CA Urvashi Porwal
Brief of the Case
In the case of The CC&CE V/s M/s. Panyam Cements & Minerals Industries Ltd., Kurnool, it was held by Andhra Pradesh High Court that invoking Section 11A is mandatory for recovering the refund granted pursuant to the adjudication order passed under section 11B which subsequently declared as unsustainable
Brief facts
M/s. Panyam Cements and Minerals Industries Limited, Kurnool hereinafter referred to as the respondent is manufacturer of cement and clinker falling under Chapter Heading 2502.29 and 2502.10. The respondent filed a price list effective from 1.10.1975 in respect of Grey Portland cement and claimed the deduction of packing charges from the assessable value on the ground that the packing material is of durable nature and is returnable as provided. The Jurisdictional Assistant Commissioner did not accept the exclusion of packing charges from the assessable value and the price list was approved including the packing charges thereon. The respondent after receipt of the approved price list started paying duty under protest. Though the respondent paid the duty under protest, thereafter, he did not take any steps to challenge the approved price list by filing appeal questioning the inclusion of package charges from the assessable value. Thereby the duty payable came to be crystallized as approved by the Assistant Commissioner.
On 7.5.1985, the respondent filed the refund claiming the said amount has been paid as excise duty on packing charges during the period 1.10.1975 to 8.1.1976 on the ground the packing material i.e. gunny bags are of durable nature and is returnable within the meaning of Section 4(4) (d) (1) of the Act and thus the value is deductible from assessable value. By issuing show-cause notice dated 17.8.1986 and after considering the objections filed by the
Respondent, adjudication order was passed on 19.08.1986 granting the refund. Thereafter, the department filed an appeal against the adjudication order and the Commissioner had set aside the same on 29.10.1987. In the interregnum period pursuant to the refund order granted by the Assistant Commissioner amounts were refunded to the respondent. The respondent questioned the order dated 29.10.1987 by filing Appeal No.1022 of 1996 before the CEGAT, South Zonal Bench at Madras. The said appeal was allowed on 7.8.1996 directing the Appellate Commissioner to consider the appeal denovo. Thereafter, once again the Appellate Commissioner vide its order dated 4.2.2002 in Appeal No.66/97(H)(D)CE allowed the appeal by setting aside the order in original dated 19.09.1986 holding that the respondent was not entitled to refund. Further a direction was issued to pay back the said amount. The respondent once again filed the appeal before the CEGAT and the same came to be numbered as Appeal No.E/550/2002. The CEGAT while confirming the order dated 4.2.2002 held that the respondent was not entitled to claim refund of the amounts paid during 1.10.1975 to 8.1.1976. However, held that the said amounts were not recoverable from the respondent on the ground that no proceedings were issued under Section11A of the Act. In the above set of facts, the department is in appeal
Contentions of the Assessee
The Assessee contended that the Tribunal has erred in holding that the independent proceedings under Section 11A of the Act are required to be initiated for recovering the sum of money which has been refunded to the respondent in the process of adjudicating claim under Section 11B of the Act inspite of the fact that on merits the Tribunal had found that the respondent was not entitled to such refund. The assessee further submitted that in the set of facts, the department is not seeking to recover erroneously refunded duty amount but was seeking to recover the duty amount refunded on account of the adjudication order passed on 19.9.1986 which order came to be set aside in the appeal proceedings. In other words, the recovery was sought to be made by way of restitution and putting back the parties in the same position before passing the adjudication order. The very refund claim was not maintainable and the same could not have been entertained by the Assistant Commissioner after a long lapse of time and thus the alleged exercise of power by the Assistant Commissioner under Section11B of the Act was itself erroneous and the said aspect stands confirmed by the orders of the appellate authorities which orders have become final. Thus holding the respondent was never entitled for refund of the alleged excise duty amount paid.
Inasmuch as the very adjudication order holding that the respondent was not entitled to refund of the amount came to be set aside and the amount is recoverable from the respondent and the provisions of Section 11A have no application in such situations. The appellant submitted that the circular dated 22.9.1998 of the C.B.E.C relied by the Tribunal is erroneous and the said circular has no application to the facts of the case.
Contentions of the Revenue
The Revenue relied on the following judgments:-
a) CCE vs. Ratan Melting and Wire Industries
