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WRIT TAX No. - 147 of 2018

AFR

Reserved On 18.10.2019

Delivered on 17.12.2019

Court No. - 35

Case :- WRIT TAX No. - 147 of 2018

Petitioner :- M/S Honda Siel Power Products

Respondent :- Union Of India Through Secy. And Another

Counsel for Petitioner :- Nishant Mishra,Tarun Gulati,Vinayak Mathur

Counsel for Respondent :- A.S.G.I.,Anant Kumar Tiwari,B.K.Singh Raghuvanshi

Hon'ble Bharati Sapru,J.

Hon'ble Rohit Ranjan Agarwal,J.

(Delivered by Hon'ble Rohit Ranjan Agarwal,J.)

1.Heard Sri Tarun Gulati, learned Senior Counsel assisted

by Sri Vipin Upadhyay and Sri Nishant Mishra, learned counsel

for the petitioner, Sri B.K.S. Raghuvanshi and Sri Anant Kumar

Tiwari, learned counsel for the respondents-department.

2.Present petition has been filed seeking a writ of certiorari

for quashing show-cause notice dated 17.08.2017 and order

dated 30.11.2017, and also for writ of mandamus restraining

respondents from enforcing demands in respect of repayment

of refund received by petitioner.

3.Facts in brief are that petitioner is a Company

incorporated under the Companies Act, 1956 and is engaged

in manufacture of portable gensets and IC engine falling under

Chapter Heading No. 85 and 84 of First Schedule to Central

Excise Tariff Act, 1985.

4.Dispute relates to period 2014-15. According to petitioner,

it applied for provisional assessment of excise duty under Rule

7 of Central Excise Rules, 2002 (hereinafter called as “Rules”)

on 01.04.2014. The Excise Commissioner, Central Excise,

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Division II accepted the request of petitioner for provisional

assessment and intimated the same on 31.07.2014. The said

correspondence is on record as Annexure-5. Petitioner-

Company, thereafter, filed an application for finalisation of

provisional assessment on 19.06.2015.

5.Provisional assessment was finalised for period 2014-15

by Assistant Commissioner on 24.07.2015, copy of said order

is on record as Annexure-8. According to provisional

assessment order, an amount of Rs.17,89,42,303/- was

passed on to customer and excise duty deposited to the tune

of Rs.1,02,75,633/- was in excess. Assistant Commissioner

further held after examining certificate submitted by CA of

petitioner-Company that principle of unjust enrichment was not

applicable to facts of the case. Order of provisional

assessment became final as the department did not prefer any

appeal as contemplated under Section 35E read with Section

35 of Central Excise Act, 1944 ( for short “Excise Act”).

6.After finalisation of provisional assessment, petitioner-

Company applied for refund. Again after adjudication of refund,

on 05.11.2015 refund claim was sanctioned under Section 11B

of Excise Act. The adjudication of refund order also took note

of the fact that unjust enrichment did not apply to facts of the

case. This order was also appealable under Section 35E read

with Section 35 of Excise Act but no appeal was preferred by

department and it attained finality.

7.In one of the matters CCE, Madras vs. Addison and

Company, (2016) 10 SCC 56 , the Apex Court held that

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principle of unjust enrichment applied in a case where

manufacturer had failed to establish that burden of duties had

not been passed on to the ultimate buyer. On the basis of said

judgment, respondent no. 2 issued show-cause notice to

petitioner-Company on 17.08.2017, that is after more than two

years, asking why amount of Rs.1,02,75,633/- which was

erroneously refunded, should not be recovered and credited to

the Consumer Welfare Fund. Reply was filed by petitioner-

Company on 09.10.2017 and written submission were

submitted on 30.10.2017, taking specific objection that

proceedings seeking to reopen concluded proceedings on the

basis of unconnected and subsequent Supreme Court

judgment was without jurisdiction and ought to be dropped.

8.Respondent no. 2 on 30.11.2017 held the petitioner liable

for refund of the amount being unjust enrichment, since

petitioner was not able to prove that burden of duty was not

passed on by dealers/ distributors to their customers.

9.Counsel for the petitioner submitted that revenue did not

file any appeal against finalisation of provisional assessment

order dated 24.07.2015 wherein it was held that unjust

enrichment is inapplicable. Further, no appeal was preferred

against order dated 05.11.2015, whereby refund of excess

excise duty was paid to petitioner, and thus, it attained finality.

It is contended that by issuing show-cause notice dated

17.08.2017 seeking to reopen the proceedings and, thereafter,

by passing order impugned dated 30.11.2017, the respondent

authorities had committed gross illegality to question the

correctness of earlier orders which had become final. Reliance

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WRIT TAX No. - 147 of 2018

placed by department on the decision of the Apex Court in

case of Union of India vs. Jain Shudh Vanaspati, 1996 (86)

ELT 460 (SC) cannot be applied in the present case, as said

case relates to fraud which is not alleged in the present case.

It is further contended that Section 35E of Excise Act provides

that power of review is available with the Commissioner under

which it can be directed that an appeal against any order be

filed by department. As orders dated 24.07.2015 and

05.11.2015 whereby provisional orders were finalised and

refund was granted, also qualifies as order passed under the

Act, and respondents were entitled to file an appeal against

such orders. In absence of any appeal, these orders attained

finality and cannot be reopened by starting collateral

proceedings by issuance of show-cause notice under Section

11A of Excise Act, as provisions of Section 11A applies inter

alia in case when there is a grant of “erroneous refund”, while

in the present case refund was granted in accordance with

orders passed which attained finality and cannot be termed as

erroneous to invoke Section 11A.

10.Reliance has been placed upon a judgment of Madras

High Court in case of Eveready Industries Ltd. vs. Cestat,

Chennai 2016 337 ELT 189 (Mad. HC), wherein it has been

held that once refund is allowed, then parallel proceedings by

way of issuance of show-cause notice under Section 11A of

the Act can not be initiated. Relevant Paras 48 and 49 are

extracted hereasunder:-

“48. In other words, two valuable rights, one in the

form of right of appeal and another in the form of order

of refund, are now sought to be taken away indirectly

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by taking recourse to Section 11A. What cannot be

done directly cannot be done indirectly also.

49. In so far as the decision of the Andhra Pradesh

High Court is concerned, one observation made in

paragraph 16 of the said decision is of prime

importance. In paragraph 16, the Andhra Pradesh High

Court has made it clear, after analysing Sections 11A

and 11B that there is an adjudication process involved

in the processing of applications made under Sections

11A and 11B. The Andhra Pradesh High Court held

that orders passed under Sections 11A and 11B are

appealable. Therefore, the decision of the Andhra

Pradesh High Court, especially the observation in

paragraph 16, should be made use of by the assessee

to contend that since there was no appeal against the

order under Section 11B, the Department cannot take

recourse to Section 11A.”

11.In case of CCE and C, Tirupati vs. Panyam Cements

and Minerals Industries Ltd. 2016 (331) ELT 206 (AP), the

Andhra Pradesh High Court took a view that once the

department failed to file an appeal, it would be incorrect to

start collateral proceedings by issuance of show-cause notice

under Section 11A of the Excise Act.

12.Apex Court in case of Mafatlal Industries Ltd. Vs.

Union of India 1979 (89) ELT 247 (SC), while dealing with a

situation where a manufacturer pays a duty unquestioningly

and his remedy of appeal fails, then after the order becoming

final after a lapse of sufficient period, on basis of decision

rendered by a High Court or Supreme Court challenges the

same on the ground that duty was not payable or was payable

at a lesser rate, it was held that manufacturer was not entitled

to claim any refund as the adjudication order had become

final. In case in hand assessment order as well as refund order

having become final, revenue cannot restart the matter by

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issuing show-cause notice exercising power under Section 11A

of the Act.

13.The second point canvassed by counsel for petitioner is

that show-cause notice dated 17.08.2017 was issued after

more than two years from finalisation of assessment order

dated 24.07.2015 and is barred by limitation. Show-cause

notice has been treated from the date of refund order dated

05.11.2015, which is a consequential order after finalisation of

assessment, thus, show-cause notice is beyond two years and

is barred by limitation. Reliance has been placed upon a

decision of the Apex Court in case of CTO v. Binani Cements

(2014) 8 SCC 319, wherein it has been held that a specific

provision relating to a specific and defined subject would

prevail over a general provision relating to a broad subject.

14.Sri Gulati further submitted that issuance of show-cause

notice by respondent was based on mere change of opinion

on the very same facts, only on account of a subsequent

decision of Apex Court, which is not applicable in the present

case. Issuance of notice under Section 11A amounted to

reassessment as held in case of Shahnaaz Ayurvedics vs.

CCE, Noida 2004 (173) ELT 337 (All. HC).

15.On question of reassessment, on basis of subsequent

decision, reliance has been placed on a decision of Apex

Court in case of CIT vs. Simplex Concrete Piles (2013) 11

SCC 373, and also on a Division Bench of this Court in case of

Samsung India Electronics Pvt. Ltd. vs. State of U.P. and

others, (2016) SCC Online All. 1539 wherein it was held that

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WRIT TAX No. - 147 of 2018

subsequent judgment cannot be used to reopen assessment

or disturb past assessments. Relevant Para 11 is extracted

hereasunder:-

“11. Further, a subsequent judgment cannot be used to

reopen assessments or disturb past assessments

which have been concluded. [See Para 7, Austin

Engineering v. JCIT (2009) 312 ITR 70 (Guj.) Para 4

and 5, Bear Shoes 2011 (331) ITR 435 (Mad.), B.J.

Services Co. Middle East Ltd. v. Deputy Director

(2011) 339 ITR 169 (Uttarakhand), Sesa Goa v. JCIT

2007 (294) ITR 101 (Bom.), Geo Miller and Co. 2004

(134) Taxman 552 (Cal)]. Reliance is also placed on

the decision of the Hon'ble Supreme Court in MEPCO

Industries v. CIT, (2010) 1 SCC 434, where the CIT on

the basis of a subsequent decision of the Supreme

Court sought to rectify his earlier order. The Hon'ble

Court held that this would amount to a change of

opinion.”

16.Reliance has also been placed on the decision in case of

CIT vs. Bhanji Lavji (1972) 4 SCC 88, Arun Gupta vs.

Union of India (2015) 371 ITR 394 (All. HC) (Para 14, 20),

Calcutta Discount Company Ltd. vs. ITO AIR 1961 SC 372

and Jeans Knit Pvt. Ltd. vs. DCIT Bangalore 2016 SCC

Online 1536 wherein the Courts have held that no

reassessment can be made once the proceedings are

concluded, merely on the basis of change of opinion.

17.Counsel for the petitioner distinguishing the case of

Addison and Company (supra) relied upon the department

while issuing show-cause notice, submitted that the said case

is distinguishable on facts. As Hon'ble Apex Court interpreted

clause (e) of Proviso to Section 11B and not Clause (d). As in

that case no CA certificate was presented by assessee

evidencing that incidence of duty lied with assessee, no

commercial invoices were issued by applicant to its customers

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WRIT TAX No. - 147 of 2018

on which no excise duty was mentioned. While reading

Section 11B(2), it is clear that where manufacturer has applied

for refund of excise duty, clause (d) of Proviso to Section

11B(2) states that (i) the duty of excise should have been paid

by the manufacturer and (ii) such incidence of duty must not

have been passed on to any other person. In the present case,

it is not in dispute that incidence of excise duty which was

initially passed on to dealer was borne by petitioner on

issuance of credit notes and discounts on invoices. The

Commissioner on the basis of such credit notes and invoices

had held petitioner to have paid excess excise duty, thus, the

law laid down by Apex Court in case of Addison and

Company (supra) was not applicable in the present case.

18.Stress was also laid upon the fact that Civil Appeal No.

8488 of 2009 decided along with case of Addison and

Company (supra) where credit notes were issued regarding

return of excise duty paid and CA certificate was produced,

the Apex Court dismissed the appeal of the revenue and

allowed refund to assessee. Relevant Paras 38 and 39 are

quoted hereasunder:-

“38. The respondent-Assessee is a 100 per cent

export-oriented unit (EOU) manufacturing cotton yarn.

The respondent filed an application for refund of an

amount of Rs. 2,00,827/- on 14.08.2002 on the ground

that it had paid excess excise duty @ 18.11 % instead

of 9.20 %. The Assessee initially passed on the duty

incidence to its customers. Later the Assessee

returned the excess duty amount to its buyers which

was evidenced by a certificate issued by the Chartered

Accountant on 02.08.2002. The refund claim was

rejected by the Deputy Commissioner of Central

Excise, Kolhapur Division vide an order dated

24.09.2002 on the ground that the Assessee did not

submit either the credit notes or the Chartered

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Accountant’s certificate at the time of filing the refund

application. Not satisfied with the genuineness of the

documents, the Deputy Commissioner rejected the

refund claim. The Commissioner (Appeals) Central

Excise, Pune allowed the appeal filed by the Assessee

by taking note of the certificate issued by the

Chartered Accountant and the credit notes dated

29.07.2002. The Appellate Authority accepted the

Assessee’s contentions and held that there was no

reason to doubt the genuineness of the documents

produced. The Appellate Authority allowed the appeal

of the Assessee and the said order was confirmed by

the Central Excise and Service Tax Appellate Tribunal

vide judgment and order dated 06.10.2005. The said

order of Central Excise and Service Tax Appellate

Tribunal was further confirmed by the High Court of

Judicature at Bombay in Central Excise Appeal No.

100 of 2008 filed by the Revenue. The Revenue has

filed the above Civil Appeal challenging the validity of

the judgment of the High Court in CCE v. Eurotex

Industries and Exports Ltd, reported in 2008 SCC

OnLine Bom 1578.

39. Except for a factual dispute about the genuineness

of the certificate issued by the Chartered Accountant

and the credit notes raised by the Assessee regarding

the return of the excess duty paid by the Assessee,

there is no dispute in this case of the duty being

passed on to any other person by the buyer. As it is

clear that the Assessee has borne the burden of duty,

it cannot be said that it is not entitled for the refund of

the excess duty paid. In view of the facts of this case

being different from Civil Appeal No. 7906 of 2002, the

appeal preferred by the Revenue is dismissed.”

19.In the present case, CA certificate dated 15.06.2015 was

submitted to substantiate that burden of duty initially passed

on to dealers/ distributors was assumed back by petitioner

after credit notes were issued.

20.As to the maintainability of writ petition, Sri Gulati

submitted that the Apex Court in State of Punjab vs.

Bhatinda District Cooperative Milk Producers Union

(2007) 11 SCC 363 had held that question of limitation being a

question of jurisdiction, a writ petition under Article 226 of the

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WRIT TAX No. - 147 of 2018

Constitution is maintainable. He also relied upon decision of

this Court in case of Samsung India Electronics Pvt. Ltd.

(supra) wherein it has been held that writ petition is

maintainable when reassessment proceedings are initiated on

the basis of mere change of opinion.

21.It was lastly contended that no burden of excise duty was

passed in respect of cash discount and mega discount is

concerned to the dealers/ distributors. Perusal of invoices

issued by petitioner reveals that in case of cash discount and

mega discount, the discounts are passed on to dealers

through invoices issued at the time of sale of products, thus,

amount paid by dealers to petitioner is the discounted prices

and incidence of excise duty on such discount remained with

petitioner alone and is never shifted to dealer.

22.Per contra, Sri B.K.Singh Raghuvanshi, learned counsel

appearing for the department submitted that order impugned

dated 30.11.2017 is appealable before Commissioner

(Appeals) in terms of Section 35 of the Act, as there is an

alternative remedy available to the petitioner. He has relied

upon a decision of the Apex Court in case of Union of India

vs. Rubber Products Ltd. 2015 (326) ELT 232 (SC).

23.He further submitted that excise duty is subsumed in the

prices and not charged separately from customer, when price

charged from customer includes excise duty and discounts are

provided to the dealers by way of credit notes, then it is not

clear how the duty element included in the discount granted by

way of credit note is passed on to customers after sale.

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24.It was also contended that Section 11A of the Act

provides for recovery of excise duty refunded erroneously. The

show-cause notice was issued in the background of judgment

of Apex Court in the case of Addison and Company (supra).

According to him, there is no pre-condition under Act to review

of the refund order before initiating recovery proceedings, as

Act nowhere bars such recovery proceedings without review of

refund order.

25.Sri Raghuvanshi also relied upon judgment of Apex Court

in case of Jain Shudh Vanaspati (supra) wherein it has been

held that show-cause notice issued under Section 28 of

Customs Act, could be issued for demand of duty without

revising order passed under Section 47 in terms of Section

130 of Customs Act. Reliance has also been placed upon a

decision of Apex Court in case of CCE Bhuvenshwar vs. Re-

Rolling Mills (1997) 94 ELT 8 (SC) wherein it has been held

that Section 11A was parimateria with Section 28 of Customs

Act.

26.Learned counsel for department laid stress that show-

cause notice as well as the order dated 30.11.2017 are not in

nature of reassessment as they do not affect or change the

quantum of excise duty assessed and refunded to petitioner,

but has been issued only for transfer/ credit to the Consumer

Welfare Fund after recovering the same from petitioner to

whom it has been erroneously refunded.

27.We have heard counsel for the parties and perused the

material on record. Before proceeding to decide the issue in

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hand, it would be necessary to have a cursory glance at

relevant provisions of Central Excise Act, 1944. Relevant

portion of Sections 11A and Sections 11B, 12B, 35E and 35

are extracted hereasunder:-

“Section 11A. Recovery of duties not levied or

not paid or short-levied or short-paid or

erroneously refunded.-

(1) Where any duty of excise has not been levied or

paid or has been short-levied or short-paid or

erroneously refunded, for any reason, other than the

reason of fraud or collusion or any wilful mis-statement

or suppression of facts or contravention of any of the

provisions of this Act or of the rules made thereunder

with intent to evade payment of duty,

(a) the Central Excise Officer shall, within [two years]

from the relevant date, serve notice on the person

chargeable with the duty which has not been so levied

or paid or which has been so short-levied or short-paid

or to whom the refund has erroneously been made,

requiring him to show cause why he should not pay

the amount specified in the notice;

(b) the person chargeable with duty may, before

service of notice under clause (a), pay on the basis of,

(i) his own ascertainment of such duty; or

(ii) the duty ascertained by the Central Excise Officer,

the amount of duty along with interest payable thereon

under section 11AA.

….....

Explanation 1. — For the purposes of this section and

section 11AC,—

(a) “refund” includes rebate of duty of excise on

excisable goods exported out of India or on excisable

materials used in the manufacture of goods which are

exported out of India;

(b) “relevant date” means,-

(i) in the case of excisable goods on which duty

of excise has not been levied or paid or has

been short-levied or short-paid, and no

periodical return as required by the provisions of

this Act has been filed, the last date on which

such return is required to be filed under this Act

and the rules made thereunder;

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(ii) in the case of excisable goods on which duty

of excise has not been levied or paid or has

been short-levied or short-paid and the return

has been filed, the date on which such return

has been filed;

(iii) in any other case, the date on which duty of

excise is required to be paid under this Act or the

rules made thereunder;

(iv) in a case where duty of excise is

provisionally assessed under this Act or the rules

made thereunder, the date of adjustment of duty

after the final assessment thereof;

(v) in the case of excisable goods on which duty

of excise has been erroneously refunded, the

date of such refund;

(vi) in the case where only interest is to be

recovered, the date of payment of duty to which

such interest relates.

Section 11B. Claim for refund of [duty and

interest, if any, paid on such duty.-

(1) Any person claiming refund of any [duty of excise

and interest, if any, paid on such duty] may make an

application for refund of such [duty and interest, if any,

paid on such duty] to the [Assistant Commissioner of

Central Excise or Deputy Commissioner of Central

Excise] before the expiry of [one year] [from the

relevant date] [[in such form and manner] as may be

prescribed and the application shall be accompanied

by such documentary or other evidence (including the

documents referred to in section 12A) as the applicant

may furnish to establish that the amount of [duty of

excise and interest, if any, paid on such duty] in

relation to which such refund is claimed was collected

from, or paid by, him and the incidence of such [duty

and interest, if any, paid on such duty] had not been

passed on by him to any other person:

Provided that where an application for refund has

been made before the commencement of the Central

Excises and Customs Laws (Amendment) Act, 1991,

such application shall be deemed to have been made

under this sub-section as amended by the said Act

and the same shall be dealt with in accordance with

the provisions of sub-section (2) substituted by that

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Act :

Provided further that the limitation of [one year] shall

not apply where any [duty and interest, if any, paid on

such duty] has been paid under protest.

(2) If, on receipt of any such application, the [Assistant

Commissioner of Central Excise or Deputy

Commissioner of Central Excise] is satisfied that the

whole or any part of the [duty of excise and interest, if

any, paid on such duty] paid by the applicant is

refundable, he may make an order accordingly and

the amount so determined shall be credited to the

Fund :

Provided that the amount of [duty of excise and

interest, if any, paid on such duty] as determined by

the [Assistant Commissioner of Central Excise or

Deputy Commissioner of Central Excise] under the

foregoing provisions of this sub-section shall,

instead of being credited to the Fund, be paid to the

applicant, if such amount is relatable to -

(a)  rebate of duty of excise on excisable goods

exported out of India or on excisable materials used in

the manufacture of goods which are exported out of

India;

(b) unspent advance deposits lying in balance in the

applicant’s account current maintained with the

[Principal Commissioner of Central Excise or

Commissioner of Central Excise];

(c) refund of credit of duty paid on excisable goods

used as inputs in accordance with the rules made, or

any notification issued, under this Act;

(d) the [duty of excise and interest, if any, paid

on such duty] paid by the manufacturer, if he had

not passed on the incidence of such [duty and

interest, if any, paid on such duty] to any other

person;

(e) the [duty of excise and interest, if any, paid on

such duty] borne by the buyer, if he had not

passed on the incidence of such [duty and

interest, if any, paid on such duty] to any other

person;

(f) the [duty of excise and interest, if any, paid on

such duty] borne by any other such class of applicants

as the Central Government may, by notification in the

Official Gazette, specify:

Section 12B. Presumption that the incidence of

duty has been passed on to the buyer. -

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Every person who has paid the duty of excise on any

goods under this Act shall, unless the contrary is

proved by him, be deemed to have passed on the full

incidence of such duty to the buyer of such goods.

Section 35. Appeals to [Commissioner

(Appeals)]. — (1) Any person aggrieved by any

decision or order passed under this Act by a Central

Excise Officer, lower in rank than a [Principal

Commissioner of Central Excise or Commissioner of

Central Excise], may appeal to the [Commissioner of

Central Excise (Appeals)] [hereafter in this Chapter

referred to as the [Commissioner (Appeals)]] [within

sixty days] from the date of the communication to him

of such decision or order :

[Provided that the Commissioner (Appeals) may, if he

is satisfied that the appellant was prevented by

sufficient cause from presenting the appeal within the

aforesaid period of sixty days, allow it to be presented

within a further period of thirty days.]

[(1A) The Commissioner (Appeals) may, if sufficient

cause is shown at any stage of hearing of an appeal,

grant time, from time to time, to the parties or any of

them and adjourn the hearing of the appeal for

reasons to be recorded in writing :

Provided that no such adjournment shall be granted

more than three times to a party during hearing of the

appeal.]

(2) Every appeal under this section shall be in the

prescribed form and shall be verified in the prescribed

manner.

Section 35E. Powers of [Committee of Chief

Commissioners of Central Excise] or [Principal

Commissioner of Central Excise or Commissioner

of Central Excise] to pass certain orders-

(1) The Committee of Chief Commissioners of Central

Excise may, of its own motion, call for and examine

the record of any proceeding in which a Principal

Commissioner of Central Excise or Commissioner of

Central Excise as an adjudicating authority has

passed any decision or order under this Act for the

purpose of satisfying itself as to the legality or

propriety of any such decision or order and may, by

order, direct such Commissioner or any other

Commissioner to apply to the Appellate Tribunal for

the determination of such points arising out of the

decision or order as may be specified by the

Committee of Chief Commissioners of Central Excise

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in its order.”

28.Thus, from the reading of provisions of Section 11A(1) of

the Act, which provides for recovery of any duty of excise

which has not been levied or paid or has been short levied or

short paid or erroneously refunded. The recovery of such

amount of excise duty can be made under Section 11A(1)

irrespective of whether such non-levy or non payment or short

levy or short payment or erroneously refund was on the basis

of any approval, acceptance or assessment relating to rate of

duty or on valuation of excisable goods under any other

provisions of this Act or Rules made thereunder.

29.Section 35 of the Act provides for appeals to

Commissioner (Appeals), wherein any person aggrieved by

any decision or order passed under this Act may appeal within

60 days from the date of communication. Further, Section 35E

which confers power on Committee of Chief Commissioner of

Central Excise to either call for and examine the records of

any proceedings in which a Principal Chief Commissioner of

Central Excise or Commissioner of Central Excise as an

Adjudicating authority has passed a decision or order under

the Act and may direct such Commissioner or any other

Commissioner to apply before Appellate Tribunal for decision.

While Section 11B of the Act provides for claim for refund of

excise duty.

30.As in the present case, provisional assessment was

finalised on 24.07.2015, the assessing authority recorded a

finding that CA certificate dated 15.06.2015 certifies that no

part of duty is recovered from the dealers/ distributors involved

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in the discount passed on to the dealers/ distributors, which

indicates that assessee had not passed on the incidence of

duty paid in proportion to the discount given to dealers/

distributors and, therefore, issue of unjust enrichment is a

remote possibility and further, the order observed that duty to

the tune of Rs.17,89,42,303/- was passed on to the customers

and duty deposited to the tune of Rs.1,03,75,633/- was in

excess. Further, an application being made by petitioner was

adjudicated by Assistant Commissioner on 05.11.2015 wherein

it was held that it was not a case of unjust enrichment and

petitioner was entitled for refund. This order was also not

challenged by revenue and the same attained finality.

31.Thus, question for consideration before us is, as to

whether the revenue can initiate proceedings under Section

11A for recovery of excise duty, once adjudication had been

made by department making final provisional assessment and,

thereafter, adjudicating application for refund under Section

11B, and no appeal being filed challenging the said

adjudication which having attained finality, is barred on the

ground of change of opinion or would amount to reassessment

when once the revenue did not take recourse to appeal in

higher forum.

32.As it is not in dispute that after provisional assessment

order, the adjudicating authority passed an order for refund

under Section 11B of the Act. Both the orders which were

appealable and revisable under Section 35 and 35E were

never taken to the higher forum by revenue and they attained

finality. It was only after decision of the Apex Court in case of

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Addison and Company (supra) that show-cause notice was

issued on 17.08.2017, and order was passed on 30.11.2017

directing the petitioner for refund of excise duty to be

deposited in Consumer Welfare Fund.

33.A careful reading of Sections 11A, 11B, 35 and 35E

would reveal that an application for refund as envisaged under

Section 11B is not to be dealt as a ministerial Act or an

administrative Act, rather an application has to be made by

person claiming refund within a prescribed time and the

application is to be accompanied by documents referred to in

Sub-section (1) of Section 11B to establish that amount of duty

of excise and interest, if any paid on such duty in relation to

which such refund is claimed was collected from, or paid by

him and the incidence of such duty and interest, if any, paid on

such duty has not been passed on by him to any other person.

It is on the receipt of this application, Assistant Commissioner

or Deputy Commissioner of Central Excise, if satisfied may

make an order for refund. Thus, it is only after the adjudication

of the application that an order of refund of duty and interest is

passed.

34.Sub-section (3) of Section 11B which is a non-obstante

clause makes it clear that dehors any judgment, decree, order

or direction of appellate tribunal or court or any other provision

of the Act, no refund shall be made except as provided in Sub-

section (2). Thus, the 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 period of limitation

as well as method of adjudication in which refund has to be

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made.

35.Thus, Section 11B assumes great significance, as any

order of refund of excise duty and interest is made only after

the adjudication as envisaged under scheme of Section 11B.

In the present case, petitioner-company had made an

application for refund which was adjudicated on 05.11.2015

and it was directed to refund excise duty to tune of

Rs.1,02,75,633/- which was in excess. This order was never

challenged by revenue in appeal and it attained finality.

36.Thus, once the order of adjudication has been validly

passed under Section 11B and a refund has been made on

05.11.2015, the next question which crops up for consideration

is as to whether Section 11A can be invoked thereafter.

37.As Section 11A(1)(a) uses the word “Central Excise

Officer” who is empowered for recovery of any refund, Central

Excise Officer is defined in Section 2(b) of the Act to mean

Chief Commissioner of Central Excise, Commissioner of

Central Excise, Commissioner of Central Excise (Appeals),

Additional Commissioner of Central Excise, Joint

Commissioner of Central Excise, Assistant Commissioner of

Central Excise or Deputy Commissioner of Central Excise or

any other officer of Central Excise Department invested by

Central Board of Excise and Customs constituted under

Central Board of Revenue Act, 1963 with any of powers of a

Central Excise Officer under the act. Thus, an order of

recovery can be passed under Section 11A by an Assistant

Commissioner, as he happens to be a Central Excise Officer in

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terms of Clause (a) of sub-section (1) of Section 11A, though

an application under sub-section (2) of Section 11B can be

made and an order for refund can either be passed by

Assistant Commissioner or by Deputy Commissioner. Meaning

thereby that a Deputy Commissioner can pass an order for

refund under Section 11B (2) and an Assistant Commissioner

can invoke proceedings for recovery under Section 11A (1).

38.This could lead to a situation where power of recovery

under Section 11A is invoked by a subordinate authority

despite the fact that refund application has been adjudicated

upon by a superior authority under Section 11B.

39.Through plain reading of Section 35E, it is clear that

limited revisional jurisdiction is conferred upon Principal

Commissioner and Commissioner of Excise in sub-section (2)

of Section 35E, this power is not actually to correct any error

directly, but only available for directing the competent authority

to take matter to the Commissioner (Appeals). Meaning

thereby that it is always open to Principal Commissioner or

Commissioner or Central Excise to examine the order passed

by adjudicating authority under Section 11B and direct the

competent authority to file appeal against order of refund. In

the present case, order of refund was never taken to higher

forum and it became final.

40.Decisions relied upon by the counsel for the revenue in

case of Jain Shudh Vanaspati (supra) relates to proceedings

which were vitiated by fraud. Further, the Apex Court recorded

a clear finding that goods were cleared for home consumption

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under Section 47 of the Act by playing fraud upon the

Department. Therefore, the Court held that fraud vitiates all

solemn Acts, while in present case department has not alleged

any fraud upon the petitioner-assessee.

41.Further reliance placed by counsel for revenue on the

decision of Addison and Company (supra), wherein it was

held that recovery under Section 11A can be made where

excise duty was refunded erroneously, but the Apex Court had

also held that where the incidence of duty was not passed on

and the assessee had borne burden of duty, thus he was

entitled for the refund. Thus, both the cases relied upon by the

department are not applicable in the present case, as it is

neither a case of fraud, nor where incidence of duty was

passed on.

42.Secondly, the argument of alternative remedy under

Section 35 is concerned, the said fact is of no rescue to the

department as specific case of petitioner is that show-cause

notice dated 17.08.2017 was issued after more than two years

from finalisation of assessment order dated 24.07.2015, and

where there is change of opinion by issuance of show-cause

notice, writ petition is maintainable as held in Shahnaaz

Ayurvedics (supra), Simplex Concrete Piles (supra) and

Samsung India Electronics Pvt. Ltd. (supra).

43.As seen above that Section 35E and 11A operate in

different fields and are invoked for different purposes, we are

merely concerned in this case with the interplay between

Sections 11A and 35E. We are also concerned with what

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happened in the form of an adjudication under Section 11B.

What happens in a case wherein adjudication takes place

under Section 11B and authorities do not take recourse

available to them, whether after having allowed adjudication

under Section 11B to attain finality, was there any remedy

available to department at all under Section 11A to proceed.

44.This question was considered and decided in Eveready

Industries (supra), wherein the Court held that two valuable

rights, one in the form of right of appeal and another in form of

order of refund, are now sought to be taken away indirectly by

taking recourse to Section 11A. What cannot be done directly

cannot be done indirectly also.

45.Thus, the department, once the adjudication has taken

place under Section 11B cannot proceed to recover on the

basis of “erroneous refund” under Section 11A so as to enable

the refund order to be revoked, as the remedy lied under

Section 35E for applying to the Appellate Tribunal for

determination and not invoking Section 11A.

46.In view of the above, we are of the considered opinion

that the issuance of show-cause notice dated 17.08.2017 and,

thereafter, order dated 30.11.2017 passed by respondent

authority for repayment of refund pursuant to orders under

Section 11B are unsustainable and are hereby quashed.

47.The writ petition stands allowed.

OrderDate :- 17.12.2019

V.S.Singh