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2014 DIGILAW 344 (GUJ)

WELSPUN INDIA LTD v. UNION OF INDIA

2014-03-06

AKIL KURESHI, SONIA GOKANI

body2014
ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Heard the learned counsel for the parties for final disposal of the petition. The petitioner has challenged an order dated 29.8.2013 passed by the Government of India, the revisional authority, by which an order dated 24.7.2012 passed by the Commissioner(Appeals), Rajkot came to be confirmed. 2. Brief facts are as under : 2.1. The petitioner is a company registered under the Companies Act. The petitioner is engaged in the manufacturing of bedsheets/towels falling under Chapter heading 63 of Central Excise Tariff Act, 1985. The petitioner is one such unit located in Kutch availing the benefit of exemption notification no.39/2001 dated 31.7.2001. Under such notification, the petitioner was entitled to either refund of duty paid from the PLA or to avail self credit in the subsequent months. 2.2. For various consignments of goods cleared for export from the said factory, the petitioner filed rebate claims seeking refund of excise duty paid on such goods so exported. In response to such 127 separate rebate claims filed by the petitioner, the adjudicating authority issued show cause notices indicating that the notification no.39/2001 exempts goods cleared from the Kutch district by refunding the duty paid from the PLA and inasmuch as the goods were exempted by virtue of section 5A of the Act, the same cannot be treated as duty paid goods. 2.3. The petitioner replied to the show cause notices. The petitioner relied on an order dated 13.12.2005 passed by the Commissioner of Appeals which were in its favour. 2.4. It appears that the rebate claims were dismissed by the Assistant Commissioner passing two separate orders dated 8.3.2006 and 8.3.2007. Case of the petitioner is that such orders were never communicated to it. The department does not accept this position. We would however, advert to this aspect later. 3. It is undisputed that Rule 18 of the Central Excise Rules, 2002 was amended by notification no.37/07 dated 17.09.2008. This was followed by introduction of section 88 by the Finance Act, 2008 providing that notwithstanding anything contained in any order, judgement or decision of any Court, tribunal or authority, rebate of excise duty paid under the said notification was permissible in respect of exports covered during the period of 1.3.2002 to 7.12.2006. It is also not in dispute that all the rebate claims of the petitioner pertained to exports made during the said period. 4. It is also not in dispute that all the rebate claims of the petitioner pertained to exports made during the said period. 4. Laboring under the impression that rebate claims were still pending before the Assistant Commissioner, the petitioner wrote a letter on 14.5.2008 and stated as under : “Dear Sir, We filed Rebate Claims under rule 18 of central excise for the duty paid through PLA amounting to Rs.1300 lac approx upto 07.12.2006 which are pending/rejected by your office. The Govt. of India vide enactment in the finance bill 2008 has allowed the rebate of the duty which has been paid from the PLA account retrospectively from 01.02.2002 to 07.12.2006 vide section 8B of the finance Act 2008 read with 6th schedule. In view of the above amendment we hereby request you to sanction our rebate claims pending with your office at earliest.” 5. The Assistant Commissioner, thereupon passed several orders one of which dated 23.5.2008 is produced at Annexure C. He granted the rebate claim of Rs.4,91,544/- relying on section 88 of the Finance Act read with proviso to Rule 18. He also mentioned that previously this rebate claim was rejected by him on 8.3.2007. 6. Several other orders were passed by the said authority along the same line sanctioning all rebate claims which were previously rejected by him. The department challenged the action of the Assistant Commissioner before the Commissioner of Appeals contending that once rebate claims were already rejected, Assistant Commissioner could not have suo moto revised his own order and granted benefit even on the basis of law retrospectively amended. The Commissioner passed his order dated 24.7.2012 and allowed the appeals. He was of the opinion that the Assistant Commissioner having once already rejected the rebate claims, he could not thereafter, exercise suo moto powers. He relied on the decision of the Supreme Court in case of M/s. Mafatlal Industries Ltd. v. Union of India reported in 1997 (89) ELT 247 (SC) and held that the original order passed by the adjudicating authority rejecting the petitioner’s claims cannot be ignored. He did not have power of reopening the concluded proceedings unless such order was set aside according to law. He held that the amendment in rule 18 was meant to protect and validate the action already taken with retrospective effect. He did not have power of reopening the concluded proceedings unless such order was set aside according to law. He held that the amendment in rule 18 was meant to protect and validate the action already taken with retrospective effect. Such provision along with section 88 of the Finance Act, 2008 were never intended to affect or alter any proceedings which were contemplated. In view of such observations, he allowed the department’s appeal. 7. The petitioner filed appeal against the order of the Commissioner of Appeals. Such appeal was however, dismissed by the Government of India by the impugned order dated 29.08.2013. It was observed as under : “7. On perusal of records, Government observes that the applicants engaged in the manufacture of Bed Sheets/Terry Towels, has availed the benefit of areas based exemption notification No.39/01CE(NT) dated 31.07.2001 and opted for recredit of Central Excise duty paid through PLA in the next month. The amount of refund by way of recredit in terms of Notification NO.39/01CE(NT) dated 31.07.2001 also included the portion of duty which was paid on goods cleared for export under claim of rebate under Rule 18 of the Central Excise Rules, 2002. Subsequently, the applicants filed rebate claims before jurisdictional Assistant Commissioner of Central Excise. Show cause notices were issued proposing rejection of rebate claims on the ground that amount of duty paid through PLA on such exported goods was already refunded to them by way of self recredited in terms of notification No.39/01CE(NT) dated 31.07.2001. The adjudicating authority rejected the said rebate claims vide Orders in original No.14 to 20/AC /0607 dated 08.03.2007, 01/AC/06 dated 08.03.2006 and applicant did not file any appeal against said orders as mentioned by Commissioner Appeals in his Orders in Appeal No.02 to 259/2009 dated 09.01.2009. Subsequently original authority sanctioned the said 127 rebate claims vide 127 Orders in Original of 2008 as mentioned in para 2.2 above. The department reviewed the said rebate sanction orders and filed appeals before Commissioner(Appeals) on the ground the original authority has no power to reopen the case suo moto once it has been adjudicated & rejected by him by issuing an appealable order. Commissioner(Appeals) vide orders in appeal No.2 to 259/2009/Comm(R)/RAJ dated 09.01.2009 allowed the department’s appeal by setting aside impugned rebate sanction orders of the original authority. Commissioner(Appeals) vide orders in appeal No.2 to 259/2009/Comm(R)/RAJ dated 09.01.2009 allowed the department’s appeal by setting aside impugned rebate sanction orders of the original authority. The show cause notices dated 12.02.2009 were issued for recovery of sanctioned rebate claims, pursuant to said orders in appeal dated 09.1.2009. Being aggrieved by the said orders in appeal dated 12.9.2009 the applicants filed writ petition before the Hon’ble Gujarat High Court who vide order dated 23.9.2009 restored the revision applications No.195/3,4,100/08RACX and directed this authority to decide the same within 3 months time. The Hon’ble High Court also set aside the said orders in appeal No.2 to 259/2009/Comm(R) RA dated 9.1.2009 and directed that it will be open for the Commissioner (Appeals) to decide the appeals contained in the said orders in appeal dated 9.1.2009 after the decision in Revisions Applications. The authority decided the said revision applications No.195/3,4 & 100/08RACX of M/s. Welspun Corp. ltd. formerly known as M/s. Welspun Gujarat Sthat Rohens Ltd and M/s. Welspun Trading Ltd vide GOI Revision Order no. 212214/10Cx dated 16.2.2010. Now Commissioner (Appeals) vide impugned common orders in appeal no.447 to 706/2012/Commr(A)/ RBT/RAJ dated 24.7.2012, decided the department appeals, relating to three parties including the instant cases of applicant. Commissioner(Appeals) decided the appeal in favour of department and set aside all these Order in original sanctioning rebate claims. Applicants have now filed these revision applications on grounds mentioned in para(4) above. Meanwhile, the department initiated action for recovery of sanctioned rebate claims pursuant to impugned orders in appeal dated 29.7.2012. The applicants filed Special Civil Application NO.14733 of 2012 and 14735 of 2012 against the said action of recovery of sanctioned rebate. The Hon’ble High Court vide order dated 12.12.2012 restrained the department from taking further action of recovery of sanctioned claims till the final disposal of these impugned revision applications. The revision applications filed by other two parties M/s Welspun Corp. Ltd. and M/s. Welspun Trading Ltd against the same common orders in appeal No.447 to 706/12 dated 24.07.2012 were decided vide GOI Revision Order No.599 to 858/13CX dated 28.6.2013. The instant revision applications filed by applicant against the same common Orders in Appeal no.447 to 706 dated 24.07.2012 are being decided by this order. 8. Ltd. and M/s. Welspun Trading Ltd against the same common orders in appeal No.447 to 706/12 dated 24.07.2012 were decided vide GOI Revision Order No.599 to 858/13CX dated 28.6.2013. The instant revision applications filed by applicant against the same common Orders in Appeal no.447 to 706 dated 24.07.2012 are being decided by this order. 8. Government observes that the Commissioner (Appeals) decided the cases vide impugned orders in appeal dated 24.07.2012 in favour of the department by holding that the jurisdictional adjudicating authority having rejected the rebate claims initially, cannot reopen his own orders suo motu and sanction the rebate to the applicants and set aside the impugned 127 Orders in Original rebate sanction orders of 2008 mentioned in para. 2.2 above (which were also earlier set aside vide Orders in Appeal NO.2259 dated 09.01.2009). 9. Applicant has contended that the initial show cause notices issued proposing rejection of these rebate claims were pending and in the meantime the retrospective amendment in Rule 18 of the Central Excise Rules, 2002 came into existence by virtue of section 88 and sixth schedule of the Finance Act 2008 allowing such rebate claims for the period 01.03.2002 to 07.12.2006, that in pursuance to said amendment Assistant Commissioner Central Excise has rightly sanctioned their rebate claims. In this regard, Government notes that Commissioner (appeals) has categorically recorded in his Orders in Appeal 02 to 259/09 that said rebate claims were initially rejected by Assistant Commissioner Central Excise vide Orders in Original No.1,14 to 20/AC/0607 dated 08.03.2006 and no appeal was filed against said orders and therefore said orders have attained finality. This factual position is contrary to the claim of applicant. This position was stated in Order in Appeal dated 09.01.2009 and still applicant has shown ignorance about these Orders in Original dated 08.03.2006 rejecting rebate claims initially. As such this contention is contrary to facts and cannot be accepted. Applicant has not submitted any evidence that appeal was ever filed against Order in Original dated 08.03.2006 and therefore, Government has no alternative but to accept that no appeal was filed against Orders in Original dated 08.03.2006 and same has attained finality. Moreover the impugned Order in Appeal dated 24.07.2012 is not w.r.t Orders in Original No.01,14 to 20/AC/0607 dated 08.03.2006. So the said orders dated 08.03.2006 are not under challenge in this revision application. 10. Moreover the impugned Order in Appeal dated 24.07.2012 is not w.r.t Orders in Original No.01,14 to 20/AC/0607 dated 08.03.2006. So the said orders dated 08.03.2006 are not under challenge in this revision application. 10. Applicant has further contended that in view of GOI order No.559858/13Cx dated 28.06.2013, their revision application may be allowed. Government has held in para 8.4 of said order dated 28.6.2013 as under : 8.4 Government observes that the said issue was not involved in the revision applications in question i.e. Revision Application No.195/3,4 & 100/08RA, and therefore, the said issue was not considered This issue is raised in the present revision applications and as such it is to be considered as per law. In this regard, Government notes that it is a well settled legal position on this issue that after passing an appealable order, the authority become functus officio and cannot reopen the case suo moto to redecide the same. The original authority had no option to reopen the rebate claim which were already rejected and rejection order was upheld by Commissioner(appeals). The provision of section 88(2) of Finance Act, 2002 do not permit the authority reopen the decided case suo moto. The observation of Commissioner(appeals) as contained in para.12.2 of the Order in Appeal are reproduced below : “12.2 On careful reading of the amended provisions in rule 18 supra it is quite palpable that said provisions of retrospective amendment introduced in Rule 18 of Central Excise Rules only validates and legitimize or protects the action already taken, in consonance with the amendment, as if the law existed on the relevant date. The Retrospective amendment does not confer any power to the original authority to undo or alter any action already taken or completed by him. The words and phrases employed in subsection(2) of section 88 of the Finance Act, 2002 categorically emphasize that any action taken or done or purported to have been done at any time during the period commencing on and from the 1st day of March, 2002 and ending with the 7th day of December, 2006 under the rule as amended by subsection(1) shall be deemed to be and always to have been, for all the purposes, as validly and effectively taken or done, as if amendment made by subsection(1) had been in force at all material times. The amendment, thus emphasized that if any benefit had been extended or allowed before this retrospective amendment, it protects the action already taken during the said period, as if validity and effectively taken during the aforesaid material period between 01.03.2002 to 07.12.2006. At the cost of reiterating, it has to be observed that is not intended to undo an action taken by the lower authority, let alone reopening of cases. Any retrospective amendment enacted by the legislature is intended to validate and to decide the case pending at various levels whether it is before the adjudicating authority or before the appellate level. Had the intention of the amendment in Rule 18 of Central Excise Rules, been to start the proceedings of rebate/refund claims afresh from scratch from the level of the lower authority/Assistant Deputy Commissioner, it would have expressly stated therein. However, there is no such provisions in the amendment in the said rule.” Government is in agreement with these findings of Commissioner (appeals) and holds that the provisions of section 88(2) of Finance Act, 2008 do not mandate the reopening of already decided cases suo moto as is done in this case by original authority. Therefore, Government do not find any legal infirmity in the impugned orders in appeal w.r.t said issue and upholds the impugned Orders in appeal dated 24.07.2012 to this extent.” 10.1 In the instant case, the initial rebate rejection orders dated 08.03.2007 were not challenged in appeal. Otherwise facts of the cases are same. As stated above, Government has concurred with the finding of Commissioner(appeals) that after passing an appealable order the authority becomes functus officio and cannot reopen the case suo moto to redecide the same. In this case also same finding of Government holds good. Government therefore agrees with the said order of Commissioner(appeals) that original authority had rejected the rebate claims initially and he had no authority to reopen the said cases and sanction the claims on his own. Government holds that original authority has erred in sanctioning the said claim when his earlier orders rejecting the claims were in force. As such Commissioner(appeals) has rightly set aside the said Orders in Original of 2008. 10.2 Government notes that benefit of retrospective amendment in Rule 18 of Central Excise Rules, 2002 can be extended by following the due process of law. As such Commissioner(appeals) has rightly set aside the said Orders in Original of 2008. 10.2 Government notes that benefit of retrospective amendment in Rule 18 of Central Excise Rules, 2002 can be extended by following the due process of law. In this case the initial Orders in Original No.01, 14 to 20/AC/0607 dated 08.03.2006 rejecting the rebate claims were not challenged before Commissioner (appeals), and therefore have attained finality. In these revision applications the Order in Appeal dated 24.07.2012 w.r.t. 127 Order in original of 2008 is under challenge and no legal infirmity is found in said Order in Appeal as held in para 10.1 above. The initial Orders in original dated 08.03.2006 rejecting rebate claims have already attained finality. In case of other two parties M/s Welspun Corp. ltd and M/s. Welspun Trading India Ltd., the initial Orders in Original rejecting rebate claims were challenged before Commissioner (Appeals) who upheld the same. Thereafter, said Orders in appeal were challenged in revision applications before Central Government. So facts of instant case are altogether different. Therefore, in view of above position the ratio of GOI revision order dated 28.06.2013 cannot be made applicable to this case for the reason stated above.” 8. From the submissions made before us and the documents on record, what emerges is that the petitioner’s rebate claims though were rejected by the Assistant Commissioner on 8.3.2006 and 8.3.2007, according to the petitioner, such orders were never communicated to the petitioner company. The respondents have not accepted this aspect. However, in the affidavit in reply, it is stated that the office of the concerned Assistant Commissioner having been shifted in the year 2008, some of the documents were not traceable. It was therefore, not possible for the department to produce the proof of the service of the orders. Learned counsel for the petitioner pointed out that even before the appellate commissioner, the petitioner had canvassed that the Assistant Commissioner’s earlier orders were never received by them. At least at that time, the department could have placed the proof of service of orders, if such orders were actually served. 9. Under the circumstances, we have no choice but to proceed on the basis that the said orders were not served to the petitioner. 10. At least at that time, the department could have placed the proof of service of orders, if such orders were actually served. 9. Under the circumstances, we have no choice but to proceed on the basis that the said orders were not served to the petitioner. 10. This is crucial because the question of applicability of a retrospective amendment may have some bearing on the aspect whether the petitioner had accepted the orders of rejection of rebate claim and abandoned the proceedings. Even it was so established, perhaps the department could have argued that the basis of decision in case of M/s. Mafatlal Industries Ltd. v. Union of India(supra) that any change in law even with retrospective effect brought about much later, would not enable the petitioner to claim benefit of such change in view of the fact that the adjudicating authority’s order was not challenged by the petitioner. 11. In the present case, however, as already held by us, the petitioner was never served with such orders. It was therefore, that when the law was changed to its retrospective effect by virtue of introduction of proviso to section 18 of the Central Excise Rules and enactment of section 88 of the Finance Act, 2008, that the petitioner laboring under the impression that rebate claims were still pending adjudication before the Assistant Commissioner, wrote on 14.5.2008 and requested that in view of such amendment, the rebate claims be sanctioned. It was on this application that the Assistant Commissioner passed various orders including one produced at Annexure C dated 23.5.2008. All rebate claims which pertained to the period of 1.3.2002 to 7.12.2006 covered under the retrospective operation of the statutory provision, were granted. 12. Counsel for the Revenue would contend that letter dated 14.5.2008 of the petitioner itself would demonstrate that the petitioner was aware about the rejection of the rebate claims. If one reads the entire letter as a whole, I clearly emerges that the petitioner requested for allowing the rebate claims which were pending. Mere mentioning of rebate claims decided/pending cannot be read in isolation as to conclude that the petitioner was communicated the decision of the Assistant Commissioner. 13. We have some doubt about whether the Assistant Commissioner could have suo moto entertained such request and granted rebate claims once having already passed an order rejecting them earlier. Mere mentioning of rebate claims decided/pending cannot be read in isolation as to conclude that the petitioner was communicated the decision of the Assistant Commissioner. 13. We have some doubt about whether the Assistant Commissioner could have suo moto entertained such request and granted rebate claims once having already passed an order rejecting them earlier. If the petitioner was served with such orders and had chosen not to appeal against such orders, a serious question would arise, whether any retrospective amendment in the statute would enable the petitioner to revive such claim. In the present case, however, the petitioner was denied any opportunity of challenging the order passed by the Assistant Commissioner because such orders were never served to the petitioner. Had the orders being served, the petitioner could have availed the remedy and challenged the same before the Commissioner and if unsuccessful further before the tribunal. Therefore, the logic adopted by the Commissioner on the basis of decision in case of M/s. Mafatlal Industries Ltd. v. Union of India (supra), cannot be applied in the present case. 14. For the same reason, the contention of the counsel for the Revenue that at least when the petitioner came to know about the rejection of rebate claims by the Assistant Commissioner, the petitioner could and should have challenged the same cannot be accepted. The first point of time where from the record the petitioner can be stated to have been made aware about the rejection of rebate calims is order passed by the Assistant Commissioner on 23.5.2008 granting the rebate claims. In such order, he had referred to his previous order rejecting the rebate claims. However, when the Assistant Commissioner passed the said order on 23.5.2008, allowing the rebate claims, the petitioner had not cause left to file any appeal. To suggest that even after the Assistant Commissioner allowed all rebate claims, the petitioner could have traced back the earlier orders of 8.3.2006 and 8.3.2008 rejecting such rebate claims and prefer appeals, can simply not be accepted. By virtue of Assistant Commissioner’s further order passed in March, 2008, all rebate claims of the petitioner were allowed. He thereafter had no cause for preferring any appeal. In fact, it was the department which was aggrieved and therefore, rightly filed appeals before the Commissioner. 15. By virtue of Assistant Commissioner’s further order passed in March, 2008, all rebate claims of the petitioner were allowed. He thereafter had no cause for preferring any appeal. In fact, it was the department which was aggrieved and therefore, rightly filed appeals before the Commissioner. 15. Under the circumstances, in our opinion, the law retrospectively amended must be applied to the rebate claims of the petitioner. It is undisputed that such retrospective amendment in the statute covered all rebate claims. Therefore, if the petitioner’s rebate claims were pending either before the adjudicating authority or the appellate authority or the revisional authority, when such amendments were introduced, such amendments had to be applied to such pending proceedings. Resultant effect would be that rebate claims were granted. Merely because the petitioner was prevented from preferring such further proceeding on account of the orders passed by the adjudicating authority were not communicated to the petitioner, situation cannot change. 16. In the result, order passed by the revisional authority dated 29.8.2013 confirming the order of Commissioner (Appeals) is quashed. Orders of adjudicating authority granting rebate claims to the petitioner are reinstated. 17. Petition is disposed of accordingly.