Custom, Excise & Service Tax Tribunal
Sonar Impex vs Commissioner Of Central Excise, ... on 12 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/1111/2012-SM [Arising out of Order-in-Appeal No. 38/2012 dated 27/01/2012 passed by the Commissioner of Central Excise, Mangalore] For approval and signature: HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Sonar Impex Sy. No.18/1, Singinkoppa Village, Khanapur Taluk, Belgaum Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax, Belgaum No. 71, Club Road, Central Excise Building, Belgaum 590 001 Karnataka Respondent(s)
Appearance:
Mr. N. Anand, Advocate # 152, Race Course Road, Bangalore 560 001 Karnataka For the Appellant Mr. Pakshi Rajan, AR For the Respondent Date of Hearing: 12/05/2015 Date of Decision: 12/05/2015 CORAM:
HON'BLE Mr. B.S.V. MURTHY, TECHNICAL MEMBER Final Order No. 21140 / 2015 Per : B.S.V. MURTHY Appellant is a 100% EOU. They filed 4 refund claims for the period from October 2005 to September 2007 totally amounting to Rs. 6,42,052/- (Rupees Six Lakhs Forty Two Thousand and Fifty Two only). The refund claims have been filed under Notification No. 05/2006-CE (NT) dated 14.03.2006 under Rule 5 of Cenvat Credit Rules 2004. The refund claims were rejected by the original authority by orders numbering from 153 to 156/2007 all dated 28.03.2008. On an appeal filed by the appellants, the Commissioner (Appeals) in his order-in-appeal dated 13.05.2009 allowed the appeals. Before allowing the appeal the Commissioner (Appeals) called for a verification report from the original adjudicating authority and asked him to clarify whether the 3 conditions specified in the circular issued by the Board regarding place of removal have been fulfilled or not. The 3 conditions are whether the ownership of the goods and the property in the goods remained with the seller of the goods till the delivery of the goods; the seller bore the risk of loss or damage to the goods during transit to the destination and freight charges were an integral part of the price of goods. Taking note of the fact that the original authority after verification of documents had submitted that the appellant had fulfilled all the 3 conditions prescribed in the Boards Circular No. 97/08/2007 dated 23.08.2007, allowed the appeals. No appeal was filed by the Revenue against this order.
2. Instead fresh proceedings were started by the Revenue by issuing another show-cause notice on 22.03.2010. The show-cause notice while admitting the fact that the Commissioner (Appeals) had allowed the appeals after getting the verification report and assessee had filed a letter dated 29.12.2009 for refund as per the order passed by the learned Commissioner, the show-cause notice mentions that assessee was asked to produce documents for verification but assessee contended that they need not produce any documents since the verification process had been completed and Commissioner (Appeals) had allowed their appeals and therefore refund should be granted without delay. However the notice proceeded to say that in the absence of any documents in support of fulfillment of the 3 conditions reproduced hereinabove in terms of Boards Circular, refund claims cannot be considered. After due process the original authority again rejected all the claims on the ground that appellant had not fulfilled these conditions and did not produce evidence of fulfillment of these conditions. On an appeal filed by the appellants, Commissioner (Appeals) also upheld the order passed by the original authority. Both the lower authorities while undertaking the fresh proceedings, have not dealt with the claims made by the appellant that the order-in-appeal dated 13.05.2009 had attained finality.
3. When the matter was called the learned counsel for the appellants submitted that the order passed on 13.05.2009 by the Commissioner (Appeals) had attained finality in the absence of any appeal filed by the Revenue and therefore all the proceedings initiated thereafter are ab initio void. On merits also he submits that there is absolutely no evidence brought out by the Revenue to show that as to why the verification report submitted by the concerned original authority has to be treated as invalid and another original authority has to go through and verify the documents to determine their eligibility or to determine whether they are fulfilled the conditions. He relies upon the decisions in the case of Triveni Chemicals Ltd. Vs. Union of India [2007 (5) S.T.R. 177 (S.C)] to submit that once an order had attained finality, in the absence of any appeal, the Revenue cannot initiate fresh proceedings but has to implement in the order. He relies on the decision of Honble Supreme Court in the case of Union of India Vs. Kamlakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (SC)] to submit that original authority by issuing a show-cause notice had not followed the ratio of law laid down by the Honble Supreme Court which requires all authorities to maintain judicial discipline. He also relies upon the decision of the Honble Delhi High Court in the case of Nav Bharat Impex Vs. Union of India [2010 (255) E.L.T. 324 (Del.)] to submit that the original authority should have granted the refund with interest once the Commissioner (Appeals) had allowed their appeals.
4. Learned AR would submit that in the second proceedings original authority has found that a portion of the refund claim was time-barred which shows that there was no proper verification of documents. Therefore he submits that the proceedings initiated afresh cannot be found fault with.
5. I have considered the submissions made by both the sides. I find that while issuing show-cause notice, only ground taken by the Revenue in the first round of litigation was that appellant was not at all eligible for the credit of service tax paid on GTA service as a receiver of service. No other ground was taken. Normal presumption in such cases, is that, when a claim is received, the claim is examined, verified and if the rejection is to be made all the grounds which are required to be considered before rejection should be considered and all the grounds which can cause rejection of refund claim should be enumerated in the show-cause notice. Unfortunately in this case even at the beginning itself, by failing to issue a detailed show-cause notice covering other grounds, the opportunity to refuse portion of refund was lost. The show-cause notice was limited to only one ground and this was covered by the original authority and the Commissioner (Appeals) order dated 13.05.2009. Commissioner has considered the issue properly by getting the documents submitted before him verified and getting the verification report by the original authority and after satisfying himself based on the verification report, he allowed the appeals. The Revenue had an opportunity to rectify the mistakes at least at this stage since litigation is a mixed question of law and facts and probably this could have been considered by the Tribunal if appeal was to be filed. Whether this could have been done or not is not relevant since another opportunity was lost by not filing the appeal against the order of Commissioner (Appeals).
6. Thereafter the officers committed another mistake by issuing another show-cause notice after 9 months in March 2010. This show-cause notice could not have been issued at all. Only option available was to file rather than issuing a show-cause notice. Taking note of the fact that before the Tribunal, there is no limit for condonation of delay, there was time available to rectify the defects and file appeal even at this stage which was also lost.
7. The legal process adopted in this case shows that opportunities to proceed properly on the part of the Revenue in this case were missed/lost. Now the question arises because of these missed opportunities, whether the second round of litigation initiated by the Revenue by issue of a fresh show-cause notice in 2010 culminating in the impugned order before me should be held as sustainable? In my opinion the answer has to be no. Once the order-in-appeal passed on 13.05.2009 attained finality, the only option available to any appellate forum is to say so and any other option, if exercised, would be illegal. It is unfortunate that law enforcing/implementing agency chooses to ignore the law and just because assessee became entitled to refund, proceeded to somehow deny refund, without even considering legal options. The decision of the Honble Supreme Court in the case of Triveni Chemicals Ltd. was rightly relied upon by the learned counsel in this regard. Paragraphs 7, 8 and 9 would be relevant and are reproduced:
7. The short question which arises for consideration before is as to whether in the peculiar facts and circumstances of this case, Section 11B, as amended by Section 3 of the Central Excise and Customs Laws (Amendment) Act, 1991, would be applicable.
8. We have noticed hereinbefore that the application for refund was rejected by the Assessing Authority. It was, however, allowed by the Appellate Authority. It is not in dispute that no further appeal was taken therefrom. The said order, therefore, attained finality. It matters little as to whether the application for refund was in the prescribed form or not. The respondents herein could raise all contentions before the Appellate Authority. In fact, before the original authority, a plea of unjust enrichment was raised. Such a plea, however, appears to have not been raised before the Appellate Authority. If no such plea was raised, only because the appellant herein filed an application to be dealt with on the administrative side for refund subsequently, the same would not, in our considered view, attract the provisions of Section 11B as inserted by the Amending Act of 1991.
9. The application filed subsequently by the appellant was required to be filed to proceed with the matter on administrative side. Appellant had all along been contending that despite such order, the amount in question had not been refunded. It was, therefore, obligatory on the part of the concerned authorities to comply with the order passed by the Collector. The authorities were bound to do so in view of the doctrine of judicial discipline. The same having not been done, in our opinion, the plea sought to be raised now that it was for the appellant to prove that the burden of the duty had not been passed to the customers cannot be accepted.
8. In that case also, the fresh round was started by the Revenue on the ground that question of unjust enrichment was not considered in the initial round and Honble Supreme Court said that once the order attained finality, even on the ground of unjust enrichment, fresh proceedings could not have been initiated. This case stands on a worse ground. In this case the same ground on which Commissioner (Appeals) had got a verification report and allowed the appeals stands reopened. This could not have been done at all. Further a small amount has also been held to be beyond the limitation period prescribed under Section 11B which is of course a new ground but in the light of the decision of the Honble Supreme Court, this ground also cannot be considered. In any case once all the refund claims and their fate had attained finality in the order of the Commissioner (Appeals), no further action could have been taken except the option of appealing against that decision and recover the lost ground which has been missed. I also agree with the submissions that this is a case where the decision of the Honble Supreme Court in the case of Kamlakshi Finance Corporation Ltd. is applicable and therefore the order should have been simply implemented.
9. In view of the above discussion I find that the second round of litigation initiated itself was unwarranted and probably has to be held void. In any case allowing the appeal with consequential relief and holding the proceedings ab initio void have the same consequences. Therefore I prefer to allow the appeal with consequential relief to the appellants.
10. At this stage even though strictly speaking it is not required, as a measure of caution, I would like to mention that appellant would be eligible for the interest after 3 months from the date of filing the claim in this case so that another round of litigation is not initiated by not granting the interest by the original authority.
(Order pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER iss