Summary
A textile mill's claim for refund of excise duty paid on captively consumed yarn was sanctioned in 2000, but on the Revenue's appeal under Section 35E of the Central Excise Act, 1944 the Commissioner (Appeals) set aside the refund in 2005 for unjust enrichment and limitation. The Tribunal and the Bombay High Court, following Bajaj Auto, held that the erroneous refund could not be recovered without a separate notice under Section 11A within its time limit. The Supreme Court allowed the Revenue's appeal: under its binding decision in Asian Paints, Sections 11A and 35E operate in different fields with different time limits, and once the refund order is set aside in Section 35E proceedings initiated within time the consequences follow without any further notice under Section 11A.
Issues
- Whether a separate notice under Section 11A of the Central Excise Act, 1944, issued within the period prescribed by that section, is a condition precedent to recovery of an erroneous refund where the order sanctioning the refund has been set aside in proceedings under Section 35E.
Provisions considered
- Section 35E, Central Excise Act, 1944Permits the Revenue to have an order sanctioning refund reviewed in appeal within the time prescribed by that section; once the refund order is set aside on merits, the assessee has no basis to claim refund and the necessary consequences follow. (¶¶ 7.1, 8)
- Section 11A, Central Excise Act, 1944Operates in a different field from Section 35E with its own time limit; reading it as a prerequisite to recovery after a successful Section 35E appeal would render Section 35E ineffective, as held in Asian Paints. (¶¶ 7.2, 7.3, 7.4, 8)
Held
- The issue is not res integra: in Asian Paints this Court held that Sections 35E and 11A operate in different fields, are invoked for different purposes and carry different time limits, and rejected the contention that recovery cannot follow an appeal under Section 35E if the Section 11A period has expired. That decision bound the High Court, which without reasons ignored it and followed its own earlier decision in Bajaj Auto. (¶¶ 7.2, 7.3, 7.4, 7.5)
- Once the order-in-original sanctioning refund was set aside in a Section 35E proceeding initiated within the prescribed time, no further notice under Section 11A was required, and there could be no refund pursuant to the quashed order-in-original. (¶ 8)
Result
Appeal allowed; Bombay High Court judgment dated 24.09.2008 and the Tribunal's order dated 12.10.2007 quashed; order of the Commissioner (Appeals), Mumbai dated 13.05.2005 setting aside the refund restored; no order as to costs.