Erroneous refund - Order of refund u/s 11B is an adjudication order - Without review u/s 35E, refund already granted cannot be recovered u/s 11A: High Court
By TIOL News Service
CHENNAI, APR 05, 2016: THIS is an appeal by the assessee against the order of Tribunal reported in 2008-TIOL-42-CESTAT-MAD. In the impugned order, the Tribunal, by relying on the Supreme Court decision in case of M/s Jain Shudh Vanaspati 2002-TIOL-585-SC-CUS held that demand under Section 11A can be made without reviewing the order of refund under Section 35E.
Before the High Court, the appellant submitted that after having allowed the order of the Commissioner (Appeals) to attain finality and without even taking recourse to the procedure available under Section 35 E( 2), it is not open to the Department to take recourse to Section 11A.
Revenue contended that Section 11A and Section 35E are two different provisions, which operate in different fields and that wherever there is erroneous refund, the same can always be recovered by initiating proceedings under Section 11A without taking recourse to the provisions of Section 35E.
After hearing both sides, the High Court held:
+ A careful look at the scheme of Sections 11A, 11B and 35E would show that an application for refund is not to be dealt with merely as a ministerial act or an administrative act. Under Section 11B of the Act, a person, claiming refund of any duty of excise and interest already paid, should make an application in the prescribed form. The detailed procedure prescribed under Section 11B not only regulates the manner and form, in which, an application for refund is to be made, but also prescribes a period of limitation, method of adjudication as well as the manner, in which, such refund is to be made. In simple terms, Section 11B is a complete code in itself.
+ It is clear that what is required of an Assistant Commissioner or Deputy Commissioner under Sub-Section (2) of Section 11B is to adjudicate upon the claim for refund.
+ It was always open to the Principal Commissioner or the Commissioner of Central Excise to examine the order of the Adjudicating Authority namely the Assistant Commissioner in the proceedings under Section 11B and to give a direction to the Competent Authority to file an appeal against the order of refund under Section 11B, to the Commissioner of Appeals under Section 35. This was not done in this case.
+ The decision of the Supreme Court in Jain Shudh Vanaspathi Ltd., will not go to the rescue of the Department in view of the fact that there was a clear finding that the assessee got the goods cleared for home consumption under Section 47 of the Customs Act by playing a fraud upon the Department. Therefore, when an objection was taken that after clearance under Section 47, the provisions of Section 124 cannot be invoked, the Supreme Court pointed out that fraud vitiates all solemn acts. That is not the type of case that we are dealing here.
+ The very same argument now advanced by the Department to the effect that Sections 11A and 35E operate in two different independent fields was raised by them. After considering the issue elaborately and also after taking note of the decision in Asian Paints (India) Limited approved by the Supreme Court - 2002-TIOL-498-SC-CX, this Court came to the conclusion that unless procedure under Section 35E is followed, respondents cannot invoke Section 11A.
In the result, the High Court allowed the appeal.
(See 2016-TIOL-676-HC-MAD-CX)
