JUDGMENT
S.M. Jhunjhunwala, J.
1. By this Petition, the Petitioners seek to challenge the orders dated 28th August, 1985 and 30th August, 1985 passed by the Assistant Collector of Central Excise Division IV, Bombay II, the copies whereof are annexed as Exhibits ‘Q’ and ‘T’ to the Petition.
2. Briefly stated, the facts are as under :
(i) The 1st Petitioners manufacture various types of vegetable oils at their factory at Vikhroli, Bombay. By a Notification dated 29th May, 1971, the Central Government exempted vegetable products made from indigenous Rice Bran Oil from Excise duty leviable thereon to the extent of Rs. 10/- per quintal subject to the conditions mentioned therein.
(ii) The Petitioners were manufacturing vegetable products using indigenous Rice Bran Oil. The Petitioners claimed benefit of exemption under the said Notification dated 29th May, 1971 as amended by Notification No. 40/72-C.E., dated 17-3-1972. The Petitioners first paid the excise duty payable and thereafter claimed refund under the said exemption Notification on monthly basis. Sometime prior to June, 1981, an objection was raised by the Department contending that the benefit of the said exemption Notification was restricted only to the extent of Rice Bran Oil used in vegetable products and started withholding refund due to the Petitioners. For the period commencing from June, 1981 to January, 1982, a sum of Rs. 5,06,192.78 of the Petitioners was thus blocked up. The petitioners requested the Department for sanction of the claims expeditiously. The Petitioners were allowed refund against Bank Guarantee and after February, 1982 on the Petitioners executing bonds.
(iii) By another Notification No. 259/83 dated 15th October, 1983, the Central Government exempted vegetable products made solely from indigenous Rice Bran Oil or from mixture of indigenous Rice Bran Oil and other oils falling under Tariff Item No. 13 of the First Schedule to the Central Excises and Salt Act, 1944 (for short, ‘the said Act’) from the duty of excise livable thereon to the extent of Rs. 30/- per quintal subject to conditions mentioned therein. The Petitioners from and after January, 1984 started deducting the amount of rebate available to them on the Gate Passes under approved classification lists. A Notification bearing No. 99/84 dated 30th April, 1984 was issued by the Central Government whereby the said Notification dated 15th October, 1983 was superseded and vegetable products made from indigenous Rice Bran Oil or a mixture of indigenous Rice Bran Oil and other oils were exempted. However, the exemption was made equivalent to the amount calculated at the rate of Rs. 30/- per quintal on the quantity of indigenous Rice Bran Oil used in the manufacture of vegetable products. This Notification became effective from 1st May, 1984.
(iv) On 23rd January, 1985, a Show Cause Notice under Section 11(A) of the said Act was issued to the Petitioners calling upon them to Show Cause why a sum of Rs. 23,81,162.66 being refund of rebate of Central Excise for the period June, 1981 to December, 1983 claimed in respect of the entire quantity of vegetable product on the basis of the said earlier Notifications, dated 29th May, 1971 and 15th October, 1983 should not be recovered from the Petitioners. The Petitioners filed their reply to the said Show Cause Notice, inter alia, contending that the same was barred by limitation having regard to the provisions under Section 11(A) of the said Act.
(v) On 1st May, 1985, the 2nd Respondent passed an order confirming the demand of Rs. 23,81,162.66 under Section 11(A) of the said Act and directed the Petitioners to pay the said amount within the time specified therein. The Petitioners preferred as Appeals therefrom to the 3rd Respondent. Pending the said Appeal, the Superintendent Central Excise Range IX, Bombay Div. IV issued notice dated 26th February, 1985 under Section 11(A) of the said Act calling upon the Petitioners to Show Cause to the 2nd Respondent why the Petitioners should not pay the sum of Rs. 6,77,075.50, being the rebate of duty availed by the Petitioners vide Gate Passes while clearing vegetable products under the said Notification No. 259/83 dated 15th October, 1983 during the period from 1st January, 1984 to 30th April, 1984. On 26th April, 1985, the Petitioners replied to the Show Cause Notice.
(vi) On 24th June, 1985, the 3rd Respondent passed an order on the said Appeal preferred by the Petitioners inter alia holding that the said order of the 2nd Respondent was hit by limitation. The said impugned order dated 1st May, 1985 was set aside by the 3rd Respondent with consequential relief to the Petitioners. On 28th August, 1985, the 2nd Respondent passed an order confirming the demand of Rs. 6,77,075.50 in pursuance of the said show cause notice issued on 26th February, 1985. This Order is under challenge in this Petition.
(vii) On 22nd August, 1985, the 2nd Respondent addressed a Show Cause Notice intimating the Petitioners that the 2nd Respondent was proposing to reject the claims of the Petitioners for Rs. 23,81,162.66 for refund for the reasons stated therein and called upon the Petitioners to file their written submissions in respect thereof on or before 28th August, 1985.
(viii) By their Advocates’ letter dated 22nd August, 1985, the Petitioners showed cause and inter alia contended that the said Show Cause Notice dated 22nd August, 1985 was erroneously issued to them inasmuch as the subject matter thereof, being the refund claims for the period from June, 1981 to December, 1983, was already subject matter of the earlier Show Cause Notice dated 23rd January, 1985 issued to the Petitioners, which was already adjudicated upon, as per the said Order passed by the 3rd Respondent on 24th June, 1985.
(ix) On 30th August, 1985, the 2nd Respondent passed an order rejecting all the 32 refund claims of the Petitioners amounting to Rs. 23,81,162.66. This Order of the 2nd Respondent is also under challenge in this Petition.
3. Since Mr. Sanklecha, the learned Counsel appearing for Respondents, fairly stated that he is not supporting the said Order dated 28th August, 1985 passed by the 2nd Respondent, it is not necessary to consider the controversy leading to passing of the said Order and the said Order dated 28th August, 1985 passed by the 2nd Respondent is quashed and set aside.
4. Mr. Milind Vasudeo, the learned Counsel appearing for the Petitioners, has submitted that in view of the said appellate Order dated 24th June, 1985 passed by the 3rd Respondent, the 2nd Respondent could not have issued another Show Cause Notice dated 22nd August, 1985 and consequently, could not pass the said Order dated 30th August, 1985 rejecting refund claims of the Petitioners. In the submission of Mr. Vasudeo, since refund claims of the Petitioners were considered and adjudicated also on merits and the said Order dated 24th June, 1985 was accordingly passed by the 3rd Respondent, the issuance of the said another Show Cause Notice by the 2nd Respondent and the Order passed thereon on 30th August, 1985 are illegal and bad in law and as such liable to be quashed and set aside.
5. Mr. Sanklecha has submitted that the said another Show Cause Notice dated 22nd August, 1985 was issued by the 2nd Respondent under Section 11(B) of the said Act and the said Order passed on 30th August, 1985 has been passed on all the said claim refund applications for the Petitioners and as such, the 2nd Respondent was entitled in law and justified in passing the said Order dated 30th August, 1985.
6. In the said Show Cause Notice dated 23rd January, 1985 issued by the 2nd Respondent to the Petitioners, it has been stated that amounts of excise duties were erroneously refunded to the Petitioners which were recoverable from them under Section 11(A) of the said Act and as such, required the Petitioners to show cause as to why the said amount of Rs. 23,81,102.66 should not be recovered from them. In reply to the said Show Cause Notice, the Petitioners contended that the amounts of Central Excise Duty refunded to the Petitioners were refunded during the period from June, 1982 to July, 1984 and since the Show Cause Notice was issued on 23rd January, 1985, the same being beyond the period of six months stipulated in Section 11(A) of the said Act, was clearly barred by the Law of Limitation. The Petitioners also disputed the claim of the 2nd Respondent that the duty was erroneously refunded to the Petitioners since the refunds were made in accordance with the notifications issued by the Government of India and the Petitioners were entitled to the said refunds. The Petitioners also contended that their claims for refund were sanctioned by the authorities concerned and the Petitioners were rightly granted the rebates that they were entitled in law. The Petitioners had denied that their claims were provisionally cleared. The Petitioners, in view of the statements made in their advocates’ letter dated 8th April, 1985 addressed to the 2nd Respondent in reply to the said Show Cause Notice, did contend that the said Show Cause notice be quashed and set aside. Thereafter on 1st May, 1985, the 2nd Respondent passed his Order on the said Show Cause Notice and held that the rebate was provisionally allowed and was not finally sanctioned and as such, the question of time bar did not arise. It was further held that the Petitioners’ contention that as per said Notifications Nos. 61/71 and 259/83 rebate amount was admissible on the total quantity of vegetable product cleared from the factory of the Petitioners was not acceptable. The 2nd Respondent further held that the rebate was admissible to the vegetable product manufactured out of indigenous rice bran oil and as such, there was no justification in the claim of the Petitioners that the rebate was admissible on the total quantity of Vegetable Product cleared from Petitioners’ factory and that the rebate amount claimed by the Petitioners on the total quantity of Vegetable Product cleared from Factory released to the Petitioners provisionally against Bank Guarantee and B-13 Bonds was correct. The 2nd Respondent, in view of his said findings, confirmed the demand of Rs. 23,81,162.66 under Section 11(A) of the said Act and directed the Petitioners to pay the same.
7. In the appeal from the said Order dated 1st May, 1985 passed by the 2nd Respondent preferred by the Petitioners to the 3rd Respondent, the 3rd Respondent passed on Order on 24th June, 1985 and inter alia held that –
(i) there was no allegation in the Show Cause Notice dated 23rd January, 1985 regarding suppression of facts, wilful misstatement etc. and the said Show Cause Notice issue on 23rd January, 1985 for the period from June, 1981 to December, 1983 is bad in law and thus not maintainable;
(ii) all RT-12’s were finally assessed and not provisionally and the 2nd Respondent could not have asked for provisional assessments only;
(iii) there is definitely an attempt on part of the 2nd Respondent to take shelter of provisional release under illegal B-13 bond for the purpose of invoking period beyond six months under Section 11(A) of the said Act;
(iv) the 2nd Respondent incorrectly interpreted the Notification No. 99/84 and gave effect to the same retrospectively. This Notification has been effective prospectively only.
Accordingly, the 3rd Respondent allowed the appeal of the Petitioners and set aside the said Order dated 1st May, 1985 passed by the 2nd Respondent with consequential reliefs.
8. In the circumstances, in our view, both the 2nd Respondent as well as the 3rd Respondent had considered claims of the Petitioners for refund of excise duty even on merits. No appeal from the Order dated 24th June, 1985 passed by the 3rd Respondent having been preferred by the Department to the Customs, Excise & Gold (Control) Appellate Tribunal under Section 35B of the said Act, the said order became final and binding and further Show Cause Notice issued by the 2nd Respondent on 22nd August, 1985 could in law be not issued and as such, is illegal and bad in law. The said Order dated 30th August, 1985 passed by the 2nd Respondent on such Show Cause Notice is also bad in law and is liable to the quashed and set aside.
9. In the result, both the Orders dated 28th August, 1985 and 30th August, 1985 being Exhibits ‘Q’ and ‘T’ to the Petition are quashed and set aside. The Petition succeeds. Rule is made absolute in the above terms with no order as to costs.
