By TIOL News Service

HYDERABAD, JUNE 20, 2016: THE appellants are engaged in manufacture of leather tanning chemicals and are registered with Central Excise Department. They filed application for refund of central excise duty on the discounts given to dealers. The original authority passed Order-in-Original sanctioning the refund for different periods.

Thereafter, show cause notices were issued to appellant proposing to recovery the sanctioned refunds. The original authority adjudicated the matter and confirmed the recovery of sanctioned refund holding that these are erroneous refunds. The appellants filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) upheld the order passed by original authority. The appellant is thus before the Tribunal.

The appellant contended that the order passed by original authority sanctioning the refund is an adjudicated order. Revenue has not filed any appeal against these orders. It is mandatory under Section 35 E of Central Excise Act, 1944 that the order passed by the adjudicating authority has to be received by a superior authority. Without review and filing of appeal, the Assistant Commissioner cannot pass an order to recover the amount which was sanctioned by passing an adjudication order.

After hearing both sides, the Tribunal held:

+ The issue that came up for consideration in the case of M/s Eveready Industries India Ltd Vs Cestat, Chennai - 2016-TIOL-676-HC-Mad-CX before the Hon'ble High Court was whether department can recover refund by invoking provisions of Section 11 A without exercising the power of review under Section 35 E and the order of refund not being reviewed by a superior officer. The Court referred to the case of Commissioner of Customs & Central Excise Vs Panyam Cements & Mineral Industries Ltd - 2015-TIOL-2127-HC-AP-CX to observe that when no appeal was filed against order under Section 11B, the department cannot take recourse to Section 11A.

+ The proposition laid in the case of M/s Eveready Industries India (P) Ltd case is squarely applicable to the case in hand, the fact and issue being identical. In view thereof, it is held that the impugned orders are not sustainable. The same are set aside.

(See 2016-TIOL-1467-CESTAT-MUM)