Customs, Excise and Gold Tribunal - Mumbai
Rosemount (India) Ltd. vs Commissioner Of C. Ex. on 29 January, 1998
Equivalent citations: 1998(99)ELT502(TRI-MUMBAI)
ORDER K.S. Venkataramani, Member (T)
1. The Appellants an SSI unit are engaged in the manufacture of Electronic Transmitters falling under erstwhile Tariff Item 68 and had claimed the benefit of exemption under Notification No. 179/77, dated 17-6-1977 on the ground that their product was manufactured without the aid of power. This claim of exemption was rejected by the Assistant Commissioner vide his Order No. MP/46/85, dated 16-12- 1985. Accordingly, the Appellants had filed an appeal before Collector of Central Excise (Appeals), Bombay. With the introduction of Central Excise Tariff Act, 1985, they filed a classification list No. 12/86 under protest w.e.f. 1-3-1986 classifying the product under Chapter 90 of Central Excise Tariff Act, 1985. This classification list was approved without vacating the party's protest. Accordingly they paid duty under protest during the period from 1-3-1986 to 31-3-1986. Thereafter, they filed another classification list No. 3/86 effective from 1-4-1986 for the financial year 1986-87 and also lodged their protest letter on 8-4-1986. This classification list was also approved without vacating the protest letter.
2. The appeal filed by the Appellants against the classification order dated 16-12-1985 was allowed with consequential relief by Commissioner of Central Excise (Appeals), Bombay vide Order-in-Appeal No. M/157/Ahd & M/809/86, dated 6-10-1986. Based on this, the Appellant filed two refund claims; one for Rs. 5,89,787.39 ps. for the month of March, 1986 and other for Rs. 7,49,169.79 ps. for the period from 1-4-1986 to 7-6-1986. After due scrutiny, an amount of Rs. 3,84,822.86 ps. was allowed in respect of the first claim, while the second claim was sanctioned in toto. The order sanctioning the refund claims were thereafter reviewed and appeals were filed under Section 35E(4) by the Commissioner of Central Excise on the ground that the consequential relief was admissible with reference to Notification No. 179/77 and not with reference to Notification No. 175/86-C.E. and that the claims for the periods from 1-3-1986 to 20-3-1986 and from 1-4-1986 to 7-4-1986 were time-barred, as the protest letters were filed only on 21-3-1986 and 8-4-1986 respectively.
3. The Departmental appeals were decided by the Commissioner of Central Excise (Appeals), Bombay vide Order-in-Appeal Nos. GSM/336 & 337/89-Ahd, dated 29-2-1989 setting aside the Assistant Commissioner's orders and remanding the matter for de novo proceedings for deciding the protest lodged by the party vide their letters dated 16-12-1985 and 21-1-1986. The Assistant Commissioner vide his impugned order has held that the protest lodged by the party will continuously be operative from 16-12-1985 and that the two refund claims sanctioned earlier by the Assistant Commissioner were correctly granted.
4. The Collector again sought review of Commissioner's order on the grounds that with the introduction of Central Excise Tariff Act, 1985, the protest lodged on 16-12-1985 under the old tariff became null and void; that the refund claim for the period from 1-3-1986 to 21-3-1986 was time barred, as the protest letter under Rule 233B was filed only on 21-3-1986; that the Order-in- Appeal dated 6-10-1986 is applicable to the period covered by the first Order- in-Original dated 16-12-1985 and there is no separate Order-in-Original for the later period; that the entire refund claim sanctioned to the party is not admissible to them, as it amounted to unjust enrichment in the light of the various judgments of the Supreme Court and the High Courts, as they had already recovered from their customers, the excess excise duty paid by them.
5. In the impugned order the Commissioner (Appeals) has held that the refund claim for the period 1-3-1986 to 20-3-1986 is time barred. He has also held that the refund will also have to be recovered on the ground of unjust enrichment, as the Appellants had not shown that the duty burden has been borne by them and has not been passed on to the others. At the same time, the Commissioner (Appeals) has also held that the recovery is subject to issue of a demand notice under Section 11A of Central Excise Act, 1944.
6. Ld. Sr. Counsel Shri Pochkhanawala appearing for the Appellants emphasised that the Assistant Commissioner has also held similarly that the recovery of erroneous refund can only be made by issuing a notice under Section 11A of the Act and that any notice issued now will be time barred. The ld. Sr. Counsel urged that as on date no demand for the recovery of erroneous refund under Section 11A has been issued by the Department and hence the recovery is totally time barred. It was also argued that provisions of Section 11A are independent of review proceedings under Section 35E of Central Excise Act, 1944 and Tribunal decision reported in 1996 (81) E.L.T. 154 was relied upon. The ld. Sr. Counsel contended citing Tribunal decision reported in 1994 (69) E.L.T. 766 that even in case of review application a notice within time limit under Section 11A for recovery of erroneous refund has to be issued. Tribunal decision reported in 1996 (83) E.L.T. 187 on the same lines was also cited. The ld. Sr. Counsel referred to the reasoning in the Assistant Commissioner's Order to urge that protest letter of 25-12-1985 would have continuing effect even after 1-3-1986.
7. Ld. DR Shri S.V. Singh relied upon Tribunal decision in the case of Andhra Sugars v. Collector - 1991 (17) ETR 645 to contend that having regard to the scheme of review under Section 35E of the Act, and the time limit of one year given thereunder for the executive Collector to call for and examine the records of an adjudication by Commissioner as regards its legality and propriety, and the time limit of 3 months available to the Assistant Commissioner for filing application for a review on a direction from the executive Collector, it is but rarely, Tribunal observed, that the Department would be in a position to issue notice within time limit under Section 11 A. As regards the effect of Appellants protest letter, ld. DR pointed out as held by Madras High Court reported in 1995 (80) E.L.T. 15 Premier Products v. Supdt., the protest is effective from the date of filing thereof and cannot cover the period earlier to that date.
8. We have considered the rival contentions. Taking up first the point regarding limitation for recovery of erroneously granted refund, the ld. DR has relied upon Tribunal decision in the case of Andhra Sugar (supra) that it will be incongruous to apply the time limit under Section HA of the Act for such recovery as a result of review proceedings under Section 35E. We also find that this contention finds support in Single Judge judgment in the case of Sivananda Pipe Fittings v. Supdt., Central Excise [1944] 45 ECC 77 which has been confirmed on an appeal by the Division Bench of the High Court as reported in 1998 (97) E.L.T. 52. The Single Judge judgment held that there is absolutely no warrant or justification to restrict the scope and amplitude of the powers of Collector (Appeals) under Section 35E by reading into it the provisions of Section 11A of the Act. The High Court Division Bench confirming the judgment aforesaid held that where several remedies are open to the authorities and one remedy is resorted to, it cannot be said that the same is illegal so long as provision of law permits the same. "We cannot be persuaded", observed the Division Bench, "to interpret the provision of law in such a manner and in the sence that the amount erroneously refunded to the Appellant should remain with him. It is the natural consequence of the order of the Appellate authority that the amount erroneously refunded should be re-credited to the department. We do not find any substance in the argument ... that without the original authority invoking Section 11 A, the direction to re-credit the amount cannot be upheld."
9. However, we find that the controversy now stands settled by the Supreme Court judgment in the case of Collector v. Re Rolling Mills - 1997 (94) E.L.T. 8. The appeal was against Tribunal's decision in the case of Re Rolling Mills v. Collector -1989 (43) E.L.T. 115. It was held by the Tribunal that when any duty has been erroneously refunded Section 11A requires that the Central Excise Officer should within six months from the relevant date serve a notice on the person to whom the refund has been erroneously refunded to show-cause why he should not pay the amount specified in the notice. The time limit of Section 11A, the Tribunal observed, governs the issue of demand under that Section and that section alone. "It follows that if no demand has been issued in accordance with Section HA, nothing else can take its place." The Tribunal also held in that decision that an order passed by the Appellate Collector under Section 35E cannot have the effect of nullifying Section 11A and its time limit. Dismissing the Department's appeal against the Tribunal's decision the Supreme Court held:
"The learned Counsel for the parties do not dispute that this appeal is covered by the judgment of this court in Union of India v. Jain Shudh Vansapati [1996] 10 SCC 520. In that case the court was dealing with Section 28 of the Customs Act which is in pari materia with Section 11A of Central Excise Act. The said decision is thus applicable to the present case also. For the reasons given in the said judgment, the appeal is dismissed with no order to costs."
Applying the ratio of the Supreme Court judgment, in the present appeal, admittedly no notice under Section 11A has been issued in this case so far, for the recovery of the erroneous refund. The Assistant Commissioner in his order has observed, "Even if at this stage the refund is said to have been erroneouslygranted...the erroneous refund could be demanded by issuing proper show cause notice under the provisions of Section 11A. This unfortunately has not been done at earlier stage or even at the time of filing EA2 application. Thereafter if any notice for recovery of is issued today it will be time barred." So also Commissioner (Appeals) has held that recovery of erroneous refund is subject to demand notice under Section HA of Central Excise Act, 1944.
10. In the result, following the Supreme Court judgment, the Appellants succeed on the point of limitation because notwithstanding the order passed by the Commissioner (Appeals) under Section 35E, in the absence of notice under Section 11A of Central Excise Act, 1944 for recovery of erroneous refund within time limit prescribed therein, such recovery has become timebarred. In view of the disposal of the appeal as above, we do not feel called upon to determine the other aspects of the case argued before us. The Appeal is accordingly allowed.