ORDER
H.R. Syiem, Member (T)
1. The facts are as follows :The Assistant Collector of Central Excise, Coimbatore, passed on order on a refund claim for Rs. 62,063.54 filed by M/s. Universal Radiators Ltd. and sanctioned the amount of Rs. 28,861.26 and rejected the rest. The Assistant Collector, under orders of the Collector of Central Excise, Coimbatore by virute of Section 35E(2) of the Central Excises and Salt Act, 1944, made an application to the Collector of Central Excise (Appeals), Madras and submitted that the assessees had not been able to establish that the goods, radiators, coolers, heat exchanger, had been used as parts of diesel engines and that the officer deputed for verification had not been able to get evidence that the goods In respect of which the refund daim was sanctioned were used as parts of diesel engines, or were parts of diesel engines. There was no proof that the goods were exclusively used as parts of diesel engines and, therefore, the respondents were not entitled to exemption under Notification No. 55/75 The applicant Assistant Coll. pleaded that the sanction of the refund be set aside.
2. The Collector (Appeals) received the authorisation of the Collector of Central Excise under Section 35E(2) on 30th April, 1984 and he forwarded it to the respondents-assessees on 1-5-1984. The respondents-assessees submitted their memorandum of objections on 16-5-1984 and were heard In person on 28-6-1984 in which they argued that they received the notice proposing to recover refund after the expiry of the time-limit under Section 11A of the Act and, therefore, the application had to be rejected under proviso 2 of Sub-section (3) of Section 35A of the Act read with Sub-section (4) of Section 35E.
3. The Collector (Appeals) recorded that the refund cheque was cashed by the respondents assessees on 24-8-1983 and, therefore, the date of the cheque must have been prior to this date. His notice was received by the assessees-respondents on 3-5-1984 and, therefore, the notice regarding erroneous refund of duty was served on the respondents assessees after the expiry of six months from the date of the erroneous refund. As a result of this, the Collector (Appeals) decided that he was not authorised to Issue an order requiring the respondents to pay the duty erroneously refunded and so he rejected the application under Section 35E made by the Assistant Collector of Central Excise.
4. The learned counsels for the two sides argued long and hard on the respective merits of their cases; but the problem is quite different from how the concerned people have seen It.
5. The Central Excises and Salt Act, 1944, has one section which authorises recoveries of duty erroneously refunded and this is Section 11 A. It provides that
(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded a Central Excise Officer, may within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been 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.
This is the fundamental and only authority in the law that permits the Central Ex-else Department to recover erroneously refunded duty; if any duty Is refunded, and it is discovered that the refund was an error, the only procedure for recovering that duty is under Section 11 A. The procedure in the section prescribes a notice to be issued to the person chargeable with the duty calling upon him to show cause why lie should not pay the amount specified in the notice, the Assistant Collector, after considering the representation, will determine the amount of duty due from such person and, thereupon, such person shall pay the amount so determined; ft is also prohibited in the law to recover any money in excess of the amount specified in the notice.
6. The Act has another section which provides how claims for refund of duty can be made upon the Central Excise Department by a person claiming refund, making an application to the Assistant Collector of Central Excise within a period stipulated in the law; and how the Assistant Collector of Central Excise must satisfy himself that the whole or any part of the duty should be refunded to the claimant; and how he should make an order accordingly. Note very carefully that a refund, if It is to be made, must be under the orders of an Assistant Collector of Central Excise. This fact is at the root of this problem.
7. The refund claim in this case originated as a refund claim made by the asses-sees M/sl Universal Radiators and in pursuance of that refund claim, the Assistant Collector sanctioned an amount of Rs. 28,861.27, this was the only way that the refund could have been paid and it is this amount that later formed the bone of contention between the two sides when the Collector of Central Excise came to the conclusion that the refund was erroneous and he set about taking steps to recover it. For this purpose, In exercise of the powers given to him under Section 35E(2) of the Act, he directed the Assistant Collector, to make an application to the Collector of Central Excise (Appeals), Madras, which was duly carried out by the Assistant Collector. That application was heard and adjudicated upon by the Collector (Appeals).
8. When the Collector (Appeals) heard the matter, he came to the conclusion that the notice he served on the assessee-respondents was barred under section 11-A and, therefore, he could not issue an order directing them to repay the duty erroneously refunded. But the reasoning was somewhat awry.
9. The only way by which an erroneously refunded duty can be recovered Is a notice under Section 11 -A; an application and proceedings under Section 35-E are not a step In that direction. If It were, then the department can, by using this section, recover erroneously refunded duty or short levied duty for which no notice was issued within the time specified under Section 11 -A, the primary and fundamental section, and the fountain-head of all the powers for recovery of any money erroneously refunded. Thus, by resort to Section 35-E, the department can recover erroneous refunds that have long become barred by limitation under Section 11-A, to say nothing of the fact that It is almost inconceivable that any notice Issued by the Collector (Appeals) under Section 35-E, as he did in this case, could ever reach the assessee in time. All of them would be out of time and Illegal. To argue that, because Section 35-E allows this procedure of application and determination by the Collector (Appeals), the department can recover such duties, is to enlarge the powes of the department in a way that sets Section 11 -A at naught. It defeats the right process laid out in the Act.
10. The proper route of the right process laid out in the Act is only the one written in Section 11 -A. This section prominently gives leave to the Assistant Collectorto issue notices If any money representing duty is found to have been lost by mistaken refund. There is no other coaurse for the authorities to the recovery of such duty.
11. I can see an objection coming forward to this, that the Assistant Collector would be seeking to review his own order if he seeks to recover erroneously refunded duty. After alt, Section 11 -B allows only the Assistant Collector to make refunds and, therefore, when he himself Issues notice under Section 11 -A for return of the erroneous refund, he is sitting in judgment over his own action. This is a difficulty that I see no means of surmounting – but that is how the law frames it. If the objection prevails, then obviously no erroneously refunded duty can be recovered, because only the Assistant Collector can make refund In the rare cases when the erroneous refund was a result of fraud or collusion or any other criminal reason, the Collector would be the notice given. But the objection will appear in the form of questioning the authority of the Collector himself to review the Assistant Collector’s order. For he has none.
12. The Collector of Central Excise, Coimbatore, says in his authorisation dated 27-9-1984 to file this appeal before the Tribunal that the notice of appeal has been fled within the time-limit of Sub-section (4) of Section 35-E and hence It was not correct to hold that the time-limit of Section 11 -A would apply in this case also. He does not say why it Is incorrect. There is nothing anywhere In any part of the Act that can counteract Section 11 -A, or that can lock it out. It enters where it must; Its power is inexorable; it sinews remorseless; Section 35-E has nothing to offer to fight, or even to shield anyone from, Its puissance.
13. The Collector understands the words of Sub-section (4) about the provisions relating to appeals being applied to the application under Section 35-E as meaning mat the legislature did not want the time-limit of Sectiuon 11 -A to apply, otherwise, he holds, Section 35-E would be nullified. But he does not see that his own interpretation nullifies Section 11 -A, because Its protection to the assessee can then be pierced and destroyed by a simple tool – a Section 35-E application, and that the time-limit will virtually come to mean one year or more.
14. The protective time-limit of Section 11-A cannot be surprised from the rear or taken from the flanks, because It runs all round, a secure and sure guard – It is a wall of defence. We must not breach It or attempt to scale it – It provides invaluable services, often in ways we do not always appreciate.
15. Section 35-A second proviso in fact Is designed to protect the assessee from just such exactions as may be made when the department finds its demands under Section 11 -A barred by time. It prohibits the Collector (Appeals) from passing an order requiring a person to pay any duty which he (Collector) may discover, during the appeal proceedings before him, has been short levied or erroneously refunded, unless a notice of demand to pay Is Issued to that person within the time-limit of 11-A. The time-limit of Section 11 -A runs on a tight Schedule – Its starting point to its finishing post is rigidly controlled. It must set out from the “relevant date” – no other date Is permissible, whether It runs for six months or for five years. The time-limit “specified In Section 11-A” Is not six months: it is “six months from the relevant date”. A time-limit counted any other way would not be a ‘time-limit specified In section 11 -A”.
16. May be we have here a stand-off, a stalemate; and I can see no way round ft.
17. However, as no notice was given to M/s. Universal Radiators within the time-limit specirfled In Section 11 -A of the Central Excises and Salt Act, the refund said to have been erroneously made to them cannot be recovered.