SONAL VYAPAR LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The appellants are manufacturers of non -alloy steel products falling under Chapter 72 of the CETA Schedule. During the material period, they were working under compounded levy scheme under Section 3A of the Central Excise Act. Accordingly, they had to discharge the duty liability in respect of their products on the basis of the Annual Capacity of Production (ACP) of their Mill determined by the Commissioner of Central Excise. For the period of dispute, the Commissioner had determined their ACP and accordingly fixed their monthly duty liability and they were paying duty accordingly. As they were of the view that the liability fixed by the Commissioner was on the higher side, they chose to pay duty on an ad -hoc basis from month to month. Thus, their duty payments for the period September 1997 to March 1999 was on an ad -hoc basis, pending revision of ACP and duty liability by the Commissioner. The Commissioner eventually revised their ACP and fixed a lower amount of duty to be paid for every calendar month. This happened in January 2000 and gave the appellants a cause of action for refund. They filed their refund claim with the Assistant Commissioner, who rejected it on account of time -bar and unjust enrichment. The appeal filed by the assessee against the decision of the original authority did not succeeded in full. The lower appellate authority allowed the claim but credited the amount to the consumer welfare fund. Hence the present appeal. The only issue arising for consideration is whether the above refund claim can be held to be hit by the bar of unjust enrichment created under Section 11B of the Central Excise Act. Both sides have addressed this issue and have relied on decisions of the Tribunal.

(2.) After considering the submissions, I find as under: a) Under the Central Excise Act, there, is a machinery for recovery of duty from a defaulter of duty leviable under Section 3 of the Act and the same is under Section 11A. But in respect of duty leviable (under the compounded levy scheme) under Section 3A of the Act, there is no separate recovery mechanism insofar as Hot Re -rolling Steel Mills (like the appellants) arc concerned. Though Rule 96ZP(3) of the Central Excise Rules, 1944 prescribed the mode of discharge of duty liability for Hot Re -rolling Steel Mills like the appellants, there was no provision for recovery in the event of default. Hence it cannot be said that the compounded levy scheme (which is 110 more in force) was self -contained in all respects. It lacked recovery mechanism. In the circumstances, the general provisions of Section 11A of the Act would be invocable for recovery of any amount of duty non -paid or short -paid, by the manufacturers who were working under the compounded levy scheme. This view, however, seems to be contrary to the view taken by the Tribunal's Larger Bench in Mohinder Steels Ltd. v. CCE, Chandigarh cited by ld. Counsel. (b) If Section 11A is held to be applicable to duty leviable under Section 3A of the Act, prima facie Section 11B cannot be kept out of the purview of a refund claim filed in respect of excess duty paid under Section 3A. c) In the case of Kothi Steel Ltd. v. CCE, Vadodara cited by ld. Counsel, it was held by the West Zonal Bench that the bar of unjust enrichment created under Section 11B was not applicable to a refund claim relating to duty paid under Section 3A of the Central Excise Act. On the other hand, in the case of K.B. Rolling Mills v. CCE, Hyderabad cited by ld. SDR, it was held by a coordinate Circuit Bench (Hyderabad) that the doctrine of unjust enrichment was applicable to such refund claims also.

(3.) As I am confronted by conflicting decisions of the Tribunal, I am unable to proceed further in the present case. In the circumstances, Registry is directed to place the records before the Hon'ble President for constituting a Larger Bench to resolve the above conflict.