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TMI Blog2023 (7) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... has established its unit at SIDCO Industries Complex, Samba. The respondent is registered for the manufacture of aforesaid products under Tariff Heading Nos. 38089330, 38089990, 38089090 & 38089340 respectively of the 1st Schedule to the Central Excise Tariff Act, 1985 ['the Act of 1985']. The respondent being eligible had been availing exemption/refund of excise duty under Notification No. 56/2002-CE dated 14.11.2002 as amended ['the exemption notification']. The respondent filed monthly claims of exemption for the period from 2005-06 to 2008-09 which was duly sanctioned by the appellant in favour of the respondent by passing separate orders for each month. The orders passed by the appellant for exemption/refund under the exemption notification were not assailed by the appellant-revenue and instead, the sanctioned amount was released in favour of the respondent. It seems that, during some investigation, the appellant noticed that, during the relevant period, the respondent had cleared the products Paushak/Joy and Kri-kelp on payment of duty by classifying the same under sub-heading 3808 9340 and claimed the benefit of exemption notification. It was found by the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant herein was, thus, time barred; and, (ii) That the Revenue had not challenge the appealable orders sanctioning refund to the respondent herein before CESTAT and, therefore, those orders had attained finality. The demand could not have been raised under Section 11A of the Act without challenging the appealable orders. 4. The revenue did not accept the final order passed by the CESTAT accepting the appeal of the respondent and is, therefore, in appeal before us in terms of Section 35 G of the Act. 5. This Court vide its order dated 16.04.2019, after hearing both the sides, framed the following substantial question of law for determination in this appeal: "Whether the erroneous refund which was sanctioned under Notification No. 56 of 2002-CE can be recovered under Section 11A of the Central Excise Act, 1944 by invocation of extended period of limitation, where the refund was granted on the basis of any approval, acceptance and assessment relating to the rate of duty ? 6. Heard learned counsel for the parties and perused the material on record. 7. Mr. Jagpaul Singh, learned counsel appearing for the appellant-revenue vehemently submits that the respondent through its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the provisions of Section 11A were not invocable. His further argument is that the orders sanctioning refund passed by the Revenue were indisputably appealable under Section 35 of the Act. The revenue did not file appeals and accepted the orders passed by the Assessing Authority and sanctioned the refund by passing separate orders for each month. He submits that, unless the orders sanctioning refund are reviewed or recalled, the same should be deemed to have attained finality. The refund sanctioned under such final orders cannot be termed as 'erroneous' and made subject matter of recovery by having resort to Section 11A of the Act. 9. To buttress his submissions, learned counsel relies upon a judgment of Gauhati High Court in the case of Commissioner of Central Excise Shillong vs. Jellalpore Tea Estate, 2011 (268) ELT 14 (Gau). Learned counsel goes a step further and submits that Section 11A of the Act can be invoked in the case of 'erroneous refund' and, therefore, for invoking Section 11A, the revenue is required to demonstratively show that the refund sanctioned in favour of the respondent was actually an erroneous refund. He contends that the refund duly sanctioned by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the notice- Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty by such person or his agent, the provisions of this sub section shall have effect Explanation: where the service of the notice is stayed by an order of a Court the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be. (1A) when any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to sub section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under section 11AB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods on which duty of excise has been erroneously refunded, the date of such refund" 12. From a reading of Section 11A of the Act, it clearly transpires that when any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer, may within six months from the relevant date, serve a notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made to show why he should not be asked to pay the amount specified in the notice. Indisputably, in the instant case, the period of six months from the relevant date has since expired. To put it more clearly, the expression 'relevant date" is defined under sub-section 3 (ii) of Section 11A of the Act. Neither side has disputed that the limitation, provided for issuance of show cause notice in terms of sub-section 1 of section 11 A of the Act had expired much prior to the issuance of show cause notice to the respondent. The revenue, however, has relied upon the proviso appended to sub-section (1) of Section 11A of the Act which provides for extended period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibbereillic acid as dominant ingredient, is a question of fact which cannot be gone into by this Court hearing an appeal on a substantial question of law. Be that as it may, even if we were to assume that the revenue had erroneously made the refund of the excise duty in favour of the respondent, yet the period of limitation for issuing show cause notice in terms of sub-section (1) of section 11A of the Act, had since expired and, therefore, the entire process had become time barred. As already explained, the extended period of limitation as provided under provision to sub -section (1) of Section 11A was not invocable for the simple reason that the twin factors which are sine quo non for invoking the proviso were missing in the instant case. We are not convinced with the argument of Mr. Jagpaul Singh that not only the respondent had misstated/suppressed the facts with regard to the classification of the product in question, but had done so with an intent to evade payment of excise duty. 15. That apart, we are also in agreement with CESTAT that, once the excise duty in favour of assessee is sanctioned by the competent authority after passing a speaking order and which order is appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words one year, the words "five years" were substituted. A bare reading of Section 11A of the Act indicates that power can be exercised only if duty has not been levied or paid or has been short-levied etc. "on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Central Excise, Meerut, 2005 (188) ELT 149 (SC) wherein the Apex Court, after considering the provisions of Section 11A of the Act in para 27 held thus: "27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. Vs. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to section 11A of the Act. We are, therefore, of the firm opinion that where facts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the revenue may invoke Section 35E of the Act and direct the concerned Authority to take an appropriate remedy against such order sanctioning erroneous refund, if any, in favour of the assessee. 21. For the foregoing reasons, we find no illegality or infirmity in the final order passed by the CESTAT Chandigarh impugned in this appeal and, therefore, uphold the same. The substantial question of law framed by this Court vide order dated 16.04.20119 reproduced above is replied in the following manner: The refund of excise duty claimed by an assessee and sanctioned by the competent Authority vide its order under Notification No. 56 of 2002-CE which order has attained finality as not having been challenged before any appellate or revisional authority under the Excise Act cannot be termed as 'erroneous refund' and recovered by resort to section 11A of the Act. The extended period of limitation as provided under proviso to sub section (1) of Section 11A would be attracted only in a case where the refund made in favour of the assessee is erroneous by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any provisions of the act and t ..... 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