TMI Blog1995 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to payment of Excise Duty under the provisions of Central Excises and Salt Act, 1944. 3.The country experienced severe shortage of cement in Nineteen Eightees and government of India was keen on the manufacturers setting up new factories for increasing production of cement. The Government of India had offered various incentives and concessions to the manufacturers of cement. Relying upon the assurance given by Government of India, the Company set up second plant known as Phase-II in the Factory in July, 1982 and capacity was 10 lakh Metric Tonnes. The manufacture of cement commenced in July, 1982 in the second plant of the Company. On 29-4-1987 the Government of India in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, exempted cement falling under sub-heading No. 2502.20 of the Schedule to the Central Excise Tariff Act, from so much of duty of excise leviable thereon, as is in excess of the amount calculated at the rate of Rs. 205 per tonne. The notification required that exemption is available provided cement is manufactured in a factory, which had commenced production during the period commencing from January 1, 1982 and ending with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. The grounds set-out in the show-cause notice were - (a) Company had not obtained L4 licence for Phase-II unit till March 24, 1988, (b) that the Company had failed to produce the certificate from the Competent Authority that production in respect of Phase-II unit is not less than 30% of the annual licensed capacity of the plant, (c) that the Company had recovered the amount of duty from the customers and, therefore, the grant of refund would amount to unjust enrichment. The Company filed detailed reply in answer to the grounds set-out in the show-cause notice. The Assistant Collector by order dated June 30, 1988 came to the conclusion that the claim for refund filed by the Company is entitled to succeed, but only for the period commencing from July 15, 1987 to March 31, 1988. The Assistant Collector held that though the Company was entitled to refund for the earlier period that is, from April 29, 1987 to July 15, 1987, the same could not be awarded as the claim was barred by limitation. The order of adjudication passed by the Assistant Collector deals with every ground mentioned in the show-cause notice and holds that the claim of the Company cannot be denied. The ground of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the goods and has wilfully misstated in the claim for refund that they have paid duty. The show cause notice claims that the wilful misstatement has resulted in unjust enrichment by the Company. The show-cause notice then sets-out that initially refund was granted by order dated June 13, 1988 of a sum of Rs. 1,25,92,716/- and subsequently of a sum of Rs. 22,52,943/- making a total of Rs. 1,48,45,659/-. The Company was called upon to show-cause why the amount erroneously refunded, should not be repaid by the Company. The power to issue the show-cause notice was exercised under proviso to sub-section (1) of Section 11A of the Act, claiming that the period of limitation was 5 years from the date of refund. It would not be out of place to mention that this third show-cause notice dated December 21, 1990 was issued after the life of the exemption notification came to an end on March 31, 1990. 8.The Company challenged the issuance of third show-cause notice by filing petition under Article 226 of the constitution. The company claimed that exercise of powers to issue third show-cause notice was in contravention of the provisions of the Act. It was claimed that Collector had no j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant material particulars to the Excise Authorities in support of the claim that Phase-II unit was a separate factory entitled to avail of the benefit under the exemption notification. The Collector, Belgaum informed the Company on February 15, 1988 that Phase-II unit is entitled to the benefit of exemption notification. It is required to be stated at this juncture that before this communication, the Excise Authorities had deputed officers to visit the unit and ascertained whether the Phase-II unit was separate and distinct entity and decision was taken to give benefit of notification only on satisfaction that Phase-II unit is a separate unit. In pursuance to the decision of the Excise Authority, refund application was filed and was granted after the Assistant Collector served show-cause notice enquiring as to why refund should not be refused on diverse grounds. The Company satisfied the adjudicating authority about the validity of the claim of refund and then the order of adjudication came to be passed. The Department did not challenge the order of adjudication passed on June 13, 1988 nor any proceedings were adopted under sub-section (2) of Section 35E of the Act by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attracted to the claim for refund. The adjudicating authority had held in favour of the appellant Company and merely because, some officer in the Department did not like the decision, that cannot confer jurisdiction to issue the third show-cause notice. In our judgment, the issuance of third show-cause notice was without any jurisdiction and the exercise of powers was totally unjust and improper. 9.It cannot also be overlooked that reference was made to Proviso to sub-section (1) to issue the third show-cause notice because the Proviso enlarges the period of limitation from 6 months to 5 years in case of wilful suppression, collusion of fraud on the part of the Assessee. As mentioned hereinabove, the order of refund was passed and payment made on June 13, 1988. The exercise of powers after more than four and half years was undertaken with reference to Proviso to sub-section (1) of Section 11A by claiming that there was wilful suppression on the part of the Company in making mis-statement that Phase-II unit was an independent unit. The claim made in the show-cause notice is totally false and misleading. As mentioned hereinabove, the issue arose for adjudication in earlier two p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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