Standard Industries Limited vs Union of India

Akil Kureshi, J.—Petitioners are aggrieved by the action of the respondents in not sanctioning the refund claim of Rs. 17,34,292/-. Petition is heard for final disposal, with the consent of the learned advocates for the parties. Petition arises in following factual background :-

The petitioners had disputed a duty demand of Rs. 18,06,544/- made by the Department towards Excise duty. Ultimately, the issue was decided by the Customs, Excise & Gold [Control] Appellate Tribunal, West Regional Bench, Mumbai [hereinafter referred to as, "the CEGAT"] by judgment dated 27th June, 2003 2003 (157) ELT 713 in the following manner :-

In the Notification 33/90 there is a reference to execution of bond in terms of paragraph (vi) of the notification, but, the show cause notice does not state that the claim is made on the bond but under Rule 9(2) of the Central Excise Rules. The said rule provides for removal of manufacturing goods from the factory of production. The production here was PSF, which was made by the Reliance Industries Limited and not by the appellant. But the duty has demand on the appellant. The demand under Rule 9(2) of the Central Excise Rules demanding duty on PSF on the appellant who is not a manufacturer of raw material is wrong in law. We make it clear that the department is at liberty to proceed to enforce the bond if any furnished by the appellant in accordance with law if so advised.

Hence, the impugned order is set-aside and the appeals stands allowed with consequential relief.

Pursuant to the said order, the petitioner demanded refund of amount of Rs. 17,34/292/- previously deposited with the Department under protest.

Competent Authority, instead of granting refund, vide Order dated 25th February 2004, though sanctioned such amount, further ordered its appropriation as against the Government dues of Rs. 18,06,554/- as payment was not made against the bonds. In the order, the Assistant Commissioner, Central Excise & Customs, Division-IV, Surat; in view of the judgment of the CEGAT, held that the petitioners are entitled to refund, however, in paragraph-9 of the Order, he made following observations :-

As per the Hon''ble CEGAT order, I enforced the bonds furnished by the party for Rs. 3,00,000/- dtd. 26-12-1990, for Rs. 9,25,000/- dated 26-12-1990 and 6,04,000/- dtd. 9-7-1993 vide letter F. No. IV/16-9/91/MP dtd. 29-1-2004 and directed the claimant to pay up Rs. 18,06,554/- within 10 days as per the conditions of bond. Till today, i.e., 25-2-2004 they have not paid the such amount and therefore, I have the only option to appropriate, the said amount from the present refund claim of Rs. 17,34,292/-.

On the basis of such observations, though on one hand, he sanctioned the refund of Rs. 17,34,292/-, provided that the same shall be appropriated against the Government dues of Rs. 18,06,554/- as the petitioner had not paid the bond amount.

The petitioners, therefore, once again, after filing another appeal before the Commissioner (Appeals), approached the Tribunal. The Tribunal, this time around, passed an Order dated 15th December 2008 [2009 (245) ELT 427 (Tri.-Ahmd.)] and observed as under :-

We have considered the submissions. In this case, duty demand arose because of failure to account for Rs. 137642/- kgs. of polyester staple fibre which were procured under Chapter Procedure but without payment of duty. The demand was confirmed under Rule 9(2) of the Central Excise Rules. The matter reached the Tribunal and after considering submissions of the appellant the demand under Rule 9(2) was set-aside and liberty was given to the Revenue to enforce the Bond. After the order issued by the Tribunal, the department has simply enforced the bonds and bank guarantees available with them and also adjusted the amount of refund due to them. The appellants have submitted that in absence of details of the bond, they are not aware as to which were the bonds enforced by the department. It is also their submission that inspite of their efforts, they could not find bonds executed by them to the extent of amount of Rs. 18,06,554/- payable to the department. We find considerable force in the arguments advanced by the appellant and therefore direct the original adjudicating authority that he should give the details of bonds enforced to the appellants.

The petitioners contending that in the said Order dated 15th December 2008, the CESTAT did not decide the question of refund claim, filed application for rectification of the mistake. On such application, the CESTAT vide its Order dated 3rd July 2009 [2009 (243) E.L.T. 458 (Tri.-Ahmd.)] ordered modifying paragraph 4, to read as under :-

The order ordering appropriation of refund amount towards amount due as per the enforcement of the bond is set aside and the original adjudicating authority is directed to decide the issue relating to the appropriation of the amount afresh.

It is the case of the petitioners that upon the last order passed by the Tribunal, there was no confusion left in the right of the petitioners to seek refund, despite which, the authorities are not sanctioning the refund. They have issued notices to the petitioners to remain present for personal hearing. The petitioners'' request for giving details and copy of bonds have not been accepted. The petitioners are, therefore, unable to defend properly and in the meantime, their refund claim is getting delayed.

Respondents have filed reply raising several averments; particularly, that in terms of the bonds, the petitioners were liable to pay amount of Rs. 18,06,554/-.

Since refund claim proceedings are pending with the Assistant Commissioner, we are not needed to decide the validity of rival contentions; except for noting that when in two rounds of litigations, the Tribunal had already set-aside the demand of excise duty against the petitioners, the refund claim should be processed expeditiously, without any further delay. We are conscious that the Tribunal, in the first order itself, had commented on the Department''s liberty to proceed to enforce the bond in accordance with law. The case of the petitioners, however, is that they are not aware of such bond; if any, given. In any case, the Department must point out the reason why they seek to enforce the bond. They have been asking details thereof, which are not supplied till date. Under the circumstances, we disposed of this petition with following directions :-

[a] Respondents shall supply copy of the bonds, or such other documents; as may be available with them, with respect to such bonds, within four weeks from today;

[b] Upon receipt of such documents or communication from the Department, it would be open for the petitioners to file additional reply within four weeks thereafter, raising all contentions available to them with respect to such bonds;

[c] After above stage is completed, the Asstt. Commissioner shall fix the date for personal hearing, on which date, the petitioners or their representative, may remain present;

[d] Such proceedings shall be concluded in accordance with law and subject to cooperation by the petitioners shall be decided, as expeditiously as possible; preferably within four months from today.

With respect to rival contentions, we make no observations. We are sure, the Asstt, Commissioner shall process the request, bearing in mind previous orders of the Tribunal, which we have already noted in this order.