Custom, Excise & Service Tax Tribunal
Bridgestone India Private Limited vs Ujjain on 14 September, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
EXCISE APPEAL NO. 50446 OF 2019
(Arising out of Order-in-Original No. 05/COMMR/CEX/UJN/2018-19 dated 16.11.2018
passed by the Commissioner, CGST & Central Excise, Ujjain)
M/s. Bridgestone India ...Appellant
Private Limited
VERSUS
Commissioner, CGST & ...Respondent
Central Excise, Ujjain
APPEARANCE:
Shri Tarun Gulati, Senior Advocate and Shri Ankit Sachdeva, Advocate for the
appellant
Shri Rakesh Agarwal, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. RAJU, MEMBER (TECHNICAL)
Date of Hearing: 14.06.2022
Date of Decision: 14.09.2022
FINAL ORDER NO. _50857/2022
JUSTICE DILIP GUPTA:
M/s Bridgestone Pvt. Ltd.1 has filed this appeal to assail the
order dated 16.11.2018 passed by the Commissioner, CGST and
Central Excise Ujjain2, by which an amount of Rs. 19,09,56,371/-
earlier sanctioned and refunded has been directed to be recovered
from the appellant under section 11A of the Central Excise Act 19443
and thereafter credited to the Consumer Welfare Fund under
1. the appellant
2. the Commissioner
3. the Excise Act
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section11A (2) of the Excise Act. The appellant has also been directed
to pay interest on the said amount in terms of section 11AA/AB of the
Excise Act.
2. The appellant is engaged in the manufacture of passenger cars,
trucks, buses radial tyres and tubes. In the course of business, the
appellant sells tyres directly to the original equipment manufacturers
and pays central excise duty on the transaction value. The appellant
also transfers the manufactured tyres to depots that later on sell the
tyres to dealers. In this case, the appellant pays excise duty at the
time of clearance from its manufacturing place. Under the replacement
market format, the appellant offers various discounts and incentives to
dealers like early bird discount, cash discount and dealers‟ loyalty
discounts.
3. The discount amount is calculated on the basis of performance
and according to the appellant has no nexus with the facilities provided
by the Dealer to its customer. To show that these discounts are
connected to the quantity offtake by the dealers and not dependent or
conditional to the type of Dealership, a sample discount matrix
showing the mode of calculation of these discounts has been provided
by the appellant and it is as follows:-
Category Offtake Offtake Offtake Offtake Offtake Offtake Offtake Offtake Offtake
699- 499- 299-200 199- 149-
>700 500 300 Select=>220 99-50 50-35 35<
150 100
Select 5.75% 5.75% 5.00% 5.00%
B-shop 3.75% 3.25% 3% 2.75% 2%
Normal 1.00% 1.00% 0.50%
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4. The appellant, on a quarterly basis, calculates the percentage of
discounts that a Dealer is eligible for and prepares a quarterly report
which clearly specifies the discounts available to a Dealer.
5. The appellant was, however, facing difficulty in calculating the
correct excise duty payable on tyres sold in the replacement market as
these discounts were given after sales and at the end of the scheme
by way of credit notes. The appellant, accordingly made an application
before the Assistant Commissioner for granting approval for making
provisional assessment. This application was rejected on the ground
that excise duty can be paid on the normal transaction value and there
was no need for provisional assessment. The Assistant Commissioner
also observed that the appellant could file a refund claim under section
11B of the Excise Act after the expiry of the scheme.
6. Pursuant to the aforesaid order passed by the Assistant
Commissioner, the appellant filed refund claims on quarterly basis as
every scheme was valid for a quarter only.
7. 13 refund claims for the period from April 2001 to June 2004 for
an amount of Rs. 1,90,53,661/- were, however, rejected by the
Deputy Commissioner by order dated 27.05.2005. The appellant filed
an appeal before the Commissioner (Appeals) and the refund claims
were ultimately allowed by an order dated 31.03.2006 passed by the
Commissioner (Appeals). The Department granted refund to the
appellant but also filed an appeal before the Tribunal. This appeal of
the Department was allowed by the Tribunal by order dated
23.02.2009 by way of remand and the appellant was directed to
produce documentary evidence. After remand, the Deputy
Commissioner, by an order dated 11.03.2010, held that the appellant
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was entitled to refund for the period from April 2001 to June 2004 and
also for interest on account of delayed payment. Similar refund was
granted to the appellant for the period from October 2008 to
September 2011 by various order passed by the Department.
8. A show cause notice dated 30.01.2015 was, however, issued to
the appellant by the Commissioner seeking to recover the amount
refunded to the appellant for the period from April 2001 to June 2004
and from October 2008 to September 2011. The appellant filed a
reply, but the Commissioner by order dated 15.02.2018 upheld the
demand made in the show cause notice. The appellant filed an appeal
before the Tribunal which was allowed by the Tribunal by order dated
30.01.2019. The Tribunal, after noticing that the orders under section
11B of the Excise Act by which refund was granted to the appellant
had attained finality as no appeal was filed by the Department, held
that though section 11A of the Excise Act provides for recovery of
duties erroneously refunded but as the duties had been refunded
pursuant to orders passed by the adjudicating authority under section
11B of the Excise Act, powers under section 11A of the Excise Act
could not have been exercised for refund of an amount erroneously
refunded. It was also held that when a specific power is conferred on
the Principal Commissioner of Central Excise to examine the legality or
propriety of any order passed by the adjudicating authority and when
this power had not been invoked, it will not be open to the Department
to take recourse to the provisions of section 11A of the Excise Act. The
Department has filed an appeal before the High Court of Madhya
Pradesh at Indore against the decision of the Tribunal, but it is said to
be pending.
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9. For the period from January 2016 to June 2016, the appellant
had filed refund claims for the Rs. 62,65,415/- for the extra excise
duty paid on the clearance of tyres. The Deputy Commissioner, by an
order dated 20.03.2017, rejected the refund claim on the ground of
unjust enrichment. An appeal was filed by the appellant before the
Commissioner (Appeals), who by order dated 30.09.2017, rejected the
appeal. The appellant, thereafter, filed appeals before the Tribunal,
being Excise Appeal No‟s. 50610-50611 of 2018, and the Tribunal by
order dated 30.07.2018 allowed the appeals and set aside the order
passed by the Commissioner (Appeals). It is stated that against the
aforesaid order of the Tribunal, the Department filed appeals before
the Madhya Pradesh High Court, being CEA 27-28/2019, but the
appeals were subsequently withdrawn by the Department.
Present proceedings
10. The present proceedings arise out of three refund applications
filed by the appellant for the subsequent period from October, 2011 to
June, 2012. Three show cause notices dated 10.07.2012, 20.11.2012
and 19.12.2012 were issued to the appellant for each of the three
refund applications on grounds inter alia that:
i. That the transaction value declared by the appellant in
invoice raised by the appellant on the dealer is the final
transaction value;
ii. That the produce of the appellant reaches the hand of the
ultimate customer who pays the price charged by the
retailer, which is inclusive of the duty paid by the
appellant at the time of the removal. The duty is
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supposed to have passed on and collected inclusive in the
value/price collected from the ultimate consumer;
iii. That these incentives/discounts provided by the appellant
are in the form of sales promotion expenses and
therefore, is inclusive in the transaction value in terms of
section 4 of the Excise Act; and
iv. That the claim of refund under consideration is hit by the
doctrine of unjust enrichment.
11. The appellant filed a reply to the said show cause notice. The
Deputy Commissioner, by order dated 15.05.2013, rejected the refund
applications. Feeling aggrieved, the appellant filed an appeal before
the Commissioner (Appeals), who by order dated 17.07.2014 partly
allowed the appeal holding that the claim of refund was not hit by the
doctrine of unjust enrichment, but the matter was remanded to the
adjudicating authority to assess the quantum of such eligible discounts
before allowing the refund.
12. Feeling aggrieved by part of the aforesaid order passed by the
Commissioner (Appeals), the appellant filed an appeal before the
Tribunal and the Department also filed an appeal before the Tribunal.
The Tribunal, by order dated 04.06.2015, allowed the appeal filed by
the appellant and dismissed the appeal filed by the Department and
the observations are as follow:-
"7.1. Since in the present case, the discount policy of the
assessee is known prior to the clearance as the rate of discount
is mentioned in the assessee's agreements with their dealers
and also from the circulars, it is clear that the deduction of
quantity discount cannot be disallowed. However, according to
the department, the quantity discount being extended by the
assessee is a sort of reimbursement to the dealers for
maintaining certain infrastructure and service facilities at the
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showrooms like Air Conditioned Customer waiting space,
adequate space for reception, separate space for washroom for
customers, computer based accounting software, parking
facility for customers' vehicles, tyre changer, tyre balancing
machine, Nitrogen inflation, tyre alignment machine, room
straighter etc. On going through these agreements with the
dealers, we find that there is nothing in the agreements from
which it can be inferred that the quantity discounts being given
by the assessee to their dealers are a compensation for the
expenses incurred by the dealers for maintaining the
showrooms in certain manner and providing certain minimum
facilities in the showrooms. A manufacturer can always insist on
maintenance of certain minimum facilities in the showrooms by
its dealers which would result in more sales and which in turn
will benefit both, the assessee as well as the dealer. Therefore,
we do not accept the Revenue's contention that the
quantity/turnover discount being offered is compensation by
the assesses to his dealers for incurring the expenses on
maintaining certain infrastructure and facilities at their
showrooms. In view of this, the impugned order
disallowing the deduction of the quantity/turnover
discount to different is not correct.
8. As regards the question of unjust enrichment, there is
no dispute that the discounts have been passed on by the issue
of credit notes. Once the credit notes are issued by the
assessees to the dealers, the invoice price mentioned in the
invoices issued earlier would stand reduced to that extent and
in such a situation, the burden of proof would shift to the
Department and it would be for the Department to establish
that the credit notes issued are bogus. In the present case,
there is no such evidence produced by the Department. In
view of this, following the judgment of the Hon'ble
Rajasthan High Court in the case of A.K. Spintex Ltd.
(supra), and the judgment of the Karnataka High Court
in the case of Sudhir Papers (supra), we hold that there
is no unjust enrichment and that the incidence of higher
duty paid by the assessee and whose refund is being
claimed has been borne by them and has not been
passed on by them to their customers."
(emphasis supplied)
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13. A perusal of the aforesaid order passed by the Tribunal shows
that the appellant was held entitled to refund and the contention of the
Department that refund should be denied because of unjust
enrichment was not accepted by the Tribunal.
14. It has been stated that the order dated 04.06.2015 passed by
the Tribunal has attained finality as no appeal was filed by the
Department. This factual position has not been controvertered by the
Department.
15. On the basis of the aforesaid order dated 04.06.2015 passed the
Tribunal, an amount of Rs. 2,34,99,027/- was refunded to the
appellant for the period October 2011 to June 2012. Subsequently,
further refund of Rs. 16,74,54,344/- was granted to the appellant for
the period from July 2012 to December 2015 on the basis of the
aforesaid order dated 04.06.2015 passed by the Tribunal.
16. However, a show cause notice dated 30.08.2017 was issued by
the Commissioner seeking to recover duty amounting to Rs.
19,09,56,371/- (Rs.2,34,99,027 + Rs.16,74,57,344/-) alleging that
the amount had been „erroneously refunded‟ to the appellant. The
show cause notice also proposed to credit this amount to the
Consumer Welfare Fund. This show cause notice covered the period
from October 2011 to December 2015 and was issued on the basis of
the judgment of Supreme Court in Commissioner of Central Excise,
Madras vs. Addison and Company Ltd.4 alleging that the appellant
had passed the burden of duty to the ultimate customers through
dealers.
4. 2016(339)ELT177 (SC)
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17. The reply filed by the appellant did not find favour of the
Commissioner, who by order dated 16.11.2018, directed for recovery
of the amount of Rs. 19,09,56,371/- in terms of section 11A (1) of the
Excise Act and also ordered for crediting it to the Consumer Welfare
Fund in terms of section 11B(2) of the Excise Act. The Commissioner
also ordered for recovery of interest on the said amount. The reasons
assigned by the Commissioner in the impugned order are as follows:-
a. No evidence has been produced to show that the
incidence of duty which was refunded to the dealer
through credit notes has not further been passed on to
the consumers by the dealers and therefore, the appellant
is not entitled for the refund as the same is hit by
doctrine of unjust enrichment;
b. In view of the judgment of the Hon‟ble Supreme Court in
Grasim Industries v/s Union of India5, there is no
force in the submissions of the appellant that the case
does not fall within the ambit of „erroneous refund‟;
c. The judgment of Supreme Court in Addison overrides all
the case laws cited by the appellant. Thus, the refund
sanctioned erroneously to the appellant is liable to be
recovered and credited to the Consumer Welfare Fund;
d. The refund claims have been sanctioned during the period
from 07.09.2015 to 08.06.2016 and show cause notice
has been issued on 30.08.2017. Thus, the demand for the
recovery of erroneous refund is well within limitation
period of two years.
5. 2011 (271) ELT 164 (SC)
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e. The issue in the present case attained finality only after
the judgment of the Supreme Court in Addison and the
argument of the appellant that the show cause notice is
hit by the principle of Res Judicata is not acceptable;
f. No restriction regarding issuance of second show cause
notice for subsequent period invoking provisions of
normal period has been placed by the Supreme Court in
Nizam Sugar v/s Collector of Central Excise, A.P.6.
g. That interest is leviable.
18. It is against this order of the Commissioner that the present
appeal has been filed.
19. It would be convenient to categorize the refunds claimed by the
appellant for various periods into four Blocks and they are as follows:-
Block Period Date of Refund Amount
(in Rs.)
Block I October, 2011 12.10.2015 2,34,99,027/-
to
June, 2012
Block II July, 2012 07.09.2015 16,74,57,344/-
to to
March, 2014 08.06.2016
&
October, 2015
to
December, 2015
Block III April 2001 _ _
to
September 2003
&
October 2008
to
September 2011
Block IV January 2016 _ _
to
June 2016
20. The present proceedings relate to an amount of Rs.
2,34,99,027/- for Block I for the period from October 2011 to June
6. 2006 (197) ELT 465 (SC)
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2012 and an amount of Rs. 16,74,57,344/- for Block II for the periods
from July 2012 to March 2014 and October 2015 to December 2015.
21. As noticed above, the Tribunal by order dated 04.06.2015 had,
for Block I, decided both the issues relating to entitlement of the
appellant to refund and the issue of unjust encroachment in favour of
the appellant and the Department did not file any appeal against the
said order. The amount for Block II was refunded to the appellant only
on the basis of the said order of the Tribunal.
22. The contention of Shri Tarun Gulati, learned senior counsel for
the appellant is that as the proceedings for Block I had been concluded
by the Tribunal in favour of the appellant by order dated 04.06.2015
and the Department has also granted refund, it is not open to the
Department to re-open the concluded issues by issuing notices under
section 11A of the Excise Act merely on the basis of the judgment of
the Supreme Court in Addison. In this connection, reliance has been
placed on the judgments of the Supreme Court in Deputy
Commissioner of Income Tax and others v/s Simplex Concrete
piles (India) Limited7 and Mepco Industries Limited, Madurai vs.
Commissioner of Income Tax and another8
23. Further submission advanced by the learned senior counsel is
that not only a re-assessment cannot be done on the basis of a
subsequent judgment, but even a rectification is not permissible.
Learned senior counsel also pointed out that issuance of a notice under
section 11A of the Excise Act would amount to reassessment, as has
been held by the Allahabad High Court in Shahnaz Ayurvedics v/s
7. (2013) 11 Supreme Court Cases 373
8. (2010) 1 Supreme Court Cases 434
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Commissioner of Central Excise, Noida9. Learned senior counsel
also submitted that the show cause notice under section 11A of the
Excise Act is in the nature of reopening a concluded assessment and
would amount to a review as was observed by the Supreme Court in
Canon India Pvt. Ltd. v/s Commissioner of Customs10.
24. Shri Rakesh Agarwal, learned authorized representative
appearing for the Department submitted that the decision dated
30.07.2018 of the Tribunal for the period from January 2016 to June
2016 would not come to the aid of the appellant as that decision was
passed on the fact that the incidence of excess duty paid on behalf of
the post clearance discounts had not been passed on to the customer
by the appellant. Learned authorized representative also submitted
that the decision dated June 04, 2015 of the Tribunal only examined
the issue of unjust enrichment up to the dealer and not up to the end
customer. The submission is that the doctrine of unjust enrichment
applies to the entire supply chain and the Supreme Court has held that
if the burden of duty has been passed to the customer, the refunds are
hit by the doctrine of unjust enrichment. In the present case the
appellant has not produced any tangible evidence to prove that the
incidence of duty was not passed to the end customer. Learned
authorized representative also submitted that the proper course for
recovery of an erroneous refund is to invoke the provisions of section
11A of the Excise Act.
25. The submissions advanced by the learned counsel for the
appellant and the learned authorized representative appearing for the
Department have been considered.
9. 2004 (173) E.L.T.337 (All.)
10. 2021 (376) E.L.T.3 (S.C.)
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26. As noticed above, the appeal is confined to Block I and Block II.
The refund applications filed by the appellant for Block I were rejected
by order dated 15.05.2013 passed by the Deputy Commissioner. The
appeal filed by the appellant before the Commissioner (Appeals) was
partly allowed. The Commissioner (Appeals) examined:
i. Whether, in facts and circumstances of the case, the
refund claims of the appellant are hit by the clause of
unjust enrichment?
ii. Whether the different discounts, as claimed by the
appellant, are entitled for deduction from assessable
value?
27. Both the said issues were decided by the Commissioner
(Appeals) in the following manner:-
"6.6. In view of above I abridge my findings as under:
a. The refund claims of the appellant are not hit by
Doctrine of Unjust Enrichment.
b. The appellant are entitled for deduction of Early Bird
Discount and COD discount from the assessable value
and hence entitled for consequential refund of duty
already paid to that extent.
C. The additional discounts given to B shops, Bridgestone
Select Dealers, Bridgestone Super Select Dealers and
DLS Dealers will not be admissible for deduction as
these are compensation/incentives for sales promotion
and merit inclusion in assessable value.
6.7. However, the quantum of such eligible discounts has to be
calculated and reworked before allowing refund to appellant.
Therefore, I set aside the impugned order and remand the
matter to the original adjudicating authority for passing a fresh
order in terms of my finding detailed hereinabove, within sixty
(60) days.
7. The appeal is disposed of by way of remand on above
terms."
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28. The aforesaid order dated 17.07.2014 passed by the
Commissioner (Appeals) was assailed both by the appellant and the
Department before the Tribunal. The Tribunal decided the appeal by
order dated 04.06.2015 and the said order has been reproduced
above. The order passed by the Commissioner disallowing the
additional discounts was set aside and the appeal filed by the
Department against that part of the Commissioner (Appeals) holding
that the claim of the appellant was not hit by the doctrine of unjust
enrichment was dismissed. The order dated 04.06.2015 passed by the
Tribunal has been accepted by the Department and no appeal has
been filed.
29. What needs to be noted is that on the basis of order dated
04.06.2015 passed by the Tribunal, an amount of Rs. 2,34,99,027/-
for Block I was refunded to the appellant on 12.10.2015.
Subsequently, refund of Rs. 16,74,57,344/- was also granted to the
appellant for Block II on the basis of the aforesaid order dated
04.06.2015 of the Tribunal. It is thereafter that a show cause notice
was issued to the appellant by the Commissioner under section 11A(1)
of the Excise Act on 30.08.2017 to show cause as to why the said
amount of Rs. 19,09,56,371/-, earlier refunded to the appellant, may
not be recovered and from the appellant and credited to Consumer
Welfare Fund. This show cause notice, covers both Block I and Block II
periods and has been issued on the basis of the Supreme Court
judgment in Addison.
30. The first issue that needs to be decided is as to whether the
show cause notice could have been issued by the Department under
section 11A of the Excise Act for recovery of the duty refunded to the
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appellant once the orders granting refund of duty had attained finality.
To examine this issue, it will be useful to refer to the relevant
provisions of the Excise Act.
31. Section 11B of the Excise deals with claim for refund of duty and
interest, if any, paid on such duty. Sub-sections (1) and (2), without
the proviso, are reproduced below:
"11B Claim for refund of duty and interest, if any, paid
on such duty -
(1) Any person claiming refund of any duty of excise and
interest, if any, paid on such duty may make an application for
refund of such duty and interest, if any, paid on such duty to
the Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise before the expiry of one
year from the relevant date such form and manner as may be
prescribed and the application shall be accompanied by such
documentary or other evidence including the documents
referred to in section 12A as the applicant may furnish to
establish that the amount of duty of excise and interest, if any,
paid on such duty in relation to which such refund is claimed
was collected from, or paid by, him and the incidence of such
duty and interest, if any, paid on such duty had not been
passed on by him to any other person.
(2) If, on receipt of any (2) such application, the Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise is satisfied that the whole or any part of the duty
of excise and interest, if any, paid on such duty paid by the
applicant is refundable, he may make an order accordingly and
the amount so determined shall be credited to the Fund."
32. Section 35(1) of the Excise Act deals with Appeals to
Commissioner (Appeals) and section 35B deals with Appeal to the
Appellate Tribunal. Section 35G of the Excise Act deals with Appeal of
the High Court against the order passed by the Appellate Tribunal.
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33. In the present case, as noted above, the amount was refunded
to the appellant pursuant to an order dated 04.06.2015 passed by the
Tribunal and admittedly this order of the Tribunal has attained finality
as an appeal was not filed by the Department before the High Court
against the order of the Tribunal.
34. Section 11A of the Act deals with "Recovery of duties not levied
or not paid or short-levied or short-paid or erroneously refunded".
Sub-sections (1) and (4) and Explanation I are reproduced below:
"(1) Where any duty of excise has not been levied or paid or
has been short-levied or short-paid or erroneously
refunded, for any reason, other than the reason of fraud
or collusion or any wilful mis-statement or suppression
of facts or contravention of any of the provisions of this
Act or of the rules made thereunder with intent to evade
payment of duty :
(a) the Central Excise Officer shall, within one year from the
relevant date, serve notice on the person chargeable
with the duty which has not been so levied or paid or
which has been so short-levied or short-paid or to whom
the refund has erroneously been made, requiring him to
show cause why he should not pay the amount specified
in the notice;
(b) the person chargeable with duty may, before service of
notice under clause (a), pay on the basis of, -
(i) his own ascertainment of such duty; or
(ii) the duty ascertained by the Central Excise
Officer,"
***** ******* ******
(4) Where any duty of excise has not been levied or paid or
has been short-levied or short-paid or erroneously refunded, by
the reason of -
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of
the rules made thereunder with intent to evade
payment of duty,
By any person chargeable with the duty, the Central Excise
Officer, shall within five years from the relevant date, serve
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notice on such person requiring him to show cause why he
should not pay the amount specified in the notice along with
interest payable thereon under section 11AA and a penalty
equivalent to the duty specified in the notice.
***** ******* ******
Explanation 1 - For the purposes of this section and section
11AC -
(a) "refund" includes rebate of duty of excise on excisable
goods exported out of India or on excisable materials
used in the manufacture of goods which are exported
out of India;
(b) "relevant date" means,-
(i) in the case of excisable goods on which duty of
excise has not been levied or paid or has been
short-levied or short-paid, and no periodical
return as required by the provisions of this Act
has been filed, the last date on which such return
is required to be filed under this Act and the rules
made thereunder;
(ii) in the case of excisable goods on which duty of
excise has not been levied or paid or has been
short-levied or short-paid and the return has
been filed, the date on which such return has
been filed;
in any other case, the date on which duty of
excise is required to be paid under this Act or the
rules made thereunder;
(iv) in a case where duty of excise is provisionally
assessed under this Act or the rules made
thereunder, the date of adjustment of duty after
the final assessment thereof;
(v) in the case of excisable goods on which duty of
excise has been erroneously refunded, the date
of such refund;"
35. It is in this light of the aforesaid provisions of the Excise Act that
the submission of the learned counsel for the appellant that if the
orders granting refund under section 11B of the Excise Act had
attained finality, a show cause notice under section 11A of the Excise
Act could not have been issued has to be examined.
36. Section 11A of the Excise Act does provide for recovery of duties
erroneously refunded, but if duties have been refunded pursuant to
orders passed under section 11B of the Excise Act, it is not possible to
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hold the powers under section 11A of the Act can still be exercised for
refund of the amount as this will not fall in the category of „duties
erroneously refunded‟. It also needs to be noted that an appeal can be
filed to the High Court against the order passed by the Tribunal and if
this power has not been invoked, it will not be open to the Department
to take recourse to the provisions of section 11A of the Excise Act.
37. The Commissioner, therefore, could not have issued the show
cause notice dated 30.08.2017. In the present case, as under section
11A of the Excise Act when the order passed by the Tribunal in
proceedings arising out of section 11B of the Excise Act had attained
finality.
38. This issue was also examined by the Andhra Pradesh High Court
in CC and CE, Tirupati vs. Panyam Cements & Minerals
Industries Ltd.11 and it was held that where an order under section
11B of the Act attains finality, the refund allowed would be outside the
scope of an „erroneous refund‟ contemplated under section 11A of the
Act. The relevant paragraph is reproduced below :
"16. ............ A careful analysis of the Sections 11A and 11B of
the Act would leave no manner of doubt that there is an
adjudication process involved in the processing of the
applications made under Sections 11A and 11B of the Act and
further the orders passed under Sections 11A and 11B of the
Act are appealable. The determination of an application made
under Section 11B of the Act would result in the entitlement of
an applicant for refund of any excise duty paid. If a very
determination does not result in declaration of entitlement of
refund any money paid in obedience to an order by an authority
in the process of adjudication of such claims cannot be termed
as granting of erroneous refund. Such payment would fall in the
category of implementation of an order, subject to finality of
such order. In other words, such refund would be outside the
11. 2016 (331) E.L.T. 206 (AP)
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scope of the erroneous refunds contemplated under Section
11A of the Act. In a way Section 11A and 11B of the Act
operate in two different streams."
39. The Madras High Court in Everyday Industries India Ltd. vs.
CESTAT, Chennai12 followed the view taken by Andhra Pradesh High
Court and also observed that once an application for refund is allowed
under section 11B, the amount refunded will not fall under the
category of „erroneous refund‟ so as to enable the order of refund to
be revoked under section11A of the Excise Act. The relevant
paragraphs are reproduced below :
"28. But, a careful look at the scheme of Sections 11A,
11B and 35E would show that an application for refund is
not to be dealt with merely as a ministerial act or an
administrative act. Under Section 11B of the Act, a person,
claiming refund of any duty of excise and interest already paid,
should make an application in the prescribed form. Such
application is to be made within the period of limitation
prescribed under subsection (1) of Section 11B. The application
should be accompanied by such documentary or other
evidence, in relation to which, such refund is claimed. Sub-
section (2) of Section 11B mandates that upon receipt of any
application for refund, the Assistant Commissioner or Deputy
Commissioner, if he is satisfied that the duty is refundable,
should make an order. The refund order is capable of being
given effect to in several methods including adjustment or
rebate of duty of excise, all of which are prescribed in Clauses
(a) to (f) under the Proviso to sub-section (2) of Section 11B.
*****
32. It is only when an order of adjudication is passed
under Section 11B that a person, who makes a claim for
refund, will get his money back. This assumes significance
in the light of the fact that by the proceedings dated 29-9-
1998, the appellant/assessee was informed of the sanction
granted by the Assistant Commissioner to make a refund of a
12. 2016 (337) E.L.T. 189 (Mad.)
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sum of Rs. 3,31,365/- arising as a consequence of the
finalisation of assessment.
33. In simple terms, the refund that the appellant got
was and should have been only after an adjudication
under Section 11B and not without an adjudication. It
must be pointed out that if an authority has done something, it
must be presumed that he has done it in accordance with law.
Therefore, we would give the benefit of doubt to the Assistant
Commissioner and presume that before according sanction in
September, 1998 for refund, he had actually followed the
procedure under Section 11B and passed an order of
adjudication.
34. Once it is seen that an order of adjudication has been
validly passed under Section 11B and a refund has also
been made on 29-9-1998, then the next question that
would fall for consideration is as to whether Section 11A
can be invoked thereafter. We have already extracted the
provisions of Section 11A. Interestingly, the authority, given
under Section 11A(1) for recovery of any refund erroneously
paid, is upon the Central Excise Officer. The expression used in
Clause (a) in sub-section (1) of Section 11A is "Central Excise
Officer".
*****
48. Insofar as the decision of the Andhra Pradesh High
Court is concerned, one observation made in Paragraph
16 of the said decision is of prime importance. In
Paragraph 16, the Andhra Pradesh High Court has made
it clear, after analysing Sections 11A and 11B that there
is an adjudication process involved in the processing of
applications made under Sections 11A and 11B. The
Andhra Pradesh High Court held that orders passed under
Sections 11A and 11B are appealable. Therefore, the
decision of the Andhra Pradesh High Court, especially the
observations in Paragraph 16, should be made use of by
the assessee to contend that since there was no appeal
against the order under Section 11B, the Department
cannot take recourse to Section 11A.
******
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51. We are of the considered view that the paragraph extracted
above is a complete answer to the question of law now raised.
Unfortunately, in none of the decisions relied upon by the
learned standing counsel, the Courts were confronted with an
order of adjudication passed under Section 11B on an
application. Once an application for refund is allowed under
Section 11B, the expression "erroneous refund" appearing in
sub-section (1) of Section 11A cannot be applied. If an order
of refund is passed after adjudication, the amount
refunded will not fall under the category of erroneous
refund so as to enable the order of refund to be revoked
under Section 11A(1). One authority cannot be allowed to
say in a collateral proceeding that what was done by another
authority was an erroneous thing. Therefore, the question of
law has to be answered in favour of the appellant/assessee and
the appeal deserves to be allowed."
(emphasis supplied)
40. The Gauhati High Court in Commissioner of Central Excise,
Shillong vs. Jellapore Tea Estate13 observed that the Revenue
cannot take recourse to section 11A of the Excise Act when it had a
statutory remedy available to it to challenge the order by resorting to
the powers under the Excise Act.
41. The Gujarat High Court in Commissioner of Customs vs.
Millat Fibres14 held that a show cause notice issued by the
Adjudicating Authority on the ground of „unjust enrichment‟ would
amount to review of its own order granting refund, which is not
permissible. The relevant paragraphs are reproduced below :
"7. The record of the case indicates that vide order dated
22nd February, 2005, the adjudicating authority had
adjudicated on the claim of refund made by the
respondents. At the relevant time, it was permissible for the
adjudicating authority to go into all issues which were
necessary to be looked into for the purpose of deciding the
13. 2011 (268) E.L.T. 14 (Gau.)
14. 2011 (271) E.L.T. 512 (Guj.)
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application for refund, including the aspect of unjust
enrichment. The adjudicating authority after duly considering
the claim of the respondent rejected part of the claim and
allowed the claim to the extent of Rs. 2,42,110/- and directed
that the same should be appropriated against outstanding
Government dues. Later on after the said order was
implemented another show cause notice came to be
issued calling upon the respondent to show cause as to
why the refund claim of Rs. 2,42,110/- sanctioned and
erroneously refunded by appropriating against the
outstanding Government dues should not be rejected and
amount so appropriated should not be recovered under
Section 28 read with Section 27 of the Customs Act, 1962
in absence of proof regarding burden of duty being not
passed on. The very frame of the show cause notice indicates
that the adjudicating authority was reviewing the earlier order
inasmuch as the respondent had been called upon to show
cause as to why the refund granted by the earlier order should
not be rejected.
8. Sub-section (2) of Section 129D empowers the
Commissioner of Customs to call for and examine the
record of any proceeding in which an adjudicating
authority subordinate to him has passed any decision or
order under the Act for the purpose of satisfying himself
as to the legality or propriety of any such decision or
order and to direct such authority to apply to the
Commissioner (Appeals) for the determination of such
points arising out of the decision or order as may be
specified by the Commissioner in his order. Sub-section
(4) thereof provides for preferring an appeal against the
order of the concerned authority. In the circumstances, if
the adjudicating authority was of the view that the
doctrine of unjust enrichment had not been examined
while making the order of refund, the proper course to
adopt was to take recourse to the provisions of Section
129D. A perusal of the order-in-original dated 15-2-2006
shows that the adjudicating authority has held that the
refundable amount of Rs. 2,42,110/- is required to be
credited to the Consumer Welfare Fund established
under Section 12C of the Central Excise Act, 1944 and
that the same cannot be refunded to the party by
appropriating against outstanding Government dues of Rs.
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2,75,306/- of Customs Duty vide O-I-O dated 3-2-2004. Thus
in effect and substance the adjudicating authority, has
set aside its earlier order dated 13-2-2004 whereby the
refund amount had been ordered to be appropriated
against outstanding Government dues. The adjudicating
authority has no power or authority under the Act to
reconsider or review or sit in appeal over its earlier
order. No such power or authority has been pointed out by the
learned counsel for the appellant.
9. In the aforesaid factual background, the Commissioner
(Appeals) was justified in holding that the show cause notice
issued by the adjudicating authority on the ground of unjust
enrichment, would amount to review of his own order which
was not permissible. The view expressed by the Commissioner
(Appeals) that the proper course of action was for the
Department to review the order under Section 129D(2) of the
Act and thereafter file appeal under Section 129D(4) is in
consonance with the provisions of the Act. The impugned order
of the Tribunal whereby it has confirmed the findings recorded
by the Commissioner (Appeals) does not suffer from any legal
infirmity so as to warrant interference. No question of law,
much less any substantial question of law can be stated to arise
out of the impugned order of the Tribunal."
( emphasis supplied)
42. It is, therefore, more than apparent that section 11A of the
Excise Act cannot be resorted to by the Department for recovery of
duty which it believes was erroneously refunded if the order passed for
refund of duty under section 11B of the Excise Act on an application
filed for refund of duty attained finality for the simple reason that it
cannot fall in the category of „duty erroneously refunded‟.
43. The show cause notice dated 30.08.2017 seeking recovery of the
duty refunded to the appellant is without jurisdiction. The order passed
on such a show cause notice, therefore, deserves to be set aside.
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44. The submission made by the learned counsel for the appellant
that the proceedings cannot be re-opened on the basis of a
subsequent judgment of the Supreme Court also deserves to be
accepted in view of the decision of the Supreme Court in Deputy
Commissioner of Income Tax and others vs. Simplex Concrete
Piles (India) Limited15. The relevant observations are as follows:
"In any event, at the relevant time, when the assessment order
got completed, the law as declared by the jurisdictional High
Court, was that the civil construction work carried out by the
assessee would be entitled to the benefit of Section 80HH of
the Act, which view was squarely reversed in the case of
Commissioner of Income-Tax vs. N.C. Budharaja and Co. and
Another, reported in [1993] 204 ITR 412. The subsequent
reversal of the legal position by the judgment of the Supreme
Court does not authorise the Department to re-open the
assessment, which stood closed on the basis of the law, as it
stood at the relevant time."
45. Even otherwise, the decision of the Supreme Court in Addison
would not be applicable to the facts of the present case. Clause (e) of
the proviso to section 11B of the Excise Act which relates to a buyer
was under consideration and not a manufacturer (like the appellant)
who would be covered by clause (d). Section 11B (2)(d) states that
when in the case of a manufacturer the duty of excise is paid by the
manufacturer and such incidence of duty has not been passed on to
any other person, such an amount of duty and interest payable on
such duty shall be refunded to the applicant. In the present case, it is
not in dispute that the incidence of excise duty was borne by the
appellant by the issuance of the credit notes to its dealer.
15. (2013) 11 Supreme Court Cases 373
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46. The decision of the Supreme Court in Addison was also
considered by the Tribunal in the order dated 30.07.2018 in the case
of Block IV period in the case of the appellant.
47. Thus, for all the reasons stated above, the impugned order dated
16.11.2018 passed by the Commissioner for recovery of the amount
earlier refunded to the appellant is set aside and the appeal is allowed.
(Order pronounced on 14.09.2022)
(JUSTICE DILIP GUPTA)
PRESIDENT
(RAJU)
MEMBER (TECHNICAL)
Rekha/Shreya
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
EXCISE APPEAL NO. 50446 OF 2019
(Arising out of Order-in-Original No. 05/COMMR/CEX/UJN/2018-19 dated 16.11.2018
passed by the Commissioner, CGST & Central Excise, Ujjain)
M/s. Bridgestone India ...Appellant
Private Limited
VERSUS
Commissioner, CGST & ...Respondent
Central Excise, Ujjain
APPEARANCE:
Shri Tarun Gulati, Senior Advocate and Shri Ankit Sachdeva, Advocate for the
appellant
Shri Rakesh Agarwal, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 14.06.2022
ORDER
Order Pronounced on 14.09.2022.
(JUSTICE DILIP GUPTA) PRESIDENT (C.J. MATHEW) MEMBER (TECHNICAL) Shreya