A show cause notice for recovery of erroneous refund/credit is time-barred if issued beyond five years from the date of refund. Furthermore, an assessee cannot be faulted for taking suo moto credit if the department fails to decide a timely refund application.

SATENDRA VIKRAM SINGH

M/s. Panasonic Life Solutions India Private Limited Kutch (Appellant) are engaged in the manufacture of Glass Shell, Wires & Cables, Ceiling Fan, Switch Gear, etc. They are availing benefit of Notification No. 39/2001-CE dated 31 July, 2001 as amended from time to time which grants exemption to specified goods from so much of the duty of excise or additional duty of excise as was equivalent to the duty payable on value addition undertaken by the manufacturer. The duty payable of value addition was calculable as certain percentage of the total duty payable on excisable goods as specified for different commodity groups as per table in Para 2 of the notification. Para 2B of this notification gives them option subject to several conditions, to take credit of monthly refundable amount calculated in the manner as specified in Para 2 of the notification, in the account current, instead of disbursement of cash refund as per Para 2B.

1.1 It was noticed during audit that the appellant had taken suo moto credit of Rs. 54,00,034 in account current in April, 2010 by endorsing as “Re-credit (08-09 annual)” in violation of the provisions of above notification. A show cause notice dated 29.02.2016 was issued to the appellant proposing recovery of above credit under Section 11A read with Notification No. 39/2001 along with interest under Section 11A A and penalty under Section 11A C of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules 2002. During adjudication, Joint Commissioner vide order dated 25.01.2018 confirmed the recovery of credit of Rs. 54,00,034/- along with interest and also imposed equal penalty under Section 11A C read with Rule 25 of the Central Excise Rules, 2002.

1.2 Aggrieved with this order, appellant filed appeal before Commissioner (Appeals), on the ground that:

(a) Re-credit for financial year 2008-09 was taken in April 2010 and therefore, show cause notice issued on 29.02.2016 for recovery after 6 years is hit by limitation.

(b) They submitted application to the Jurisdictional Assistant Commissioner for re-credit of duty in their PLA on 11.05.2009 which has not been decided by the authority.

The Learned Commissioner (Appeals) after considering various submissions, rejected their appeal and upheld the order of the lower authority. Hence, this appeal before the Tribunal.

2. In their appeal, appellant took the following grounds and pleaded to allow appeal by setting aside impugned order:

a) The show cause notice for recovery is hit by limitation as suo moto credit was taken in April 2010 but show cause notice has been issued on 29.02.2016. They rely on the decision of CESTAT Ahmedabad in the case of Parle Product Pvt. Ltd. vs. Commissioner of Central Excise, Rajkot reported in 2009 (237) E.L.T 579 (Tri.-Ahmd.) which has also been affirmed by Hon’ble Gujarat High Court as reported in 2010 (20) STR 179 (Guj.).

b) Hon’ble Supreme Court in the case of Government of India Vs. Citedal Fine Pharmaceuticals (Mad.), AIR 1989 SC 1771 has held that in absence of any period of limitation, every authority should exercise the power within a reasonable period. The show cause notice issued to them after 7 years from the date of their letter to the Assistant Commissioner, cannot be said to be a reasonable period. They also rely on the decision of Hon’ble Gujarat High Court in the case of Valley Valvet P. Ltd Vs. Union of India reported in 2008 (222) ELT 352 (Guj.).

c) The notification No. 16/2008-CE dated 27.03.2008 & 33/2008-CE dated 10.06.2008 which restricted refund amount have been set aside by Hon’ble Gujarat High Court in the case of SAL Steels Limited reported at 2010 (260) ELT 185 (Guj.) which held that these notifications are bad in law and the eligible units are entitled to benefit as per the original notification. Similar view has been taken in the case of Sun Pharma Laboratories Ltd Vs. UOI 2018 (360) ELT 609 (Sikkim) and Reckitt Bencki

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