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2019 (8) TMI 1546 - CESTAT KOLKATAArea Based Exemption - refund of Excise Duty - whether Units I and II resorted to paper clearances for availing erroneous refund of excise duty paid under the area-based Notification No. 32/99 dated 8 July 1999? - Revenue neutrality - time limitation. HELD THAT:- The said notification is essentially an exemption notification aimed at promoting industrialization and operationalized by way of grant of refund equivalent to the amount of duty paid by the manufacturer in cash i.e. the amount of duty paid after utilization of the Cenvat credit. Therefore, the duty paid through Cenvat credit is not at all refunded under the notification. The question of misuse of the notification could still be relevant if a case of dual benefits i.e. refunds of duty paid by the manufacturer in cash and corresponding availment of Cenvat credit by the buyers, is made out. However, in the instant case, we find that the adjudicating authority has himself accepted that the buyers of finished goods from Unit – II were non-existent and that no duty incidence could be passed on to such non-existent buyers while dropping invocation of Section 11D and thereby, ruling out the question of any double benefit being claimed. Under these circumstances, we concur with the contention of the Appellants that no intent to evade duty could be attributed on the part of Unit – II with reference to which the bulk of duty demand has been confirmed as the entire exercise turns out to be revenue neutral - the demand confirmed by invoking the extended period deserves to be set aside on this limited point alone. Even otherwise as per the revenue’s allegation, the excise duty was not at all required to be paid on the manufactured excisable goods for want of clearance thereof. Therefore, the excise duty collected from Unit – II could not have been retained under Article 265 of the Constitution and in any event, ought to have been refunded by applying the principle of restitution more so when there was no case for unjust enrichment as the buyers were allegedly non-existent - The grant of refund under the said notification is subject to such verification as may be deemed necessary by the jurisdictional Assistant Commissioner or the Deputy Commissioner of Central Excise. There are force in the contention of the Appellant that when such refund orders were not reviewed or appealed against under Section 35E(2) of the Act, and therefore, attained finality, no parallel proceedings for recovery of such alleged erroneous refund under Section 11A of the Act was maintainable as something which could not be done directly cannot be permitted indirectly either - Neither is there any allegation as regards clandestine clearance of the produced goods. Given that production is not disputed and neither was any shortage detected on physical verification or any allegation of clandestine clearance, the charge of paper clearance of the produced goods cannot sustain in vaccum. Appeal allowed - decided in favor of appellant.
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