Recovery of erroneously granted refund – refund filed on 28.11.1990 by Division of department to whom incidence of duty was not passed on

PJ/Case Laws/2011-12/1456

Case: GRASIM INDUSTRIES LTD v/s COMMISSIONER OF CENTRAL EXCISE, BHOPAL

Citation: 2011 (271) E.L.T. 164 (S.C.)

Issue:- Recovery of erroneously granted refund – refund filed on 28.11.1990 by Division of department to whom incidence of duty was not passed on – Credit Note issued after 2 years – Held – credit note issued after 2 years not reliable document – demand upheld.

Brief Facts:- Appellant had deposited duty on clearance of Sodium Hypochlorite (Bleach Liquor) for the period from 1-3-1988 to 15-6-1989. Later on they filed for refund of the duty. The refund claim was allowed by the Assistant Commissioner.

Revenue department later felt that refund was granted erroneously as the refund order was passed illegally and without jurisdiction as refund is admissible only when incidence of duty was not passed on to other persons. Show Cause Notice was issued for recovery of refund granted. In the SCN reference was also made that buyer in the case was appellant’s Staple Fibre Division, Nagda and therefore, the duty initially passed on to that Division. It was also stated that a credit note was issued on 07.08.1991 for Rs. 2, 00,305/- and as the refund of this amount was claimed much later, it would not establish that the initial duty incidence was not passed on.

The Adjudicating Authority ordered recovery of refund erroneously sanctioned in terms of Section 11A of Central Excise and Salt Act, 1944. In appeal, the Commissioner (Appeals) upheld the order of the Adjudicating Authority.

In further appeal, the Tribunal dismissed the appeal and upheld the findings recorded by the Commissioner (Appeals) as also by the Adjudicating Authority, who passed the order in original [2003 (153) ELT 694 (Tri-LB)].

Hence, appellant is before the Supreme Court.

Appellant’s Contention:- Appellant submitted that the Revenue department could not have issued a show cause notice to the appellant demanding recovery of the amount which was paid to the appellant by the respondent as refund of the duty paid bypassing the statutory provision.

The next contention raised is that the appellant had issued a credit note which was filed and, therefore, the refund which was given to them by Department should have been upheld by all the authorities.

Respondent’s Contention:- Revenue department have relied on the provisions of Sections 11A, 113 and 12 to submit that the orders passed by all the authorities including the Tribunal were just and proper.

Reasoning of Judgment:- The Supreme Court noted the facts that on the date when appellant filed application for refund claim i.e. on 28-11-1990, there was no credit note issued. The credit note was issued much subsequently i.e. on 7-8-1991. The duty was deposited on 19-7-1989 whereas the aforesaid credit note is dated 7-8-1991. But the claim appears to have been filed before the Assistant Commissioner seeking for refund on 28-11-1990 i.e. prior to even issuance of the aforesaid credit note. However, the Assistant Commissioner initially issued letter dated 22-9-1992 without considering even the merit of claim and without even considering applicability of Sections 11 and 12 of the Act.

It was noted that subsequently, the Assistant Commissioner again considered the records and in his order has also referred to the admission of appellant to the fact that the burden of said duty was originally passed on from Chemical Division to Staple Fibre Division. The refund application was not filed by Staple Fibre Division of Appellant in this case but the same is filed by the present appellant, who is another division.

It was observed that Section 11A provides for a right of issuance of show cause notice, if, according to the Department, duty of excise has been erroneously refunded to a party. In the event of such erroneous refund of excise duty, the competent authority may then issue such a show cause notice as provided for under Section 11A, in which case the assessee has to show cause as to why the aforesaid amount of refund, which is erroneously refunded, should not be recovered from him. In such a case, there is no question of filing any appeal, as appropriate remedy as provided under Section 11A is available, therefore, in the opinion, the first contention of appellant had no merit.

With regard to issuance of credit note, it was noted that the same was issued only on 7-8-1991 although the duty was paid on 19-7-1989 and, therefore, the credit note was issued after two years of the payment of duty and clearance of the goods. In this connection, Section 12 of the Central Excise Act becomes relevant which indicates that the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of goods itself. Therefore, when at the time of clearance no such document was filed and what is sought to be relied upon is a document issued after two years, the same raises a doubt and cannot be accepted as a reliable document.

The opinion of the Supreme Court was that the decision in the case of Sangam Processors (Bhilwara) Ltd. v. CCE, Jaipur [2004 (168) E.L.T. 357 (Tribunal)] which was a decision of the Tribunaland also upheld by the Supreme Court becomes applicable as the appeal filed there from was dismissed. In opinion of the Supreme Court the Tribunal did not commit any error in referring to relying on the same decision.

It was held that the Tribunal was also justified to rely on the decision in S. Kumar's Ltd. v. CCE, Indore [2007 (211) E.L.T. 124 (Tribunal)] in which reference was also made to the decision of the Supreme Court in Kunhay Arnmed & Ors. v. State of Kerala [2001 (129) E.L.T. 11 (S.C.)] wherein the question of merger as well as binding nature of the decision of the Supreme Court as precedence when civil appeals and special leave petitions are dismissed was considered.

No infirmity in order of the Tribunal.

Decision:- Appeal dismissed.

Comments

PJ/Case Laws/2011-12/1456

Post a Comment

Query