fiogf49gjkf0d
Once refund is granted under section 11B, it cannot be said to be “erroneous refund” in terms of section 11A of Central Excise Act and recourse available for recovery of such refund is only by way of following procedure laid down in section 35E of the Act and not section 11A.
Facts
The final assessment was completed and refund was determined. The assessee filed application for refund but was granted refund under section 11B only for part of the amount. However, thereafter, by invoking section 11A of the Central Excise Act, 1944, the very same Assistant Commissioner, who sanctioned refund earlier, issued Show Cause Notice followed by order directing recovery of refund sanctioned. This order for recovery of refund was confirmed by Commissioner (Appeals) as well as the Tribunal. Before the High Court, it was contended that refund application is allowed under section 11B and department has not followed procedure laid down by section 35E (2) of Central Excise Act, 1944 therefore it is not open for department to take recourse u/s. 11A. The department contended that where there is erroneous refund, the same can always be recovered by initiating proceedings u/s. 11A without taking recourse to section 35E.
Held
The High Court held that a careful look at the scheme of sections 11A, 11B and 35E would show that an application for refund is not to be dealt with merely as an administrative act. Section 11B is a complete code in itself. Hence, power exercised u/s. 11B is that of an adjudicating authority and order passed is certainly one of adjudication. Therefore, it must be presumed that before according sanction for refund, an adjudicating authority had actually followed the procedure under section 11B and passed an order of adjudication. Section 11A(1) prescribes the procedure for recovery of any duty of excise, which is erroneously refunded. The power u/s. 35E is not actually to correct any error directly on the part of an adjudicating authority. This power is available only for directing the competent authority to take the matter to the Commissioner (Appeals).
Hon’ble High Court made reference to its own judgment in case of Madurai Power Corpn. vs. Dy. CCE 2008 (229) ELT 521, where Court had occasion to consider interplay between section 11A and section 35E of Central Excise Act, 1944. It held that no one can have a quarrel with the proposition that sections 35E and 11A operate in different fields and are invoked for different purposes. However if the department’s interpretation of section 11A is accepted, it would lead to a situation of recognizing power of recovery in a subordinate authority when refund is already granted by a superior authority after adjudication, which is obviously not the legislative intent. It was held that harmonious reading of provisions of sections 11A and 35E indicates that section 11A does not contemplate overriding section 35E. Hence once refund application is allowed u/s. 11B, such refund cannot be said to be erroneous refund in terms of section 11A (1). The recourse available for recovery of refund sanctioned in terms of section 11B is therefore to follow procedure laid down in section 35E and not section 11A.
