Customs, Excise and Gold Tribunal - Tamil Nadu
C.C.E. vs Lloyd Bitumen Products on 15 May, 1998
Equivalent citations: 1998(61)ECC161
ORDER
S.L. Peeran, Member
1. This is a Revenue appeal against the Order-in-Appeal dated 29.7.88. The Commissioner (Appeals) has passed the following order in para 4:-
I have carefully considered the submissions made by the respondents. During personal hearing, a copy of their protest letter dt. 7.3.86 was handed over to me by the respondents. It is stated in the above said letter, 'The Roof Felt manufactured by us will fall under chapter No. 56 and sub-heading 5602.90. Since we do not want to hold up their clearance, they are filing a classification list for roofing fait classifying under 5900.00 and clearing the goods after payment of duty under protest. We would however request the Supdt. to consider classifying the roof folt under 5602.90'. From the above letter, it will be abundantly clear that the ground for protest was not the applicability of the notification No. 52/65-CE as amended. In fact, that notification was not in their contemplation, inasmuch the said notification applies to goods falling under 5909.00 and have been accepted by the respondents, finally. Therefore, the respondents' contention that duty was paid during the period 5.3.86 to 3.11.86 under protest, is not correct. Consequently, the order of the Asstt. Collector is erroneous in sanctioning refund by disregarding time bar under provisions of Section 1IB of Central Excise and Salt Act, I allow the application consequently, by determinating the point cited above. The Asstt. Collector will be correct in recovering the amount under provisions of Section 11A of Central Excise and Salt Act, which section specifically provides for recovery of erroneously refunded amounts under Central Excise and Salt Act.
2. In this appeal the Revenue contends that the provision of Section 11A and that of provision of 35E are independent provisions and therefore the order of the Collector (Appeals) holding that for recovery of refund only Section 11A should be resorted to is not legal and proper, as Section 11A and Section 35E are two distinct and two different provisions having no restriction on each other. Therefore, they pray that the portion of the impugned order relating to the recovery under Section 11A and Refund order dated 29.10.97 to set aside and the excess refund ordered to be recovered as per Order-in-Appeal which clearly hold the part of the refund claim is barred by limitation under Section 11A.
3. We have heard Ld. S.D.R., who reiterated the pleas and particularly pointed out to the ground 3 of the appeal memorandum wherein it has been contended as follows:--
In terms of Section 11 A, the Asstt. Collector is empowered to demand back the amount which is erroneously refunded. A refund made in pursuance of a valid order of a competent authority cannot be deemed to be a refund erroneously made. Only in cases where refund is made on account of mistaken calculations or technical error and both the assessee and the sanctioning authority admits that the amount has been refunded erroneously, Section 11A will come into operation. The Collector (Appeals) Order holding that recovery of refund should be done only in terms of Section 11A is not therefore correct.
4. Ld. Counsel submits that Section 11A cannot be considered as independent for the purpose of recovery of short levy or erroneous refund. Section 11A demand are required to be brought into implementation by issue of show-cause notice. This point has already been considered in the case of Sree Digbijay Cement Co. Ltd. v. Collector of Central Excise as wherein it has been held that the order passed under Section 35E (2) does not automatically relay into recovery of erroneous refund. This order should be followed by a show cause notice under Section 11A according to which the show-cause notice should be issued within 6 months from the date of actual refund. The Tribunal held that since the time limit for filing an appeal under Section 35E (2) is longer than the time limit prescribed under Section 11A, the show cause notice should precede the proceedings under Section 35E (2), otherwise, the order under Section 35E (2) becomes an empty formality and is not inforceable. The Tribunal adds, similarly, even if the show cause notice is issued for recovering the erroneous refund within the time limit prescribed under Section 11A without setting aside the order granting erroneous refund under Section 35E (2), no erroneous refund can be recovered. Therefore, the Tribunal observed, that the Department should initiate proceedings simultaneously under Section 11A, within the time limit prescribed therein and also under Section 35E (2) within the time limit prescribed therein.
5. We have carefully considered the submissions made before us and we are of the conisdered opinion that there is no illegality or irregularity in the Order passed by the Commissioner (Appeals). The Commissioner has rightly held that the recovery proceedings of erroneous refund has to be proceeded under Section 11A of the Act. In a similar case, the ratio of the judgment cited by Ld. Advocate, in paras 7 to 10 of the said order of the Tribunal, cited by the Ld. Advocate:--
7. It is an admitted fact that the Collector allowed the appeal filed by the appellants claiming refund of duty and directed the Assistant Collector only to verify the refund claim and the freight incurred by the appellants. The Assistant Collector, in pursuance of the order of the Collector (Appeals), worked out the refund under Annexure 'D'. While working out the actual refund, there is a wrong calculation in the sense that instead of Rs. 57,28,009.42 the amount due as against column 4 is mentioned as Rs. 57,38,009.42 resulting an excess refund of Rs. 8,639.25. This is an arithmetical mistake. Without setting aside the order granting erroneous refund, the cause of action for recovering the refund erroneously made, does not arise. The order of erroneous refund can be set aside only by following the procedure under Section 35E(2) of the Act. The order can be set aside within the time limit prescribed under Section 35E(2).
8. However, the order passed under Section 35E(2) does not automatically result in recovering the erroneous refund. This order should be followed by a show cause notice under Section 11A, according to which the show cause notice should be issued within six months from the date of actual refund. Since the time limit, for filing an appeal under Section 35E(2), is longer than the time limit prescribed under Section 11A, the show cause notice should precede the proceedings under Section 35E(2), otherwise, the order under Section 35(E)2 becomes an empty formality and is not enforceable. Similarly, even if the show cause notice is issued for recovering the erroneous refund within the time limit prescribed under Section 11A without setting aside the order granting erroneous refund under Section 35E(2), no erroneous refund can be recovered. Therefore, the department should initiate proceedings simultaneously under Section 11A within the time limit prescribed therein and also under Section 35E(2) within the time limit prescribed therein.
9. In the instant case, the refund cheque was issued on 19-5-1987 and the show cause notice ought to have been issued under Section 11A within six months from 19-5-1987. Since it was not issued, though the appeal under Section 35E(2) for setting aside the order of refund is maintainable, before the Collector, the order cannot be enforced as no notice was issued under Section 11A for the recovery of erroneous refund.
10. From the it follows that though the appeal before Collector (Appeals) was maintainable, refund erroneously made cannot be recovered. The appeal is, therefore, allowed and the order of the Collector (Appeals) is set aside.
6. By following the ratio of the Tribunal, we do not find any merit in the appeal and hence the same is rejected.
Pronounced and dictated in the open Court.