Adjudicating Authority cannot reassess/ re-quantify amount of duty that is to be refunded as per Appellate order without challenging the same

Samtel Color Ltd. (Assessee) is engaged in manufacturing colour picture tubes falling under Heading No.40.11 of the Central Excise Tariff Act, 1985. Some of the picture tubes were found to be defective at the customer’s end and accordingly were returned to the manufacturer for reconditioning/reprocessing under Rule 173L of the erstwhile Central Excise Rules, 1944 (Excise Rules). Accordingly, the Assessee filed a declaration in Form-D3 with regard to the receipt of the defective colour picture tubes and after reprocessing/ reconditioning, the Assessee cleared the reprocessed goods upon payment of duty and, subsequently, claimed refund of duty paid under Rule 173L of the Excise Rules.

The Adjudicating Authority passed an order rejecting the refund claim. Being aggrieved, the Assessee filed an appeal before the Commissioner (Appeals) where the refund claim was allowed to the Assessee. On the basis of the appellate order, the Assessee filed an application for refund. However, the Adjudicating Authority while granting refund,reduced the amount by Rs.27,003/- on the ground that the refund claim was partly barred by time, which was further upheld by the Commissioner (Appeals). Being aggrieved, the Assessee filed an appeal before the Hon’ble Tribunal, where the order of the Adjudicating Authority as well as the Appellate order was set aside. Thereafter, the Department, being aggrieved, preferred an appeal before the Hon’ble High Court of Allahabad.

The Hon’ble High Court of Allahabad held that since in first round, the Appellate Authority held that the Assessee was entitled for refund, it was not open to the Adjudicating Authority to reassess or re-quantify amount of duty that was to be refunded in second round. It was further held that since earlier Appellate order had become final, it was not open to the Adjudicating Authority to digress from that order and pass a fresh order denying refund. Hence, refund was allowed to the Assessee.

The Hon’ble High Court further allowed interest on delayed refund under Section 11BB of the Central Excise Act, 1944 holding that interest becomes payable on expiry of 3 months from date of receipt of application for refund.