1. Erroneous refund of excise duty — Recovery proceedings — Dispute over necessity of separate notice under Section 11A when refund order is reviewed under Section 35E, Central Excise Act. (Para 1 , 2 )
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2023 Supreme(SC) 274
SUPREME COURT OF INDIA
M.R. SHAH, KRISHNA MURARI, JJ.
Commissioner of Central Excise, Mumbai – 1 - Appellant
Versus
M/s. Morarjee Gokuldas SPG. & WVG. Co. Ltd. - Respondent
Civil Appeal No. 3039 of 2011
Decided On : 24-03-2023
Advocates appeared:
For the Appellant(s) : Mr. Mukesh Kumar Maroria, AOR
For the Respondent(s): Mr. Anurag, AOR
For the Appellant(s) : Mr. Mukesh Kumar Maroria, AOR
For the Respondent(s): Mr. Anurag, AOR
Important Points
A separate notice under Section 11A of the Central Excise Act is not necessary for recovering an erroneous refund when the order granting the refund is reviewed and set aside under Section 35E of the Act, as both sections operate in different fields with different time limits.
Subject
Civil Law - Taxation
Act Referred
Headnote
Central Excise - Recovery of Erroneous Refund - Central Excise Act, 1944, Section 11A, Section 35E Summary: The case involved the recovery of an erroneous refund of duty under the Central Excise Act. The main issue was whether a separate notice under Section 11A of the Act was necessary for recovery when an erroneous refund was granted through a speaking order reviewed under Section 35E. The court analyzed previous judgments and held that once the order sanctioning the refund was set aside in a proceeding under Section 35E within the prescribed time limit, no further notice under Section 11A was required. The court also emphasized that Sections 35E and 11A operate in different fields and for different purposes.
Legal Category Hierarchy
Table of Contents
2. Revenue contends Section 35E recovery precludes need for Section 11A notice; Assessee argues Section 11A notice is a condition precedent for recovering erroneous refunds. (Para 4 , 5 )
3. The court found the High Court ignored binding precedent holding that Sections 35E and 11A operate in different fields with distinct purposes and time limits. (Para 7 )
4. Recovery of excise duty pursuant to an appeal under Section 35E does not require a separate notice under Section 11A of the Central Excise Act. (Para 8 )
5. Appeal allowed — Impugned judgment and Tribunal order quashed — Order of the Commissioner (Appeals) restored. (Para 9 )
6. Is a separate notice under Section 11A required for recovery when a refund order is reviewed under Section 35E?
No. Sections 35E and 11A of the Central Excise Act operate in different fields and are invoked for different purposes. Recovery can be made pursuant to an appeal under Section 35E even if the time limit under Section 11A has expired. (Para 8 )
JUDGMENT :
M.R. Shah, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 24.09.2008 passed by the High Court of Judicature at Bombay in Central Excise Appeal No.186 of 2008 by which the Division Bench of the High Court has dismissed the said appeal preferred by the Revenue and has affirmed the judgment and order passed by the Appellate Tribunal by which the Appellate Tribunal held that the show cause notice under Section 11A of the Central Excise Act, 1944 is required to be issued in case of erroneous refund of the duty, the Revenue has preferred the present appeal.
2. The short question which is posed for consideration before this Court is whether the separate notice under Section 11A of the Central Excise Act is necessary for the recovery of the amount when an erroneous refund is granted through the speaking order is reviewed under Section 35E of the Act?
2.1 The facts leading to the present appeal in nutshell are as under:
2.2 The respondent herein was at the relevant time a manufacturer of cotton yarn which it consumed captively in its composite mills for weaving of fabric. In October, 1980 vide judgment in the case of M/s. J.K. Cotton Spinning & Weaving Mills Company Ltd. vs. Union of India 1981 (8) ELT 887, the Delhi High Court held that removal of yarn which was consumed within the factory for production did not amount to removal within the meaning of Rules 9 & 49 of the erstwhile Central Excise Rules, 1944 and hence set aside the duty demand made on such captively consumed yarn. That the respondent company filed a revised classification list wherein, they declared that no duty was payable on the yarn captively consumed. By an order issued in April, 1981 the classification list was rejected by the Department and the respondent – company was directed to file a fresh classification list. The respondent – company filed a writ petition before the Delhi High Court being Writ Petition No.1190 of 1981 inter alia challenging the levy and collection of duty on the said yarn captively consumed by them. By judgment and order dated 11.01.1983 the High Court disposed of the said writ petition upholding the validity of Rules 9 and 49 and holding that the recovery could only be done as per the time limit prescribed in Section 11A. That in the year 1983 the respondent – company filed a civil appeal against the said judgment before this Court being Civil Appeal No.320 of 1983. The Company also files application for stay of the operation of the judgment. On 15.03.1983, this Court passed an interim order in the following terms :
"In respect of future payment of Excise Duty there will be no stay. In so for as the post dues are concerned, 50% of the past dues shall be paid to the authority concerned within a period of 3 months from today. In regard to the balance 50% the appellants shall give bank Guarantee to the satisfaction of the Registrar of this Court within the same period. If the Bank Guarantee have already been given in any case in pursuance of the directions of the Delhi High Court it will continue in operation and shall be kept alive from time to time."
2.3 In pursuance to the interim directions granted by this Court on 15.03.1983, the bank guarantee given by the respondent – company was kept alive from time to time. By final judgment and order dated 17.01.1995 this Court decided the case and inter alia directed that if notice under Section 11A has not been served the Revenue would be entitled to do so within the time limit prescribed by Section 11A of the Act. On the basis of the judgment and order passed by this Court, the Divisional Assistant Commissioner issued a show cause notice on 07.04.1995 demanding a duty amounting to Rs.2,96,14,265.05. Subsequently by passing O-I-O dated 27.03.1996, the Assistant Commissioner confirmed the demand. Out of the amount demanded, Rs.1,48,07,132.84 was paid on different dates between 18.04.1983 to 28.12.1984, as per the directions of this Court. Balance of Rs.1,48,
