Full Judgment
2. We have heard Shri Vineet Kumar and Shri K.C. Sachar, Departmental Representatives, for the appellant Collector and Shri D.N. Kohli, Consultant, for the respondents.
3. It was submitted on behalf of the Collector that the fact of reprocessing of brown sugar and the consequent loss of a certain quantity of sugar had not been disclosed by the respondents at the time the rebate was sanctioned. Unfortunately, the Bench did not have the benefit of perusing the show cause notices issued in this connection but Shri Vineet Kumar read out the show cause notices as available in his record from which it was apparent that there was no allegation of suppression or wilful mis-statement of facts on the part of the respondents. Shri Sachar added that, at the time the rebate was sanctioned, the department did not know, and had no means of knowing, about the reprocessing to be undertaken later. The respondents, on their undertaking reprocessing, should have intimated the facts to the department. The duty on reprocessed sugar was leviable only at the time it was cleared out of the factory. In the present instance, the department was seeking to recover an erroneous refund and the error was occasioned only when the reprocessing took place and a certain quantity of sugar was lost. The time of reprocessing and the loss were not disclosed to the department and the date of the DD2 should be taken as the date on which the department came to know of the erroneous refund.
In these circumstances, it was the extended period of limitation that would apply to the demand.
4. Shri Kohli, Consultant for the respondents, submitted that no suppression had been alleged in the show cause notice and an attempt was being made to put forward this ground only at the appeal stage. He further submitted that, as the Tribunal had held on previous occasion, there was no question of provisional rebates and the normal period of limitation would apply to demands for recovery of sums alleged to have been erroneously refunded.
5. We have considered the submissions of both sides. As already noted, the show cause notices did not allege any suppression or mis-statement of facts on the part on the respondent. The show cause notices, as seen from the record, seem to have proceeded on the basis that the rebate originally sanctioned was provisional subject to any later adjustment that might be found necessary. This stand of the department has been negatived by the Tribunal in its decision in the case of the Collector of Central Excise, Chandigarh v. Malva Sugar Mills, Co. Dhuri Cegat, nothing but refund and a rebate or refund once given could not be held to be provisional. Inasmuch as, therefore, no suppression or any of the other ingredients required by law, was alleged in the show cause notices and held to be established on the basis of evidence, the question of invoking the extended period of limitation for recovery of erroneous refund would not arise. In this view, the demand for Rs. 34,214.33 on the ground that the rebate had exceeded the actual quantum of exemption admissible on the quantity of sugar cleared out of the factory must be held to be barred by limitation since the notice was issued after the normal period of limitation. In so far as the demand for Rs. 4,618.63 on account of sugar lost in reprocessing, it also must be held to be not recoverable in view of the decision of this Tribunal in South India Sugars Ltd. v. Collector of Central Excise Madras . In the result the appeal is dismissed.