof sealed cover after posting the particulars in official records, or b. sent to the Excise Rebate Audit Section at the place of export in case rebate is to be claimed by electronic declaration on Electronic Data Inter- change system of Customs;
viii. The exporter may prepare quadruplicate copy of application for claiming any other export incentive. This copy shall be dealt in the same manner as the original copy of application;
ix. Where goods are not exported directly from the factory of manufacture or warehouse, the triplicate copy of application shall be sent by the Superintendent having jurisdiction over the factory of manufacture or warehouse, who shall, after verification, forward the triplicate copy in the manner specified in sub-paragraph (vii); x. In case of export by parcel post after the goods intended for export have been sealed, the exporter shall affix to the duplicate application sufficient postage stamps to cover postal charges and shall present the documents, together with the package or packages to which it refers, to the postmaster at the office of booking;
18 E/87391/2013 xi. Where the exporter desires self-sealing and self-
certification for removal of goods from the factory or warehouse or any approved premises, the owner, the working partner, the Managing Director or the Company Secretary, of the manufacturing unit of the goods or the owner of warehouse or a person duly authorized by such owner, working partner or the Board of Directors of such Company, as the case may be, shall certify on all the copies of the application that the goods have been sealed in his presence, and shall send the original and duplicate copies of the application along with the goods at the place of export, and shall send the triplicate and quadruplicate copies of the application to the Superintendent or Inspector of Central Excise having jurisdiction over the factory or warehouse within twenty four hours of removal of the goods;
xii. In case of self-sealing, the said Superintendent or Inspector of Central Excise shall, after verifying the particulars of the duty paid or duty payable and endorsing the correctness or otherwise, of these particulars-
a. send to the officer with whom rebate claim is to be filed, either by post or by handing over to the exporter in a tamper proof sealed cover after posting the particulars in official records, or b. send to the Excise Rebate Audit Section at the place of export in case rebate is to be claimed by electronic declaration on Electronic Data Inter- change system of Customs;
xiii. On arrival at the place of export, the goods shall be presented together with original, duplicate and quadruplicate(optional) copies of the application to the Commissioner of Customs or other duly appointed officer; xiv. The Commissioner of Customs or other duly appointed officer shall examine the consignments with the particulars as cited in the application and if he finds that the same are correct and exportable in accordance with the laws for the 19 E/87391/2013 time being in force, shall allow export thereof and certify on the copies of the application that the goods have been duly exported citing the shipping bill number and date and other particulars of export:
Provided that if the Superintendent or Inspector of Central Excise sealed packages or container at the place of dispatch, the officer of customs shall inspect the packages or container with reference to declarations in the application to satisfy himself about the exportability thereof and if the seals are found intact, he shall allow export.
xv. The officer of customs shall return the original and quadruplicate (optional copy for exporter) copies of application to the exporter and forward the duplicate copy of application either by post or by handing over to the exporter in a tamper proof sealed cover to the officer specified in the application, from whom the exporter wants to claim rebate:
Provided that where the exporter claims rebate by electronic declaration on the Electronic Data Inter-change system of Customs, the duplicate shall be sent to the Excise Rebate Audit Section at the place of export.
xvi. The exporter shall use the quadruplicate copy for the purposes of claiming any other export incentive.
(b) Presentation of claim for rebate to Central Excise:-
i. Claim of the rebate of duty paid on all excisable goods shall be lodged along with original copy of the application to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture or warehouse or, as the case may be, the Maritime Commissioner;
20 E/87391/2013 ii. The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise of Central Excise having jurisdiction over the factory of manufacture or warehouse or, as the case may be, Maritime Commissioner of Central Excise shall compare the duplicate copy of application received from the officer of customs with the original copy received from the exporter and with the triplicate copy received from the Central Excise Officer and if satisfied that the claim is in order, he shall sanction the rebate either in whole or in part.
(c) Claim of rebate by electronic declaration:- An exporter may enter the requisite information in the shipping bill filed at such place of export, as may be specified by the Board, for claiming rebate by electronic declaration on Electronic Data Inter-change system of Customs. The details of the corresponding application shall be entered in the Electronic Data Inter-change system of Customs upon arrival of the goods in the Customs area. After goods are exported or order under section 51 of the Customs Act, 1962 (52 of 1962) has been issued, the rebate of excise duty shall, if the claim is found in order, be sanctioned and disbursed by the Assistant Commissioner of Customs or the Deputy Commissioner of Customs.
(d) Special procedure for store for consumption on board an aircraft on foreign run:- ......"
4.4 Admittedly goods were exported as per the provisions of the Rule under claim for rebate by following the procedure as prescribed by the notification. Appellants had filed 27 ARE-1's against which the export goods were cleared by them and subsequently after export of the said goods the rebate claims were filed in the prescribed manner. These rebate claims were allowed in their favour. There is no dispute that the goods which were cleared under the ARE-1's were not exported and diverted elsewhere. The facts as recorded in the order acknowledge the fact of actual shipment of these goods. It is also not in dispute 21 E/87391/2013 that these goods were cleared on payment of the duty which has been sought to be rebated after the export of the said goods. In our view the facts that the goods cleared were exported is enough to allow the claim of rebate in the favour of the appellants.
4.5 Admittedly there was misdeclaration of the description of the goods on the export documents to the effect that the goods were declared as "Platinum/ Palladium supported catalyst"
instead of "Ash and Residue". This misdeclaration resulted in appellants claiming certain benefits under the Advance License DEEC Scheme. As per this scheme against the exports made appellant obtained Advance Licenses for import of duty free precious metals, and imported duty free material against these licenses during the period from December 2003 to June 2008. Thereafter realizing their mistake they stopped importing the raw material against the export of ash and residue. They also paid the due custom duty on the duty free imports made by them and that issue was settled by Settlement Commission. Definitely availing the undue benefit by misdeclaration of the export goods was an offence under the Customs Act, 1962 which has been settled under the provisions of the Customs Act, 1962. The offence under the Customs Act, 1962 cannot be reason for denying the legitimate benefits available to the appellant under the Central Excise Act, 1944 and Rule 18 of the Central Excise Rules, 2002.
4.6 It is not even the case of revenue that any provisions of the Rule 18 or the Notification issued thereunder has been contravened. We do not find finding recorded in the impugned order. It is also to be noted at the time of filing the ARE-1 and sealing of the goods for export, the goods exported were examined and verified by the officers of Central Excise in the manner as prescribed by the Notification No 19/2004-CE (NT). That being so if revenue officers were really concerned with the misclassification of the goods or of them not being recorded in 22 E/87391/2013 the Daily Stock Register, they should have pointed out the same and could have taken the corrective action.
4.7 Annexure C to the Show Cause Notice lists out the exports made by the Appellant under Bond in terms of Rule 19 of the Central Excise Rules, 2002. Rule 18 and 19 of the Central Excise Rules, 2002 are akin to Rule 12 & 13 of the erstwhile Central; Excise Rules, 1944 and prescribed the procedure for export of the excisable goods. Though Show Cause Notice records the details of the export made in terms of Rule 19, no further action is proposed in respect of the exports made under the Rule 19. Not even a proposal for penalty has been made for the misdeclaration alleged. In case of Hindustan Petroleum Corporation [1995 (77) E.L.T. 256 (S.C.)] Hon'ble Supreme Court observed as follows:
12. A mere look at Rule 12 shows that it will cover those excisable goods which have already been subjected to payment of excise duty but which are subsequently exported outside India. On proof of fulfilment of conditions laid down by Rule 12, the concerned exporter of such goods will be able to get rebate as per the terms and conditions laid down by the notification issued by Central Govt. under sub-
rule (1) of Rule 12. So far as Rule 13 is concerned, other excisable goods mentioned in the rule may in the like manner meaning thereby as prescribed by Rule 12, can be exported without payment of duty from warehouse or licensed factory, provided that export is made in accordance with the procedure set out in the relevant provisions of Chapter IX of these Rules and the owner enters into a bond in the proper form, with such surety or sufficient security under such conditions in the sum equivalent to that chargeable on the goods for the due arrival at the port of the export. And such bond shall not be 23 E/87391/2013 discharged unless the goods are duly exported to the satisfaction of the Collector. It therefore, appears clear that Rules 12 and 13 deal with excisable goods which are exported from the country of their manufacture to outside countries. If the excisable goods are exported after payment of duty they may earn refund as per notification laid down by Rule 12. While if these excisable goods are found in bonded warehouse covered by bond to pay excisable duty payable thereon, in case they are exported as laid down by Rule 13 they may earn exemption from payment of duty in the same manner as laid down by Rule 12. Therefore, both these rules are complementary to each other and cover the same topic of payment of appropriate excise duty on excisable goods which are exported outside India. In case of Rule 12 the duty is to be paid first and on satisfying the condition of notification and proof of export appropriate refund can be earned in the light of the notification. While in case of Rule 13 no duty shall be paid in the first instance and on proof of export as laid down by Rule 13 the respondents cannot demand any duty on those goods, in excess of what is permissible. But if the proof of export is not available as required by Rule 13, full duty will have to be paid on these goods. However, so far as liability to pay excise duty under Rule 13 is concerned, it will have to be linked up with Rule 12, because that rule deals with rebate of duty paid on excisable goods manufactured in India which have ultimately been exported outside India. It is also pertinent to note that even for applicability of Rule 13 the excisable goods stored in the bonded warehouse have to be exported in the like manner meaning thereby under similar circumstances as mentioned in Rule 12 which is immediately preceding Rule 13 and which deals with similar 24 E/87391/2013 special concessional payment of duty on excisable goods manufactured in India and which are ultimately exported and which bring foreign exchange to the country. It is not as if under Rule 13 excisable goods which are subjected to export directly from the warehouse of licenced factory do not incur any excise duty. That is contra indicated by the requirement of Rule 13 itself calling upon the exporter to enter into a bond for payment of requisite full duty in case the situation arises for the same and that bond is not to be discharged and the obligation under the bond has to continue for the benefit of revenue till proof of export is made available to the satisfaction of the Collector. The appellants' contention that Rule 13 is independent of Rule 12, therefore, cannot be accepted."
4.8 In case of Ravi Foods Pvt Ltd [2018 (16) G.S.T.L. 80 (A.P.)] Hon'ble Andhra Pradesh High Court observed as follows:
"25. In Commissioner v. Suncity Alloys Pvt. Ltd. - 2007 (218) E.L.T. 174 (Raj.), a Division Bench of the Rajasthan High Court was concerned with a claim for rebate of duty, on the goods exported by the assessee. The Revenue raised a similar contention as they have raised now to the effect that the goods were exempt from payment of duty and that therefore the amount paid by the assessee cannot be treated as duty paid so as to enable the manufacturer to claim rebate. But the said contention of the Revenue was repelled by the Rajasthan High Court on the ground that even in cases where the manufacturer pays duty which is not leviable, he may be entitled to claim refund of the same. Therefore, the Department may not be right in retaining the duty paid by the petitioner."
4.9 In case of Tata engineering and Locomotive Company [2018 (360) E.L.T. 607 (Bom.)] Hon'ble Bombay High Court has held as follows:
6. Rule 12 of the Central Excise Rules, 1944 reads as under :-
25 E/87391/2013 "RULE 12. Rebate of duty on goods exported - (1) The Central Government may, from time to time, by notification in the Official Gazette, grant rebate of duty paid on excisable goods, if exported outside India, to such extent, and subject to such safeguards, conditions and limitations as regards the class of goods, destination, mode of transport, and other allied matters as may be specified therein.
Provided that if the Collector is satisfied that the goods have in fact been exported (he may, for reasons to be recorded in writing, allow), the whole or any part of the claim for such rebate even if all or any of the conditions laid down in any notification issued under this rule have not been complied with."
Thus, the aforesaid Rule 12, it is clear that if the Collector is satisfied that the duty paid goods have in fact been exported, then, he may for reasons to be recorded in writing, allow the whole or any part of the claim for such rebate even if all or any of the conditions laid down in any notification have not been complied with.
7. In this view of the matter, we set aside the order passed by the Joint Secretary, Government of India as well as the adjudication order and the order passed by the Collector of Customs (A) and direct the Commissioner of Customs or any other appropriate authority to pass a fresh order on the application seeking rebate after verifying from the records regarding the duty paid chassis manufactured by the petitioners exported as motor vehicles.
4.10 Special Counsel for revenue has strongly placed reliance on the decision of the revisionary authority in case Mahindra & Mahindra [2012 (283) ELT 313 (GOI)] holding as follows:
"8. Government observes that applicant manufactures, tractors and parts of tractors viz. IC engines, transmission assembly and sheet metal components referred together as aggregates, classifiable under Chapter 84 & 87 of Central Excise Tariff which are exempted from payment of Central Excise duty vide Notification No. 6/2002-Central Excise, dated 1-3-2002.
26 E/87391/2013 However applicants choose to pay duty on part of tractors (aggregates) on their own volition. They subsequently exported tractors and filed application of fixation of brand rate of drawback in r/o duty paid on such aggregates. The original authority rejected their drawback brand rate fixation application on the grounds that 'aggregates' being part of tractors are exempted from payment of duty vide Sr. No. 295 and 296 of the Notification No. 6/2002-C.E., dated 1-3-2002, as amended and duty was not required to be paid. The applicant preferred appeal against the impugned Order-in-Original before the Commissioner (Appeals), who rejected the same by upholding the impugned Order-in-Original.
9. Government observes that in this Revision Application, the applicant has mainly contended that the Commissioner (Appeals) in their earlier order dated 14-7-2009 specifically held that duty was payable on such aggregates and hence Commissioner (Appeals) order in this case is contrary to stand taken by him in earlier order dated 14-7-2009. The applicant also submitted that Sr. No. 296 of the Notification No. 6/2002-C.E., dated 1-3-2002 as amended by Notification No. 23/2004-C.E., dated 9-7-2004 and entry No. 92 of Notification No. 6/2006-C.E., dated 1-3- 2006, which exempts the parts of tractors, is conditional in nature as it specify the condition that they are to be captively consumed in the manufacture of tractor and as such the entry not is absolute in nature. The applicant further submitted that in case the drawback is not allowed to them the duty paid on aggregates may be allowed to be re-credited. Government observes that the respondent Department in their counter reply have mainly stated that in the earlier case the issue before the Commissioner (Appeals) was the payment of interest on duty already paid by the applicant. The issue before the Commissioner (Appeals) was not the dutiability of the aggregates, but the interest on payment of duty. The applicants paid the duty on its own volition, and the same was not even agitated by them before the lower authorities and as such the applicants contention that Commissioner (Appeals) had taken 27 E/87391/2013 contrary view is not correct. The respondent Department has further stated that column (3) of the Notification No. 6/2006- C.E. provides for description of excisable goods and column No. (5) specified the condition, Sr. No. 92 of the said Notification No. 06/2006-C.E., provides "parts, used within the factory of production for manufacture of goods of heading 8701" in column No. (3) and Nil condition in column No. (5). Thus, all the parts used within the factory of production for manufacture of goods falling under 8701 attracts nil duty without any condition. The details mentioned in column (3) is not in the nature of condition but in the nature of how it is be consumed.
10. Government observes that lower authorities have rejected application for fixation of brand rate of drawback on duty paid on aggregates, parts of tractors, on the ground that there was no duty payable on aggregates in terms of Sr. No. 92 of the Notification No. 6/2006-C.E. as the said exemption is absolute in nature. From perusal of Sr. No. 92 of the said Notification No. 6/2006-C.E., it is evident that against column no. (5) no condition has been specified. The applicant has submitted that the duty exemption available against Sr. No. 92 is conditional because there is the condition that they are to be captivity consumed in the manufacture of tractor. In this regard Government, observes that such condition is not provided under column (5) of the said Notification No. 6-2006-C.E. The exemption is available to all goods captively consumed. Hence the exemption contained in the Notification No. 6/2006-C.E. at 1-3-2006 (Sr. No. 92) being absolute and unconditional is rightly covered under Section 5A (1A) of Central Excise Act, 1944 and manufacturer has no option to pay duty on said exempted goods. Under such circumstances, the availment of duty exemption was mandatory in terms of Section 5A (1A) of the Central Excise Act, 1944 and no duty was payable on aggregate part of tractors. The applicants have also pleaded that the appellate authority had taken a view which is contrary to his Order-in-Appeal dated 14-7-2007. In this regard Government observes that the appellate authority decided the issue of 28 E/87391/2013 interest payment on duty in their order dated 14-7-2007 and not dutiability of aggregates. No specific question of dutiability on aggregates has been dealt by the appellate authority and hence, applicants contention is not tenable"
This decision is not on the issue of rebate claim in terms of Rule 18 of the Central Excise Rules, 2002 but is in the case of Fixation of Brand Rate and would not be applicable, to the facts of the present case.
4.11 Even if the it is assumed that appellant had paid the duty on ash and residue which was not required to be paid as the said goods were non excisable then also the amount of the duty paid needs to be refunded to the appellant as per the provisions of Section 11B of the Central Excise Act, 1944. However we are not concerned with that case as the rebate have been sanctioned by the departmental authorities in favour of appellant and we are concerned with the Show Cause Notice issued to the appellant under Section 11A of the Central Excise Act, 1944. Further we also note that all the facts were in the knowledge of the department and the goods were cleared for export in manner as provided by the Notification after due examination. In such a situation there cannot be any justification for invocation of extended period of limitation for making this demand.
4.12 During course of the argument and in the written submissions filed, counsel for revenue has argued against the admissibility of the CENVAT Credit as the goods namely Ash and Residue was not excisable. We do not find any merits in the said arguments as that was not even the issue in the show cause notice nor have been adjudicated by the impugned order. Further in case if the revenue intended to proceed against the appellants for recovery of inadmissible CENVAT Credit then the proper course would have been to initiate the proceedings as provided by the Rule 14 of the Cenvat Credit Rules, 2004.
4.13 We also note that all the 27 rebate claims were sanctioned by way of speaking order. In the Annexure D to the Show Cause
29 E/87391/2013 Notice - List of Relied Upon Documents following is stated at Sl No 8 "Copies of all the 27 ARE-1's, under which the Ash and residues under guise of Platinum/ Palladium supported catalyst were exported under Claim for rebate. Sanction Orders of Assistant Commissioner Central excise Taloja Division."
Once these rebate claims were sanction be way of the "Order in Original - Rebate Sanction Order" without challenging the said order in appeal before Commissioner (Appeal) these proceedings for recovery of erroneous refund in terms of Section 11A by invoking the extended period of limitation cannot be sustained. The judicially pronounced order could have been set aside only in appellate proceedings before the appropriate authority. Hon'ble Guwahati high Court has in case of Topcem India [2021 (376) E.L.T. 573 (Gau)] held as follows:
"67. The Officers of the Central Excise Department exercise Quasi judicial functions. The orders passed by the Department Officers being in exercise of Quasi Judicial powers cannot be co- laterally revoked/reviewed except when permitted under the Statute. It is seen that against sanction orders passed the concerned officers, the statute does not provide for any review of such order passed. However, under Section 35, there is a provision for appeal, which however has not been resorted to by the Department seeking revocation/recall of orders already passed sanctioning the refund in terms of "M/s. SRD Nutrients (supra)". The refund orders passed cannot be unilaterally revoked by application of Section 11A unless the requirements of sub-section (4) of Section 11A are satisfied. This will amount to impeaching collaterally a finding rendered by a quasi judicial authority. The Apex Court in "Abdul Kuddus" reported in (2019) 6 SCC 604 has very succinctly laid down the law regarding impermissibility of collateral impeachment of orders passed by Quasi Judicial bodies. The relevant paragraphs of the Judgment is extracted as under :-
30 E/87391/2013 "23. The procedure prescribed by the post 2012 amendment under the 1964 Order mandates compliance with the principles of natural justice. All the allegations and grounds are required to be served by the Tribunal in the form of a show-cause notice to the person who is alleged to be a foreigner [see para 60 in Sarbananda Sonowal (2) [Sarbananda Sonowal (2) v. Union of India, (2007) 1 SCC 174]]. Thereupon, the person has to be given a reasonable opportunity to file representation and also produce evidence. The Tribunal has been authorised to consider and allow prayer for production and examination of the witnesses which can be refused if found to be vexatious, or made with the intent to cause delay, etc. The evidence produced by the Superintendent of Police can also be recorded. The person concerned has to be heard before the Tribunal gives its opinion. The person concerned may appear in person or can be represented by a legal practitioner or an authorised representative. Opinion is to be given within a period of sixty days after the reference from the competent authority. No doubt, the Rules do not prescribe and require an opinion of the Tribunal to be a detailed judgment, nevertheless, it is obvious that the opinion rendered must state the facts and reasons for drawing the conclusions. It is a decision and an order. Fixing time-limits and recording of an order rather than detailed judgment is to ensure that these cases are disposed of expeditiously and in a time-bound manner. The opinion by the Foreigners Tribunal is a quasi-judicial order and not an administrative order. The expression "quasi-judicial order"
means a verdict in writing which determines and decides contesting issues and question by a forum other than a court. The determination has civil consequences. Explaining the meaning of quasi-judicial body in Indian National Congress (I) v. Institute of Social Welfare [Indian National Congress (I) v. Institute of Social Welfare, (2002) 5 SCC 685], it was held that when any- body of persons has a legal authority to determine questions affecting the rights of subjects and a duty to act judicially, such body of persons constitute a quasi-judicial body 31 E/87391/2013 and decision given by them is a quasi-judicial decision. It would also be a quasi-judicial order if the statute empowers an authority to decide the lis not between the two contesting parties but also when the decision prejudicially affects the subject as against the authority, provided that the authority is required by the statute to act judicially. Further, what differentiates an administrative act from the quasi-judicial act is that a quasi- judicial body is required to make an enquiry before arriving at a conclusion. In addition, an administrative authority is the one which is dictated by policy and expediency whereas a quasi- judicial authority is required to act according to the rules.
24. The opinion/order of the Tribunal, or the order passed by the Registering Authority based upon the opinion of the Foreigners Tribunal, as the case may be, can be challenged by way of writ proceedings. Thus, it would be incorrect to hold that the opinion of the Foreigners Tribunal and/or the consequential order passed by the Registering Authority would not operate as res judicata. Both the opinion of the Tribunal and the order of the Registering Authority result in determination of rights/status under the statute and by an authority after a contest on the merits which would necessarily operate as a bar to subsequent proceedings before the same authority for redetermination of the same issue/question. This Court in Ujjam Bai v. State of U.P. [Ujjam Bai v. State of U.P, AIR 1962 SC 1621] has held that the principles of res judicata equally apply to quasi-judicial bodies. Whenever a judicial or quasi-judicial tribunal gives a finding on law or fact, its findings cannot be impeached collaterally or in a second round and are binding until reversed in appeal or by way of writ proceedings. The characteristic attribute of a judicial act or decision is that it binds, whether right or wrong. Thus, any error, either of fact or law, committed by such bodies cannot be controverted otherwise by way of an appeal or a writ unless the erroneous determination relates to the jurisdictional matter of that body.
32 E/87391/2013
25. In J.J. Merchant v. Shrinath Chaturvedi [J.J. Merchant v. Shrinath Chaturvedi, (2002) 6 SCC 635], when the Learned Counsel had pleaded that the National Consumer Disputes Redressal Commission cannot examine complicated questions of facts which require examination and cross-examination of experts including doctors and that the procedure followed for determination of consumer disputes being summary in nature is not suitable for determination of complicated questions, this Court rejected these contentions and held that under the Consumer Protection Act, 1986, for a summary trial, an exhaustive procedure conforming to the principles of natural justice is provided. Merely because the trial is summary in nature cannot be a ground to reject it as unjust or unfair. Further, it was held in Rajesh Kumar v. CIT [Rajesh Kumar v. CIT, (2007) 2 SCC 181] that when civil or evil consequences ensue by reason of an act done by the statutory authority, principles of natural justice must be followed. The Act and power of judicial review vested with the constitutional courts provide sufficient safeguards, in the present context.
26. When we apply general principles of res judicata, the contention of the appellants that the person concerned should be permitted to double-dip and be entitled to a second round of litigation before the Foreigners Tribunal notwithstanding the earlier opinion expressed by the Foreigners Tribunal is far- fetched, and completely unacceptable. The plea is fallacious and has no merit. This contention therefore must be rejected and fails.
27. As stated above, a person aggrieved by the opinion/order of the Tribunal can challenge the findings/opinion expressed by way of a writ petition wherein the High Court would be entitled to examine the issue with reference to the evidence and material in the exercise of its power of judicial review premised on the principle of "error in the decision-making process" etc. This serves as a necessary check to correct and rectify an "error" in the orders passed by the Tribunal.""
33 E/87391/2013 4.12 Hon'ble Allahabad High court has in case of Honda Siel Power Product [2020 (372) ELT 30 (ALL)] held as follows:
"35. Thus, Section 11B assumes great significance, as any order of refund of excise duty and interest is made only 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 any of powers of a Central Excise Officer under the Act. Thus, an order of recovery can be passed under Section 11A by an Assistant Commissioner, as he happens to be a Central Excise Officer in terms of Clause (a) of sub-section (1) of Section 11A, though an application under sub-section (2) of Section 11B can be made and an order for refund can either be passed by Assistant Commissioner or by Deputy Commissioner. Meaning thereby that a Deputy Commissioner can pass an order for refund under Section 11B(2) and an Assistant Commissioner can invoke proceedings for recovery under Section 11A(1).
34 E/87391/2013
38. This could lead to a situation where power of recovery under Section 11A is invoked by a subordinate authority despite the fact that refund application has been adjudicated upon by a superior authority under Section 11B.
39. Through plain reading of Section 35E, it is clear that limited revisional jurisdiction is conferred upon Principal Commissioner and Commissioner of Excise in sub-section (2) of Section 35E, this power is not actually to correct any error directly, but only available for directing the competent authority to take matter to the Commissioner (Appeals). Meaning thereby that it is always open to Principal Commissioner or Commissioner or Central Excise to examine the order passed by adjudicating authority under Section 11B and direct the competent authority to file appeal against order of refund. In the present case, order of refund was never taken to higher forum and it became final.
40. Decisions relied upon by the counsel for the revenue in case of Jain Shudh Vanaspati (supra) relates to proceedings which were vitiated by fraud. Further, the Apex Court recorded a clear finding that goods were cleared for home consumption under Section 47 of the Act, by playing fraud upon the Department. Therefore, the Court held that fraud vitiates all solemn Acts, while in present case department has not alleged any fraud upon the petitioner-assessee.
41. Further reliance placed by counsel for revenue on the decision of Addison and Company (supra), wherein it was held that recovery under Section 11A can be made where excise duty was refunded erroneously, but the Apex Court had also held that where the incidence of duty was not passed on and the assessee had borne burden of duty, thus he was entitled for the refund. Thus, both the cases relied upon 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.
35 E/87391/2013
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 department at all under Section 11A to proceed.
44. This question was considered and decided in Eveready Industries (supra), wherein the Court held that two valuable rights, one in the form of right of appeal and another in form of order of refund, are now sought to be taken away indirectly by taking recourse to Section 11A. What cannot be done directly cannot be done indirectly also.
45. Thus, the department, once the adjudication has taken place under Section 11B cannot proceed to recover on the basis of "erroneous refund" under Section 11A so as to enable the refund order to be revoked, as the remedy lied under Section 35E for applying to the Appellate Tribunal for determination and not invoking Section 11A."
In our view on this ground itself the entire proceedings get vitiated and cannot be sustained. We also observe that the decisions relied upon by the special counsel to argue fraud 36 E/87391/2013 vitiates all cannot be pressed into service because neither show cause alleges fraud nor any findings has been recorded by the adjudicating authority. The reason for invoking extended period in as stated by the Commissioner in the impugned order is "misdeclaration with intention to avail erroneous rebate". It is settled law that no new case which was not before the original authority can be made during the appellate proceedings.
4.13 During the course of arguments and in the written submissions filed both the sides have referred to large number of decisions. We have not referred to each judgement individually in this order, following the directions contained in the decision of the Hon'ble Supreme Court in case of Saheli Leasing & [2011 (22) S.T.R. 97 (S.C.)] which are reproduced below:
"7. These guidelines are only illustrative in nature, not exhaustive and can further be elaborated looking to the need and requirement of a given case :-
(a) It should always be kept in mind that nothing should be written in the judgment/order, which may not be germane to the facts of the case; It should have a co-relation with the applicable law and facts. The ratio decidendi should be clearly spelt out from the judgment/order.
(b) ......
(c) The ultimate finished judgment/order should have sustained chronology, regard being had to the concept that it has readable, continued interest and one does not feel like parting or leaving it in the midway. To elaborate, it should have flow and perfect sequence of events, which would continue to generate interest in the reader.
(d) Appropriate care should be taken not to load it with all legal knowledge on the subject as citation of too many judgments creates more confusion rather than clarity. The foremost requirement is that leading judgments should be mentioned and the evolution that has taken place ever since the same were pronounced and thereafter, latest judgment, in which 37 E/87391/2013 all previous judgments have been considered, should be mentioned. While writing judgment, psychology of the reader has also to be borne in mind, for the perception on that score is imperative.
(e) ...
(f) After arguments are concluded, an endeavour should be made to pronounce the judgment at the earliest and in any case not beyond a period of three months. Keeping it pending for long time, sends a wrong signal to the litigants and the society.
(g) ......"
4.14 Since we do not find any merits in the demand made we are not inclined to hold the order demand interest and imposition of penalty.
5.1 Appeal is allowed.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) tvu