2004 (97) ECC 22 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

East Zonal Bench -- Kolkata

Shri V.K. Jain, Member (T) and Shri M.P. Bohra, Member (J)

Jellalpore Tea Estate

Versus

Commissioner of Central Excise, Shillong

Appeal No. EDM-472/03

[Arising out of Order-in-Original/CCE/Shillong No. 7/2003 Dated 30.9.2003 passed by Commissioner of Central Excise, Shillong]

Order No. A-392/KOL/2004, dt. 18.6.2004, Certified on 29.6.2004

Show Cause Notice (C. Excise)

Provisional refund -- The proper course of the Commissioner, if he is not satisfied with the Order of the Assistant Commissioner, was to review the Order of the Assistant Commissioner than to file an appeal before the Commissioner against that Order. Since the Commissioner has not followed the proper course of action under Section 35E(2) of the Central Excise Act, 1944, the impugned Order is liable to be set aside -- When the sanction of refund is provisional, notice under Section 11A of the Central Excise Act, 1944, cannot be issued.

[Paras 2 & 4]

PRESENT :

Shri K.K. Bhattacharjee, Consultant for the appellant.

Shri T.K. Kar, SDR for the respondent.

Case Cited :

Ponds (India), 1994 (73) ELT 272........................................................................ [Para 2]

Per : V.K. Jain

The present appeal is directed against the Order of the Commissioner of Central Excise, Shillong by M/s. Jellalpore Tea Estate (here-in-after called `the appellant company'). In the Order-in-Original, the Commissioner has confirmed a demand of Rs. 16,09,687.00 (Rupees sixteen lakh nine thousand six hundred and eighty-seven) only, under the proviso to Section 11A of the Central Excise Act, 1944. He has not imposed any penalty. The facts of the case are as follows:

1.1. The Assistant Commissioner of Central Excise, Silchar, provisionally sanctioned a refund of Rs. 16,09,585.00 (Rupees sixteen lakh nine thousand five hundred and eighty-five) covering the period from October 2000 to March 2002 on 30.4.2002, under Notification No. 33/99-CE dated 8.7.99. Under this Notification, exemption from duty to units set up in North-Eastern India after 24.12.97 and also to existing units to make expansion by 25% or more after 24.12.97, was granted. The appellant company completed expansion of more than 25% of the existing units on 30.9.2000. The Assistant Commissioner held that there was an expansion of more than 25% on 30.9.2000 and therefore, the appellant company was entitled to refund of duty with effect from 1.10.2000. In his Order, the Assistant Commissioner has mentioned that the sanction of the refund is provisional.

1.2. A show cause notice dated 6.8.2000 was issued by the Commissioner of Central Excise, Shillong under Section 11A of the Central Excise Act, 1944, alleging that the refund of Rs. 16,09,585.00 (Rupees sixteen lakh nine thousand five hundred and eighty-five) was taken on producing fabricated documents. He did not state as to what are the fabricated documents produced by the appellant company. They submitted the reply to the show cause notice. Written Arguments were also submitted. It was mentioned therein that the proper course for challenging the Order dated 29.4.2002 of the Assistant Commissioner of Central Excise, Silchar, was to review the same and to file an appeal with the Commissioner (Appeals) and not by issuing a fresh show cause notice on a settled issue. The Commissioner confirmed the demand under Section 11A of the Central Excise Act, 1944. The appellant company was directed to pay the interest under Section 11AB of the Central Excise Act, 1944. No penalty was imposed as there was no deliberate evasion of the duty. The above Order of the Commissioner is in challenge in this appeal.

2. We have heard Shri K.K. Bhattacharjee, Consultant for the appellant company. He submits that the Commissioner's Order is void ab initio. The proper course of the Commissioner, if he is not satisfied with the Order of the Assistant Commissioner, was to review the Order of the Assistant Commissioner than to file an appeal before the Commissioner against that Order. Since the Commissioner has not followed the proper course of action under Section 35E(2) of the Central Excise Act, 1944, the impugned Order is liable to be set aside. The Order of refund of Rs. 16,09,585.00 (Rupees sixteen lakh nine thousand five hundred and eighty-five) was granted provisionally under Order dated 30.4.2002. No notice under Section 11A can be issued, as the refund was provisional. Learned Advocate, further, submits that the Hon'ble Madras High Court in the case of Ponds (India) reported in 1994 (73) ELT 272 has held that provisions of Section 11A cannot be invoked when the order is provisional. He, further, submits that in the show cause notice and in the Order-in-Original, it has been stated that the appellant company suppressed the actual installed capacity by furnishing fabricated documents, but did not identify which were these documents. In view of the above, learned Consultant submits that the whole exercise was carried on basing upon presumption and assumption only.

3. We have also heard Shri T.K. Kar, learned SDR for the Revenue. He reiterates the Order passed by the Commissioner of Central Excises Shillong.

4. After hearing both the parties, we find that the proper course for the Commissioner to challenge the findings of the Assistant Commissioner, was to file an application under Section 35E(2) of the Central Excise Act, 1944 that it was not done within the prescribed period. The Order of the Assistant Commissioner has reached the finality. We also agree that when the sanction of refund is provisional, notice under Section 11A of the Central Excise Act, 1944, cannot be issued, as held by the Hon'ble Madras High Court in its judgment (referred supra). Since the Commissioner has not followed the proper procedure, we set aside the impugned Order and allow the appeal filed by the appellant company.

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