ORDER
T. Anjaneyulu, Member (J)
1. Heard both sides.
2. These 3 appeals are filed aggrieved by the impugned orders passed by the Commissioner (Appeals). The appellants being common in all the appeals and they raise common issue as such they are being disposed of by a common order including stay application No. C./Stay/1624/06.
3. The facts of the case may be summed up in the following manner:
M/s.Shree Fats & Proteins Private Limited are engaged in the manufacture of edible oil & Vanaspati oil for which the appellants have been using various raw materials and inputs including crude palm oil. In the normal course of business, on 2.8.2001, the appellants have imported 500 MT of crude palm oil and cleared the same to the warehouse by filing In-Bond Bill of Entry Nos. 1781 and 1782. Thereafter, the appellants have cleared 250 MT of crude palm oil lying in bond on the basis of tariff value of US$ 337 PMT by paying appropriate duty. By Notification No. 52/2001 dated 9.10.2001, the Central Government reduced the tariff value of crude palm oil from US$ 337 to US$ 286 PMT. On 1.10.2001, the appellants have filed ex-bond bill of entry for clearance of balance amount of crude palm oil by paying duty on tariff value of US$ 337 PMT. The appellants have removed the goods form the warehouse after 9.10.2001 i.e. after Notification No. 52/2001-Cus came into force. The appellants have filed the application for refund on 19.2.2002, for Rs. 7,29,567/- on the basis of goods lying in the bond warehouse on the date of application of new Notification. The Deputy Commissioner(Refund), Customs House, Kandla allowed the refund application as per Section 15(1)(b) of the Customs Act, 1962 as the rate of duty and tariff value would be applicable on the date of clearance from the warehouse. Aggrieved by the said order, the Revenue filed revision application under Section 129D(4) of the Act before the Commissioner(Appeals) who after relying upon the judgment of the Apex Court in the case of Priya Blue-2004 (172) ELT 145 and other decisions has allowed the appeal filed by the Revenue. Thereupon, the appellants being aggrieved by the order of the Commissioner (Appeals) have filed the appeal before the Tribunal. The Assistant Commissioner had issued a show cause notice dated 16.6.2005 to the appellants proposing the recovery of the amount which was refunded by the order of Deputy Commissioner since it is set aside by the Commissioner (Appeals). The Assistant Commissioner (Refund) on due adjudication of the show cause notice confirmed the same on 23.9.2005. Aggrieved by the same, the appellants have filed an appeal before the Commissioner (Appeals) but the same has been dismissed. Aggrieved by the impugned order passed by the Commissioner (Appeals), the present appeals are filed along with stay application.
4. The main contention of the learned Counsel for the appellants is that the department cannot issue a show cause notice after the period of one year from the date of granting refund. The refund was granted to the appellants on 25.9.2002 whereas the show cause notice has been issued on 16.6.2005 without invoking the larger period as well as without mentioning that the appellants made willful mis-statement or suppressed any facts of the case before the authority. In support of this contention, the learned Counsel for the appellants relying upon the following decisions:
(1) Padmini Products v. CCE . “It is observed that when in view of the Trade notices there is scope for believing that the goods were entitled to exemption and consequently no license is required to be taken out, then the extended period of limitation for demand under Section 11A is inapplicable. Mere failure or negligence on the part of the manufacturer either not to take out a license or not to pay duty in case where there was scope for doubt, does not attract the extended limitation. Unless there is evidence that the manufacturer knew that goods were liable to duty or he was required to take out a license for invoking extended period of five years limitation duty should not have been paid, short-levied or short-paid or erroneously refunded because of either any fraud, collusion or willful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder. These ingredients postulate a positive act, therefore, failure to pay duty or take out a license is not necessary due to fraud or collusion or willful mis-statement or suppress on of facts or contravention of any provisions of the Act. Likewise suppression of facts is not failure to disclose the legal consequences of a certain provision-.
(2) Collector of Central Excise v. Chemphar Drugs & Liniments . It is observed that “In order to make a demand under Section 11A of the Central Excises and Salt Act for beyond a period of six months and upto a period of five years something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required to be established. Where department had full knowledge about the facts and the manufacturer’s action or inaction is based on their belief that they were required or not required to carry out such action or inaction, the period beyond six months cannot be made applicable.
(3) Collector of Central Excise v. H.M.M. Limited . It is observed that “Limitation for extended period is not invokable unless show cause notice puts assessee to notice specifically as to which of the various commissions or omissions stated in the proviso to Section 11A(1) of Central Excise & Salt Act, 1994 had been committed.
(4) Cosmic Dye Chemical v. Collector of Central Excise, Bombay . It is observed that “It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not willful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be willful.”
(5) Doothat Tea Estate Kanoi Plantation (P) Ltd. v. CCE, Shillong 2001 (135) ELT 386 (T). It is observed that A reading of the above para shows that the department is required to initiate for recovery of the erroneous refund simultaneously under the provisions of Section 35E(2) of Central Excise Act, 1944, As in the instant case no appeal has been filed under the provisions of Section 35E(2) by the department against the earlier order of the Assistant Commissioner, issuing of show cause notice under the provisions of Section 11A without seeking to set aside the earlier order of refund by the Assistant Commissioner, cannot he held to be valid proceedings.
(6) Sree Digvijay Cement Co. Ltd. v. Collector of Central Excise 1991 (520 ELT 631 (T). It is observed that “However, the order passed under Section 35E(2) does not automatically result in recovery the erroneous refund. This order should be followed by a show cause notice under Section 11A, according to which the show cause notice should be issued within six months from the date of actual refund. Since the time limit, for filing an appeal under Section 35E(2) is longer than the time limit prescribed under Section 11A, the show cause notice should precede the proceedings under Section 35E(2), otherwise, the order under Section 35E(2) becomes an empty formality and is not enforceable. Similarly, even if the show cause notice is issued for recovering the erroneous refund within the time limit prescribed under Section 11A without setting aside the order granting erroneous refund under Section 35E(2), no erroneous refund can be recovered. Therefore, the department should initiate proceedings simultaneously under Section 11A within the time limit prescribed therein and also under Section 35E(2) within the time limit prescribed therein.
5. Further the contentions of the appellants are that the order passed under Section 129D(4) does not automatically result in recovery of amount erroneously refunded. The order passed under Section 129D(4) should be followed by issue of show cause notice under Section 28 within time limit prescribed under this section. If show cause notice is not issued within time limit, the refund granted to the party may not be recovered. The Tribunal has held in its various decisions that in case recovery of erroneous refund, the department is required to take action simultaneously under Section 35E(2) of the Central Excise Act, 1944 as well as under Section 11A. Section 129D(4) is pari materia to Section 35E(2) and therefore, the case applicable to the Central Excise Act may also be applicable to the Customs Act. The appellants are also relying upon the decision of the Tribunal in the case of Shree Ram Steel & Rolling Industries v. CCE, Jamnagar wherein it has been held as under:
So far as this ground is concerned, we note that it is a formidable ground. Since the entire provisions related to recovery of duty which is allegedly short levied, the least that was required to be done was, to issue a demand under Section 129D of the Customs Act, 1962, indicating therein the ground of short-levy, etc. No amount of duty short-levied can be collected without such a notice. The exercise of reviewing the order under Section 129D of the Customs Act provides no saving to the department against the requirements of issue of show cause notice under Section 28. Therefore, even if one were to assume a favourable result in department’s favour on the appeal filed, in terms of Section 129D, even then, the same would not help the revenue to collect the duty which escaped as a result of wrong decision on the valuation, without issuing a demand under Section 28 of the Act. Therefore, we are unable to agree with the findings of the Commissioner(Appeals) holding that, on conclusion of proceedings under Section 129D of the Act in revenue’s favour will automatically lead to confirmation of duty demand without issue of demand under Section 28. Therefore, without going into the merits of the issue of under valuation, we hold that the appellants could not be made liable to differential duty without the process of issue of notice under Section 28 of the Customs Act.
6. The aforesaid decision has also been confirmed by the Hon’ble Gujarat High Court at Ahmedabad in tax appeal No. 182/2005. The Commissioner (Appeals) in his impugned order had observed that refund is not entertainable without there being a challenge of assessment made on a bill of entry. The Commissioner(Appeals) is relying upon the following decision in the case of Priya Blue , in the case of CCE, Shillong v. Woodcrafts Products 2002 (143) 247 (SC) and in the case of CCE v. Flock India .
7. I have considered the submissions made by both sides. The facts are not in dispute that the appellants filed application for refund pursuant to the excess amount paid by them. The refund amount sanctioned by the Deputy Commissioner was turned down by the Commissioner (Appeals) under Section 129D(4) of the Act. Pursuant to this order, the respondent had issued show cause notice under Section 28 for recovery of the amount of refund after a period of one year without invoking the larger period. In the case of Shree Ram Steel & Rolling Industries cited (supra), it is observed that The exercise of reviewing the order under Section 129D of the Customs Act provides no saving to the department against the requirements of issue of show cause notice under Section 28.” The Hon’ble Gujarat High Court has confirmed the views expressed by the Tribunal in the above cited case. The same view was also followed by the Tribunal in the case of Sree Digvijay Cement Co. Ltd. v. Collector of Central Excise and Doothat Tea Estate Kanoi Plantation (P) Ltd. v. CCE, Shillong cited (supra) observing that the order under Section 35E(2) does not automatically result in recovery of refund. This order should be followed by issuance of show cause notice under Section 11A within six months from the date of actual refund. Section 129D(4) is pari materia to Section 35E(2), as such the issue involved in the appeals is very much covered by the aforesaid decisions. Further, it is seen that there is no allegation in the show cause notice for invoking the larger period. In the absence of allegations of fraud, collusions, or mis-statement, the larger period of 5 years cannot be made applicable as held by the Apex Court in the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay and in the case of Collector of Central Excise v. H.M.M. Limited cited above.
8. The learned JDR has placed reliance on the judgments in the case of CCE v. Deccan Overseas and in the case of CCE, Shillong v. Woodcrafts Products which are not applicable to the present case.
9. Therefore, I am of the view that the impugned orders are not legal and proper hence are liable to be set aside. Accordingly, the impugned orders are set aside. The appeals are allowed with consequential relief, if any, to the appellants in accordance with law. The stay application is also allowed.
(pronounced in the court on 25.8.2006)