2013 (7) TMI 883 - CGOVT - Central Excise

Denial of rebate claim - Duty paid at higher rate - Held that - Erroneous refund/rebate sanctioned under an order can be recovered by invoking provisions of Section 11A of Central Excise Act 1944 without taking recourse to provisions of Section 35E ibid and fling appeal against the assessment on the basis of which refund was initially sanctioned. Hence Government finds that appellate authority erred in holding that since the assessment at the time of export was not challenged the rebate claim cannot be reduced with reference to the time of assessment. - notification changing effective rate of duty takes effect from the date of publication of notification in official Gazette - So it is a settled legal position that on 24-2-2009 duty was payable on impugned goods @ 8% in terms of Notification No. 4/2009-C.E. dated 24-2-2009. - any amount paid in excess of duty liability on one s own volition cannot be treated as duty and it has to be treated as a voluntary deposit with the Government which is required to be returned to the assessees/respondents in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law. - Decided partly in favour of assessee.

Issues Involved:
1. Excess rebate claims due to incorrect duty rate.
2. Review of assessment and initiation of proceedings under Section 11A.
3. Applicability of Notification No. 4/2009-C.E.
4. Legal implications of ignorance of law.
5. Handling of excess duty paid.

Detailed Analysis:

1. Excess Rebate Claims Due to Incorrect Duty Rate:
The primary issue was that the manufacturers cleared exported goods by paying Central Excise duty at 10% instead of the reduced rate of 8% as per Notification No. 4/2009-C.E., dated 24-2-2009. The original authority sanctioned rebate claims based on the 10% duty paid, resulting in excess rebate claims. The appellate authority rejected the department's appeals, leading to the revision applications.

2. Review of Assessment and Initiation of Proceedings Under Section 11A:
The appellate authority held that the department had not reviewed the initial assessment at the time of clearance, which formed the basis for the rebate claims. It was deemed legally impermissible to initiate proceedings under Section 11A of the Central Excise Act, 1944, without such a review. However, the judgment referenced the case of M/s. Indian Dye Stuff Industries Ltd. v. UOI, where it was established that Section 11A is an independent substantive provision for recovering erroneously refunded excise duty, without needing an appeal against the original assessment. This principle was upheld by the Supreme Court, reinforcing that erroneous refunds can be recovered under Section 11A without prior review.

3. Applicability of Notification No. 4/2009-C.E.:
It was undisputed that the notification changing the effective rate of duty took effect from the date of its publication in the official Gazette. The duty on the goods was payable at 8% from 24-2-2009, aligning with the Supreme Court decision in UOI v. Ganesh Das Bhojraj. The C.B.E. & C. Excise Manual on Supplementary Instructions stipulated that export goods should be assessed to duty in the same manner as goods for home consumption, considering any exemption notifications. Therefore, the effective duty rate of 8% should have been applied.

4. Legal Implications of Ignorance of Law:
The argument of ignorance of law was rejected, citing precedents where ignorance of law was not considered a valid excuse. The assessee, being experienced in Excise matters, was expected to be aware of changes in duty rates and implement them accordingly.

5. Handling of Excess Duty Paid:
The judgment noted that any amount paid in excess of the duty liability voluntarily cannot be treated as duty but as a voluntary deposit with the Government. This excess amount is required to be returned to the assessee in the manner it was paid. The High Court of Punjab & Haryana in M/s. Nahar Industrial Enterprises Ltd. v. UOI ruled that refund of such excess duty paid on export products should be credited back to the Cenvat credit account rather than refunded in cash.

Conclusion:
The Government set aside the impugned orders-in-appeal, allowing the revision applications. It directed that the excess paid amount should be re-credited to the Cenvat credit account from which the duty was initially paid. The revision applications succeeded on these grounds.

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