Central Excise Act: Once Order Sanctioning Refund Is Set Aside & Proceedings Initiated, No Question Of Further Notice Arises- SC
The Supreme Court has held that once the order sanctioning the refund is set aside in a proceeding under Section 35E of the Central Excise Act, 1944, and the proceedings were initiated within the prescribed time, there is no question of any further notice under Section 11A of the said Act.
The two-Judge Bench of Justice M.R. Shah and Justice Krishna Murari observed, “… once the order in original sanctioning the refund came to be set aside in a proceeding under Section 35E of the Act and the proceedings under Section 35E was initiated within the time prescribed under Section 35E of the Act, thereafter there is no question of any further notice under Section 11A of the Central Excise Act as observed by the Tribunal affirmed by the High Court on quashing and setting aside the order in original sanctioning the refund in exercise of powers under Section 35E of the Act which otherwise is prescribed under the Act within the time stipulated under Section 35E of the Act, thereafter necessary consequence shall follow and thereafter there is no question of any refund pursuant to order in original.”
The Bench also referred to the cases of Collector of Central Excise, Bhubaneshwar v. Re-Rolling Mills 1997 (94) ELT and Asian Paints (India) Ltd. vs. CCE, Bombay 2002 (142) ELT-522 (SC).
ASG Aishwarya Bhati and Advocate Ameyavikrama Thanvi appeared on behalf of the appellant while Senior Advocate V. Sridharan appeared on behalf of the respondent.
Brief Facts -
Aggrieved with the judgment passed by the Bombay High Court by which it dismissed an appeal preferred by the Revenue and affirmed the judgment passed by the Appellate Tribunal. The Appellate Tribunal had held that the show cause notice under Section 11A of the Central Excise Act is required to be issued in case of an erroneous refund of the duty.
The respondent was a manufacturer of cotton yarn. The questions posed for consideration before the Apex Court were whether a Notice under Section 11A of the Act is necessary for the recovery of the amount when the refund granted is reviewed under Section 35E, and whether a separate notice under Section 11A is to be issued within the time limit prescribed under Section 11A and before the proceedings under Section 35E are initiated and/or the notice under Section 11A shall precede the proceedings under Section 35E.
The Supreme Court while considering the aforesaid questions asserted, “Now so far as the submissions made on behalf of the Assessee relying upon the decisions of the Tribunal in the 18 case of Re-Rolling Mills (supra) and Bajaj Auto Ltd (supra) that for refund of the duty a separate show cause notice under Section 11A of the Act is reviewed and that too within the time limit prescribed under Section 11A and that as such notice under Section 11A must precede within the time limit prescribed under Section 11A before the notice under Section 35E of the Act is concerned, as such the aforesaid issue is now not res integra in view of the direct decision of this Court in the case of Asian Paints (India) Ltd. (supra).”
The Court, therefore, restored the order passed by the Commissioner (Appeals), allowed the appeal, and quashed and set aside the impugned judgment of the High Court.
Cause Title- Commissioner Of Central Excise, Mumbai - 1 v. M/s. Morarjee Gokuldas SPG. & WVG. Co. Ltd.
