Central Excise - No Recovery of Refund under Section 11A without Review Under Section 35E

By Vijay Kumar

AN erroneously refunded duty can be recovered under Section 11A of the Central Excise Act, but can such recovery be made without challenging the refund order? It should be simple logic that an Assistant Commissioner who passed a refund order himself cannot say that his order was erroneous and so he is demanding the erroneously granted refund. Even if the refund order was passed by another Assistant Commissioner, he cannot sit in judgement over an order passed by another Assistant Commissioner.

But litigation in Central Excise is not all that simple.

In an order delivered on 19.9.2007, the CESTAT held that recovery of erroneous refund can be made without review under Section 35E. - 2008-TIOL-42-CESTAT-MAD.

Recently, the Madras High Court allowed the appeal against the above order in which the question of law considered was,

"Whether there can be a demand notice under Section 11A of the Central Excise Act, 1944 by the Original Authority for alleged erroneous refund (earlier granted by the same Original Authority) without reviewing at all the refund order of the Original Authority by the Superior Authority in terms of Section 35E of the Act ibid?"

Please see Breaking News for details of the case