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The Commissioner Customs And Central Excise, Tirupati Versus M/s. Panyam Cements And Minerals Industries Ltd., Kurnool

2015 (9) TMI 726 - ANDHRA PRADESH HIGH COURT

Refund claim - Duty paid under protest - tribunal allowed the refund claim on the ground that, no proceedings were issued under Section 11A of the Act - recovery of refund which was earlier paid to the assessee - Held that:- in view of operation of Rule 233B the duty as approved had become final. In the first place the refund application is misconceived and was not maintainable as the respondent failed to avail the remedies available under the Act.

Sections 11A and 11B of the Act are .....

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visions of Section 11A of the Act. We are not impressed with the argument of the learned counsel for the respondent that the authorities being bound by the circular and it is not open for the authorities not to implement the same. In view of the judgment of the Supreme Court in Minwool Rock Fiber Ltd case (2012 (2) TMI 289 - SUPREME COURT OF INDIA ), the departmental circulars are not binding on the Tribunal and at any rate, the Tribunal did not say that they are bound by the circulars.

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aim for refund on the ground that the adjudicating authority had committed an error in passing his order. If this position is accepted then the provisions for adjudication in the Act and the Rules, the provision for appeal in the Act and the Rules will lose their relevance and the entire exercise will be rendered redundant. This position, in our view, will run counter to the scheme of the Act and will introduce an element of uncertainty in the entire process of levy and collection of excise duty .....

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te of duty on or valuation of excisable goods under any other provisions of this Act or the Rules made thereunder. In the facts of the case the refund order was granted ignoring the fact that the duty payable as per the approved list became final on account of not pursuing the protest petition. - Decided in favour of Revenue. - CEA No. 17 of 2005 - Dated:- 14-8-2015 - Shri G. Chandraiah And Challa Kodanda Ram, JJ. For the Petitioner : Standing Counsel for Customs and Central Excise Department Fo .....

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ts and Minerals Industries Limited, Kurnool hereinafter referred to as the respondent. The respondent is manufacturers of cement and clinker falling under Chapter Heading 2502.29 and 2502.10. The respondent filed a price list effective from 1.10.1975 in respect of Grey Portland cement and claimed the deduction of packing charges from the assessable value on the ground that the packing material is of durable nature and is returnable as provided. The Jurisdictional Assistant Commissioner did not a .....

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ed by the Assistant Commissioner. 3) On 7.5.1985, the respondent filed the refund claim for an amount of ₹ 17,68,481.56 ps., claiming the said amount has been paid as excise duty on packing charges during the period 1.10.1975 to 8.1.1976 on the ground the packing material i.e., gunny bags are of durable nature and is returnable within the meaning of Section 4(4)(d)(1) of the Act and thus the value is deductable from assessable value. By issuing show-cause notice dated 17.8.1986 and after c .....

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0.1987 by filing Appeal No.1022 of 1996 before the CEGAT, South Zonal Bench at Madras. The said appeal was allowed on 7.8.1996 directing the Appellate Commissioner to consider the appeal denovo. Thereafter, once again the Appellate Commissioner vide its order dated 4.2.2002 in Appeal No.66/97(H)(D)CE allowed the appeal by setting aside the order in original dated 19.09.1986 holding that the respondent was not entitled to refund and thus the amounts of ₹ 17,68,481.56 ps., is liable to recov .....

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A of the Act. In the above set of facts, the department is in appeal raising the following substantial questions of law: 1. Whether an appeal can be filed before the appellate authority under Section 35E of the Act and the recovery of erroneous refund can be based on the decision of the appellate authority; or 2. Whether show cause notice is required to be issued within the time limit laid down in Section 11 A of the Act for recovery of such erroneously granted refund? 4) Heard Sri Jalakam Satya .....

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the case, the resort to Section 11A of the Act is mandatory for recovering the refund granted pursuant to the adjudication order passed under Section 11B of the Act which adjudication order subsequently came to be declared as unsustainable. 6) As the above question is the one which arise in the facts of the present case, we deem it appropriate to frame the question in exercise of the powers conferred on this Court under Section 35G3 of the Act in addition to the questions which have been raised .....

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s, the department is not seeking to recover erroneously refunded duty amount but was seeking to recover the duty amount refunded on account of the adjudication order passed on 19.9.1986 which order came to be set aside in the appeal proceedings. In other words, the recovery was sought to be made by way of restitution and putting back the parties in the same position before passing the adjudication order. Learned counsel submits that the very refund claim was not maintainable and the same could n .....

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fund of the amount came to be set aside and the amount is recoverable from the respondent and the provisions of Section 11A have no application in such situations. 8) Learned counsel for the appellant submits that the circular dated 22.9.1998 of the C.B.E.C relied by the Tribunal is erroneous and the said circular has no application to the facts of the case. Apart from the fact the said circular was not binding on the Tribunal being a quasi judicial forum. Learned counsel for the department cite .....

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SC) g) CCE, Shillong Vs. Wood Craft Products 2002 (143) E.L.T 247 (SC) h) Kalyani Packing Industry vs. Union of India 2004 (168) ELT 145 (SC) 9) On the other hand, Sri C.V. Narasimham, learned counsel for the respondent contends that the order of the Tribunal is unassailable and the scope of the appeal is limited to the questions of law which have been raised by the department, particularly in the facts of the present case. The learned counsel further submits that the Tribunal had rightly relied .....

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. He further submits that the only way to recover the erroneously refunded duty amount is under the provisions of Section 11A of the Act and there are no other provisions in the Act. In that view of the matter, the order of the Tribunal is sustainable. 10) To answer the above mentioned questions of law, it would be necessary to notice the relevant provisions as applicable during the years 1975-76, the duty was leviable under the provisions of Sections 3, 4 of the Act and read with Rule 173B of t .....

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followed in cases where duty is paid under protest.- Where an assessee desires to pay duty under protest he shall deliver to the Proper Officer a letter to this effect and give grounds for payment of the duty under protest. (2) On receipt of the said letter; the Proper Officer shall give an acknowledgement to it. (3) The acknowledgement so given shall, subject to the provisions of sub-rule (4), be the proof that the assessee has paid the duty under protest from the day on which the letter of pro .....

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ntation to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise. (6) In cases where the remedy of an appeal or revision is available to the assessee against an order or decision which necessitated him to deposit the duty under protest, he may file an appeal or revision within the period specified for filing such appeal or revision, as the case may be. (7) On service of the decision on the representation referred to in sub-rule (5) or of the appeal or revision ref .....

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the assessee has paid the duty without protest. Note:A letter of protest or a representation under this rule shall not constitute a claim for refund. 12) In the facts of the present case, it is an undisputed and admitted fact that though the respondent paid the duty under protest, he did not take any further steps as prescribed under Rule 233B of Rules for determination of the correct duty payable and thereafter seek refund of the amount excess paid, if any. Rule 233 B(8) coupled with the note m .....

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may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months 1 from the relevant date 4 in such form as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such .....

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duty has been paid under protest. 2 (2) 4 if, on receipt of any such application, the Assistant Col- lector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise as determined by the Assistant Collector of Central Excise under the foregoing provisions of this sub- section shall, instead of being cre .....

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ssued, under this Act; (d) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person; (e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person; (f) the duty of excise borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify: Provided further that no notification under clause (f) of the first proviso shall be issued u .....

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first proviso to subsection (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its reassembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notifi .....

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e Central Government at any time by notification in the Official Gazette."] 3 Explanation.- For the purposes of this section,- (A) " refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (B) " relevant date" means,- (a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as t .....

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nd Subs. by Act 40 of 1991, S. 3 (w.e.f. 20- 09- 1991 ). (iii) if the goals arc exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid; (c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so requi .....

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such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; (e) 4 in the case of a person, other than the manufacturer, the date of purchase of the goods by such person;"] (f) in any other case, the date of payment of duty.] 14) Rules 233B of the Rules came to be inserted with effect from 11.5.1981. Section 11B and Rule 223B are two different provisions which deal with the refund of excise duty. While Section 11B sets out a limitation of s .....

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rotest is that the same is required to be adjusted on determination of the correct duty payable on the determination of the protest petition. However, in the present case, we may observe the aspect of limitation is being dealt with incidentally though the same does not arise in the facts of the present case because the duty payable as per the approved price list became final by operation of Rule 233B(8) of the Rules. As noted above, in view of operation of Rule 233B the duty as approved had beco .....

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laim under 11 B of the Act could be made only in cases where the claim is allowed that is the claims made within limitation. In that view of the matter the very application filed by the respondent seeking refund in the year 1985 was not maintainable and ought to have been dismissed by the authority - Assistant Commissioner without any further discussion. 16) In the light of the above statutory scheme, the real question that is required to be considered is the validity or otherwise of the refund .....

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ide the same which also came to be confirmed by the Tribunal. In that view of the matter, the refund of money which has been made to the respondent was in the process of adjudicating his claim under Section 11B of the Act. A careful analysis of the Sections 11A and 11B of the Act would leave no manner of doubt that there is an adjudication process involved in the processing of the applications made under Sections 11A and 11B of the Act and further the orders passed under Sections 11A and 11B of .....

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of such order. In other words, such refund would be outside the scope of the erroneous refunds contemplated under Section 11A of the Act. In a way Section 11A and 11B of the Act operate in two different streams. 17) The situation can be best explained by reference to a civil proceedings of money suit. Pending adjudication of an appeal amount deposited / paid in honouring the judgment and decree would have been repaid back without there being any requirement of a separate suit. Present facts of .....

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There is no warrant for one to conclude for implementing the orders passed under Section 11A of the Act recourse is to be taken to the provisions of Section 11A of the Act. We are not impressed with the argument of the learned counsel for the respondent that the authorities being bound by the circular and it is not open for the authorities not to implement the same. In view of the judgment of the Supreme Court in Minwool Rock Fiber Ltd case (2 supra), the departmental circulars are not binding o .....

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ment of the Supreme Court in Union of India and others vs. Jain Shudh Vanaspati Ltd., and another 2011 (271) ELT 164 SC. The matter arose from the judgment of the Delhi High Court wherein the Delhi High Court had set aside the show cause notice issued to the company therein under the Customs Act alleging import of stainless steel containers in the guise of mild steel. In the Jain Shudh Vanaspati case (13 supra), the issue was relating to recovery of the money and does not relate to a case of err .....

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A careful reading of the Tribunal order in Re Rolling Mills case (12 supra), reveal that firstly the question involved in the said case is with regard to the time limit available for the Commissioner (Appeals) to exercise the jurisdiction under Section 35E of the Act. Secondly, the refund order granted under Section 11(A) of the Act was the one which was challenged before the Commissioner (Appeals) after lapse of time limit prescribed under Section 35E of the Act. In that context, the Tribunal .....

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t case before us and as such it has no application. Likewise, the reliance placed by the learned counsel for the respondent on Grasim Industries vs. Commissioner of Central Excise has also no application to the present case as the issue involved in the said case was whether the appellant therein can be said to be eligible for refund of the duty claimed by it in terms of Section 11B of the Central Excise and Salt Act, 1944. 21) In the said case, the appellant challenged the show cause notice issu .....

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e to claim the refund. In those facts situation the Supreme Court dismissed the appeals, where the challenge was made to the issuance of proceedings under Section 11 A of the Act. 22) Learned counsel relied on the judgment of the Ranadey Micronutrients Vs Collector Central Excise 1996 (87) ELT 19 SC for the proposition The whole objective of such circulars is to adopt a uniform practice and to inform the trade as to how a particular product will be treated for the purposes of Excise duty. It doe .....

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judgment of the Supreme Court in Re-rolling Mills Case (12 supra), which was decided based on the consensus made by the parties with respect to the Jain Shudh Vanaspati Ltd., case (13 supra). This aspect of the matter was already dealt by us supra. 23) On the other hand in Madras Rubber Factory Ltd., case (3 supra) a learned single Judge of the Madras High Court had considered the scope of erroneous refund and held as under: Para 11. The next question for consideration is whether the refund has .....

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y the petitioner and on a consideration of the contentions advanced on behalf of the petitioner came to the conclusion that the petitioner was entitled to a refund of the amount paid on the value of the tin containers as the same is not includible in the assessment of tread rubber for the purpose of excise duty. The refund was made only pursuant to the said order. Consequently, it cannot be said that refund was made erroneously. A refund in order to constitute 'erroneous refund' must hav .....

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categorically held a revision application is not maintainable. In the words of the Supreme Court Coming to the question that is raised there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filing an appeal, it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for r .....

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position cannot be countenanced. The view taken by us also gain support from the provision in sub-rule (3) of Rule 11 wherein it is laid down that where as a result of any order passed in appeal or revision under the Act, refund of any duty becomes due to any person, the proper officer, may refund the amount to such person without his having to make any claim in that behalf. The provision indicates the importance attached to an order of the appellate or revisional authority under the Act. Theref .....

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Court in Sivananda Pipe Fittings Ltd., Vs Superintendent of Central Excise, Hosur 1989 (43) ELT 115 (Tri) . In the said case the petitioner therein was granted refund by processing the application of petitioner therein under Section 11 B(1) of the Act. In appeal the appellate authority set aside the communication granting refund. A specific contention was raised that the appellate authority under Section 35A of the Act can merely decide an issue and refer a case to the adjudicating authority an .....

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e view that the submissions on behalf of the petitioner have no merit and do not merit countenance in my hands. So far as the decisions of the Apex Court referred to before me are concerned, they had no occasion to deal with or decide the issue that is relevant or raised before me in this case. The observations made were merely on the scope of Section 11-A and the necessary formalities to be observed and the conditions to be satisfied for invoking the powers under Section 11-A of the Act. The im .....

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ers of the Tribunal in Re-rolling Mills v. Collector of Central Excise (Tribunal) and Collector of Central v. Universal Radiators Ltd. (supra) would go to show that greater emphasis and effect was given by them only to Section 11-A at the expense and in derogation of Section 35-E of the Act and in utter disregard of the jurisdiction of the authority exercising powers under Section 35-E of the Act. While the orders of the Tribunal proceeded to hold that there is nothing in any part of the Act tha .....

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itself. Such an interpretation also cannot be said to be a proper or reasonable one. Para 17. On a careful analysis of the provisions contained in Sections 11-A, 35-A and 35-E it could be seen that the powers conferred are upon different authorities to be exercised in different circumstances and fact situations. Section 11-A(1) of the Act confers powers upon a Central Excise Officer, in the nature of a review or reconsideration, though the proviso confers powers under certain specified circumst .....

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lusive in their scope, extent and purport only and resort can be had to either one or more than one of such powers depending upon the exigencies of the situation and the exercise of one is not destructive of the other. 26) Finally, after analyzing various judgments of the Supreme Court, the learned single Judge held as follows: Para 21. So far as the facts and circumstances of the case are concerned, there is no dispute that the impugned order came to be passed within the six months period visua .....

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have also been substantially and effectively complied with when the procedure under Section 35-E has been followed and notices have been issued and no legitimate or real grievance whatsoever could be made by the petitioners. There is also no substance or merit in the plea that the authority exercising power under Section 35-E(4) can only set aside the order of the adjudicating authority and cannot direct refund to the State or order recovery of the amount erroneously refunded. When the very orde .....

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cidental power essential for the effective discharge of the jurisdiction under Section 35-E(4) of the Act. Otherwise, it would be a futile exercise of powers and such a construction cannot be countenanced at all by Courts and render an effective power conferred really purposeless or useless. The impugned order, therefore, does not call for any interference in these proceedings. 27) This judgment of the learned single judge was affirmed by the Division Bench in Sivanandha Pipe Fittings Ltd., case .....

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(3 supra) and the Judgment in Sivananda Pipe Fittings Ltd., case (16 supra) both single Judge and Division Bench was not brought to the notice of the Supreme Court. 28) Section 11A of the Act as amended by the Finance Act with retrospective effect may be noticed. By the time the appellate authority came to consider the appeal the amended provision came into existence. A careful reading of the amended provision sets out the scope of Section 11A of the Act. The short levy or short payment or erro .....

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sessment relating to the rate of duty on or valuation of excisable goods. The Tribunal failed to notice the statutory provision in making applicable to the present case. The Supreme Court while interpreting Section 28 of the Act, which was in pari materia to the unamended Section 11 of the Act, interpreted the word erroneously refunded as meaning The expression erroneously refunded means refunded by means of an order which is erroneously made in Geep Flashlight Industries Ltd., Vs. Union of Indi .....

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