1999 (11) TMI 421 - AT - Central Excise

Summary

Issues:
1. Validity of refund claims for slitting of Jumbo Rolls of magnetic tapes.
2. Applicability of provisions of Section 35E of the Central Excise Act.
3. Proper authorization for filing appeals under Section 35E.
4. Applicability of amended Section 11B to pending refund cases.
5. Requirement of demand under Section 11A for recovery of erroneously sanctioned refunds.

Issue 1: Validity of Refund Claims
The case involved appeals by Revenue against the Collector's order sanctioning refund claims for slitting Jumbo Rolls of magnetic tapes. The Collector (Appeals) had initially approved the refund claims, but the Revenue contended that the decision was based on outdated legal precedents. The Collector (Appeals) rejected the appeals, citing newer judgments and lack of provision for rejecting refunds based on unjust enrichment. The Revenue argued that the refund claims were still pending when the amended Section 11B came into force in 1991, emphasizing the independence of Section 35E for recovery of erroneously sanctioned refunds.

Issue 2: Applicability of Section 35E
The Respondent's advocate argued that the authorization for filing appeals under Section 35E was improper, as it did not explicitly state that the Collector (Appeals) orders were not proper or legal. However, the Tribunal found the authorization valid, citing Section 35B(2) of the Central Excise Authorisation Act, which allows the Commissioner to direct appeals if an order is deemed improper. The Tribunal also referenced past judgments to support the validity of the authorization in the absence of specific wording.

Issue 3: Applicability of Amended Section 11B
The Respondent's counsel contended that the amended Section 11B, effective from 1991, did not apply to pending cases. However, the Tribunal referenced the Supreme Court's ruling in Mafatlal Industries Ltd. v. U.O.I., establishing that the amended provisions of Section 11B applied to all cases where refunds were not finalized unconditionally. As the refund proceedings were challenged before the Collector (Appeals), the Tribunal found the amended Section 11B applicable to the present matters.

Issue 4: Requirement of Demand under Section 11A
The Tribunal addressed the necessity of issuing a demand under Section 11A for the recovery of erroneously sanctioned refunds. Citing precedents and Tribunal decisions, it was established that a show cause notice under Section 11A was mandatory for the recovery process. The Tribunal emphasized that the time limit under Section 11A could not be bypassed by actions under Section 35E, highlighting the importance of following the procedural requirements for recovery.

In conclusion, the Tribunal held that a show cause notice under Section 11A was a prerequisite for the recovery of erroneously refunded amounts. Both appeals were disposed of based on the above findings and legal interpretations.