Balaji Edibles Pvt. Ltd vs Cce & St- Bhopal

The above appeal and stay application has been filed by M/s Balaji Edibles (P) Ltd against Order-in-Revision dt. 08-07-2011 passed by Commissioner, Central Excise, Bhopal.

2. As the issue involved in the present appeal is covered by decision of the Tribunal, with the consent of both sides, I propose to dispose of the appeal itself after waiving the condition of pre-deposit.

3. The brief fact of the case are that appellants are engaged in manufacture of Biscuits falling under chapter 1905 of Central Excise Tariff Act, 1985. They have been availing services of goods transport agency. Service tax on goods transport agency services being payable under reverse charge, appellants obtained Service Tax Registration and paid service tax thereon. During the period May 2007 to March 2008, appellants paid service tax of Rs. 2746973/- against actual liability of Rs. 1363228/- resulting in excess payment of Rs.1383745/-. Therefore appellants filed a refund claim on 02-01-2009 claiming refund of excess service tax paid Rs. 952164/- Vide Order-in-Original No. 01/ST/Refund/ 2009-10 dt. 17-07-2009, the learned Assistant Commissioner granted refund of Rs. 952164/- which had been paid during last one year and held that the excess amount of Rs. 431581/- could be adjusted in subsequent payment.

4. The jurisdictional Commissioner vide Order-in-Revision dt. 08-07-2011 passed under section 84 of Finance Act, 1994, ordered for recovery of Rs. 1559695/- (Rs. 995638/- + Rs. 564057/-) under the provisions of section 73 read with section 84 of Finance Act, 1994. He observed that the Assistant Commissioner has granted refund of Rs. 995638/- excess paid during May 2007 to November 2007 by way of adjustment against the service tax liability for the subsequent period; Section 11B of Central Excise Act 1944 provides that refund claim can be filed with in one year from the date of payment of duty; therefore the refund granted by way of adjustment was barred by limitation. For the period December 2007 to March 2008, appellant had paid Rs. 952164/- against actual liability of Rs. 564057/-. Therefore appellant was eligible for refund of Rs. 388107/- but the Assistant Commissioner granted refund of Rs. 952167/-. Hence excess amount of Rs. 564057/- refunded to the appellants was held to be recoverable.

5. Mr. Kapil Vaish, Chartered Accountant on behalf of the appellant submitted that Order-in-Original dt. 17-07-2009 could not have been reviewed/revised vide order dt. 08-07-2011 without issuing notice under section 73(1) for recovery of erroneous refund. Reliance in this connection has been placed on :-

(i) Circular No. 423/56/98-CX dt. 22-09-1998.

(ii) Gillooram Gouri Shanker Vs CCE reported in 2001 (137) ELT 330.

(iii) Rosemount (I) Ltd Vs CCE reported in 1998 (99) ELT 502.

He further argued that in view of provision of Rule 6 of Service Tax Rules, 1994, service tax excess paid (during May 2007 to November 2007) could have been adjusted for payment of service tax for the subsequent period. In this regard, he referred to the judgment in the case of Gujarat NRE Coke Ltd Vs CCE reported in 2012 (27) STR 372.

6. It was claimed that amount of Rs.9,52,164 was unspent deposit and was liable to be refunded without any limitation. They also took the point that ld. Commissioner without considering the provisions of Rule 6 (1) A and 6 (3) observed that amount excess paid prior to January, 2008 could not have been adjusted against liability for subsequent period. It was also contended that refund of Rs.9,52,164/- was basically refund of advance deposit for which there was no time limit, it being not the payment of tax. Appellant submitted that when provision of Section 73 (1) specifically provided for issuance of show cause notice, ld. Commissioner could not have invoked the general provisions of section 84 for revising the Order-in-Original. Reference was made to Honble Bombay High Court Judgment in the case of Bajaj Auto Limited Vs. Union of India reported in 2003 (151)-23 BOM. It was also stated that Order-in-Original dated 07/7/2009 passed by the Adjudicating Authority could not have been reviewed/revised vide Order dated 8/7/2011 without issuing notice under section 73 (1) for recovery of erroneous refund.

7. Mr. B.B. Sharma, DR argued that the adjudicating authority could not have allowed adjustment of service tax excess paid during May 2007 to November 2007 in their subsequent liability for payment of service tax. He also submitted that appellants were at best eligible for refund of Rs. 388107/- for the period November 2007 to March 2008 but the adjudicating authority has wrongly granted refund of Rs. 952164/- resulting in excess refund of Rs. 564057/-. He therefore supported the impugned order and argued that the Commissioner had correctly ordered for recovery of amounts wrongly refunded to the appellants.

8. Heard both sides and gone through the records.

9. I find, it is un-disputed that during the period May 2007 to March 2008, appellants had excess paid service tax amounting to Rs. 1383745/-. Against the aforesaid excess payment, the adjudicating authority allowed refund of Rs. 952164/- and ordered for adjustment of balance amount of Rs. 431581/- in subsequent payments. The issue to be decided are:-

(a) Whether the learned Commissioner could have ordered for recovery of the amount refunded without issuing notice for recovery of erroneous refund under section 73(1) of Finance Act, 1994.

(b) Whether in view of Rule 6(3) of Service Tax Rules 1994, appellants were eligible for adjustment of service tax excess paid.

10. It is seen that simple issue for consideration is whether in the absence of notice under section 11 (A) for recovery of erroneous refund within time limit prescribed therein. Whether such recovery is hit by limitation. It is observed that appellants have contended that since no demand for erroneously granted refund has been raised, department cannot force recovery for that amount. It was also submitted that when provision of section 73(1) specifically provided for issuance of show cause notice, Commissioner could not have invoked the general provisions of section 84 for revising Order-In-Original. Reference was made to Honble Bombay High Court judgment in the case of Bajaj Auto Limited Vs.Union of India reported in 2003 (151)-23 BOM. Reference was also made to Boards Circular No. 435/56/98-66 dated 22/9/1998, reference to judgement in the case of Gillooram Gori Shankar Vs. CCE reported in 2001 (167) ELT 330 and Rosemount (India) limited Vs. CCE 1998 (99) ELT 502

11. I find that Circular No.. 423/56/98 dt. 22-09-1998 by referring to the decision of Honble Supreme Court in the case of CCE Vs. Re-rolling Mills reported in 1997 (94) ELT 8 (SC) has clarified that timely demands should invariably be raised with in the normal period under section 11A of Central Excise Act, 1944. It also refers to the opinion of Law Ministry holding that the demand for recovery of erroneous refund has to be made under section 11A of Central Excise Act, 1944 with in the limitation period. Similar view has been taken by this Tribunal in the case of Motor Industries Company Ltd Vs CCE reported in 1999 (113) ELT 697; in the case of Gillooram Gouri Shanker Vs CCE reported in 2001 (137) ELT 330 and also in the case of Rosemount (I) Ltd Vs CCE reported in 1998 (99) ELT 502. I find that in the present case, show cause notice for recovery of erroneous refund under section 73 (1) has not been issued by the department. The Board Circular and the decision of Honble Supreme Court as well as this Tribunals judgment are squarely applicable in the present case. I, therefore, hold that the learned Commissioner could not have passed the impugned Order in Revision without issuing notice for recovery of erroneous refund under section 73 of Finance Act, 1994. The order is liable to be set aside on this ground alone.

Further ld. DR could not refer to any decision containing different findings nor could show that above referred decisions have been challenged.

12. In view of above, I find that appellant have successfully shown that the legal position is in their favour. Recovery of erroneously granted refund is not possible. Accordingly I set aside the impugned order and allow the appeal with consequential relief, if any, as per law.

(Pronounced in Court on 14.01.2015)

(MANMOHAN SINGH)

MEMBER (TECHNICAL)

K. Gupta

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