2005 (2) TMI 382 - AT - Central Excise

Demand duty - Duty paid on nearest prevailing value - without reviewing the refund order u/s 35EA - Erroneous refund - HELD THAT - We follow the precedent and apply the ratio of the Supreme Court s decision in Jain Shudh Vanaspati 1996 (8) TMI 108 - SUPREME COURT to the facts of the instant case and accordingly reject the appellants contention that a SCN demanding erroneously refunded duty could not be issued u/s 11A without revision/review of the refund order. No other issue has arisen from the submissions made in this case. In the result we sustain the order of the Commissioner (Appeals) and reject the present appeal.

Summary

Issues Involved:

Recovery of erroneously refunded duty under Section 11A of the Central Excise Act without reviewing the refund order under Section 35EA.

Detailed Analysis:

Issue 1: Recovery of erroneously refunded duty under Section 11A without reviewing the refund order under Section 35EA

The case involved the appellants, manufacturers of Asbestos Cement Corrugated sheets, who sold their products from factory gates and depots across the country. The dispute arose when the department discovered an erroneous refund of Rs. 5,56,581/- to the appellants. A show-cause notice was issued for recovery, which the appellants contested. The main contention raised by the appellants was that the demand of duty under Section 11A without reviewing the refund order under Section 35EA was legally unsustainable. They argued that the original authority, which sanctioned the refund, had no power to review its own order, and the jurisdictional Commissioner should have reviewed the refund order before issuing a show-cause notice for recovery within the prescribed limitation period of six months under Section 11A.

The appellants relied on circulars and tribunal decisions to support their argument, emphasizing the necessity of following the prescribed procedures for recovery of erroneously refunded amounts. On the other hand, the department contended that recovery of duty without reviewing the refund order was permissible, citing relevant court decisions to support their stance.

Upon careful consideration, the Tribunal referred to the Supreme Court's ruling in a similar customs case and applied its ratio to the present situation. The Supreme Court's decision clarified that a show-cause notice for recovery could be issued under Section 11A without revising or reviewing the refund order, aligning with the provisions of the Central Excise Act. The Tribunal, following this precedent, rejected the appellants' argument and upheld the decision of the lower authorities to demand the recovery of the erroneously refunded duty.

In conclusion, the Tribunal sustained the order of the Commissioner (Appeals) and dismissed the appeal, finding no merit in the appellants' contention regarding the legality of the demand for recovery under Section 11A without prior review of the refund order under Section 35EA.

This comprehensive analysis highlights the key legal issues, arguments presented by both parties, relevant precedents, and the Tribunal's decision based on the interpretation of the law and established judicial principles.