9911796707
TMI Blog2008 (12) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ading No. 33.04. The Central Excise Department recovered a sum of Rs. 4,78,45,990.30 towards excise duty on the said goods on the basis of the said goods being classified under Chapter Heading No. 33.04. 2. The petitioner-company challenged the classification of the said goods before the Delhi High Court. The Delhi High Court by its judgment and order dated 20-5-1999, classified the said goods as a drug under Heading No. 30.03. The petitioner-company filed Refund Claim dated 30-12-1999 for the excise duty paid by the petitioner of Rs. 4,78,45,990.30. It is the case of the petitioners that the petitioners were entitled to claim interest on the said amount in terms of the provisions of the Central Excise Act, 1944, in the event of delay beyond three months in the settlement of the said Refund Claim. It is the case of the petitioners that the petitioners reserved their right to claim interest in terms of Section 11B of the Central Excise Act, 1944. 3. The Central Excise Department issued a show cause notice dated 7-4-2000 and called upon the petitioners to show cause as to why their Refund Claim should not be rejected on the ground that the petitioners had already passed on the burd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleased to dismiss the said petition holding that, "the same was pre-mature on account of pendency of the department's appeal before the CESTAT". (emphasis supplied), but was pleased to order expeditious disposal of the department's appeal. 7. The learned senior advocate for the petitioners submitted that the decision of the Delhi High Court on the issue of classification of the product, which was in favour of the petitioners, was challenged by the department before the Hon'ble Supreme Court of India. The Hon'ble Supreme Court of India by its judgment and order dated 1-11-2004 dismissed the department's Civil Appeal. The learned advocate for the petitioners submitted that thus, the classification of the goods, as claimed by the petitioners, stood approved by the Hon'ble Supreme Court of India. 8. It is the case of the petitioners that pursuant to the order of this Court in Special Civil Application No. 8375 of 2004, whereby the department's appeal pending before CESTAT against the order of Commissioner (Appeals) dated 1-10-2004 was expedited, an early hearing was granted by the CESTAT. The CESTAT by order dated 12-1-2005 confirmed the findings of the Commissioner (Appeals) and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid by the department. The Misc. Application filed by the petitioners was disposed of by the CESTAT by observing that, "the Commissioner (Appeals) or the Tribunal in the order had not granted interest". 13. The learned senior advocate for the petitioners submitted that even at the cost of repetition, he is to reiterate that in fact, by order dated 12-1-2005, CESTAT confirmed the findings of the Commissioner (Appeals) and dismissed the department's appeal, the CESTAT had also disposed of the cross objections filed by the petitioners claiming interest on the delayed refund; that the Commissioner (Appeals) by its order dated 1-10-2003 had allowed the appeal filed by the petitioners praying for refund of Rs. 4,78,45,900/- 'with interest', (emphasis supplied). The learned senior advocate for the petitioners submitted that as the Commissioner (Appeal) had allowed the appeal filed by the petitioners and had granted refund of Rs. 4,78,45,900/- with interest, the CESTAT had confirmed the order passed by the Commissioner (Appeals) and disposed of the cross objections filed by the petitioners, is to be construed to have confirmed the order of refund with interest. 14. On perusal of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced herein below :- "1. Rule. Mr. Harin Raval, learned Assistant Solicitor General of India, waives service of notice on behalf of the respondents. Having regard to the facts of the case, the application is heard today. 2. By filing the instant application, the applicants have prayed to permit them to amend the memorandum of Special Civil Application No. 21462 of 2005 by adding paragraphs 15(A) and 15(B) as well as grounds (L) to (X) and prayer clause 24(cc). 3. This Court has heard the learned counsels for the parties. In view of the averments made in the application, this Court is of the opinion that the prayer to amend the petition and the prayer clause deserves to be granted. Hence, the prayer made in paragraph 23(B) of the application is granted. The petitioners are directed to carry out the amendment in the memorandum of Special Civil Application No. 21462 of 2005 on or before February 28, 2007. 4. It is clarified that it will be open to the respondents to file reply to the amended petition and contend that the challenge to the order passed by the CESTAT on August 22, 2005, is not maintainable in the instant petition. Subject to the above referred to clarification, Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority for grant of statutory interest. 24 (ccc) That this Hon'ble Court would be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other approached writ order or direction quashing and setting aside the order dated 5th October, 2006 at annexure "CC" to the Petition passed by the CESTAT to the extent it dismissed the Misc. Application No. E/MA (Ors) 2444/06 refusing to give any direction to the adjudicating authority for grant of interest." 18. This petition is contested by the department by filing affidavit in reply of one Shri Paul J.B. Fernandes, Deputy Commissioner of Central Excise & Customs, Division Vapi, Vapi affirmed on 15-12-2005. Another affidavit of one Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi, on behalf of respondent No. 3 affirmed on 15-6-2007 is also filed. The case of the respondent authorities is set out in detail in these affidavits. 19. The department, before dealing with the contents of the petition as originally filed and additional contents placed on record after the amendment pursuant to the orders of this Court dated 21-2-2007 rendered in Civil Application - for Amendment Nos. 1402 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment requesting to grant extension of time for implementation of the final order dated 12-01-2005 of the tribunal ordering refund. That the Hon'ble CESTAT after hearing both the parties clearly recorded in para-3 the following findings. "It is seen that neither the original authority nor the Commissioner (Appeals) or the Tribunal in their orders have granted interest. From the photocopy of the Hon'ble Gujarat High Court order dated 18-7-2005 it is seen that tax appeal No.538/2005 filed by the Commissioner of Central Excise has been dismissed along with Civil Application No. 126/2005 None of the aforesaid order granted interest to the appellants. It is brought to our notice by both the sides that the principal amount has already been refunded to the appellants." After recording the said finding, vide observations and directions contained in para-4 of the aforesaid order, the Hon'ble CESTAT, after hearing both the sides and perusing the record, clearly found that there was no order of interest by the adjudicating authority, Commissioner (Appeals), Tribunal or the Hon'ble High Court and, therefore, held that the Tribunal cannot give any direction to the adjudicating authority for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not entitled to the amended writ as prayed for while challenging the order of the CESTAT dated 22nd August, 2005. I, therefore, respectfully submit that both on the ground of maintainability of a writ petition and on the ground of delay, latches and acquiescence the petitioners are not entitled to the relief notwithstanding that this Hon'ble Court has permitted the petitioners to amend the petition by way of incorporating the relief as contained in para 24(cc) of the petition. 7. That not being satisfied with the dismissal of the earlier application by the CESTAT vide its order dated 22nd August, 2005, the petitioners moved yet another application by way of E/MA(ORS)/2444/06 in Appeal No. E/71/04 seeking an order from the CESTAT to direct the department to comply with the order dated 12-1-2006 (which already stood complied with as observed by the Hon'ble CESTAT in its earlier order dated 22-8-2005 when earlier application stood dismissed) to the extent that statutory amount of interest claimed by the petitioners was allegedly due on the refund sanctioned amounting to Rs. 2,53,81,156.02 ps. with a further direction that the same be ordered to be paid to the applicants. 8. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R4. 9. I respectfully submit that in view of the aforesaid order, the repeated application stood rejected. That though this order was pronounced on 5-10-2006, no steps were taken to challenge the same by way of filing an appeal under Section 35G of the Central Excise Act, 1944 and, therefore, the said order cannot be made subject matter of a challenge in a writ petition under Article 226 of the Constitution of India. Therefore, in view of the liberty reserved vide order dated 21-2-2007 rendered in Civil Application for amendment No. 2738/2007, it is respectfully contended that the writ petition seeking such a prayer is not maintainable. Such a relief is also barred by delay, latches and acquiescence inasmuch as after unreasonable period the said order is sought to be challenged. I further respectfully submit that the conduct of the petitioners has also disentitled itself to the grant of such a relief since knowing fully well that earlier no such relief was granted by the Tribunal at the time of rendering the first order in the main appeal pronounced on 12-1-2005, the petitioners moved an application which came to be rejected on 22-8-2005. That the petitioners permitted the said or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use why it should not be rejected under Section 11D read with Section 12B of the Act and further calling upon the petitioners to show-cause as to why it should not be rejected under Section 11B(1) of the Act on the ground as the petitioners failed to file the refund claim within the prescribed period of six months as prescribed in Section 11B(1) of the Act. That reply was filed by the petitioners in defence to the show-cause notice only on 28-9-2000. 11. It is submitted that the decision of the Hon'ble Delhi High Court was dated 20-5-1999 and the application was received only on 17-1-2000 as stated hereinabove. That personal hearings were held on the following dates, viz. 20th April, 2000, 15th May, 2000, 14th June, 2000, 5th July, 2000 and 5th October, 2000. Thus, reply was filed after four dates of hearing had gone by. After the last hearing held on 5-10-2000, the petitioners' representative made request for time to file written submissions, which was filed on 25-10-2000. That by an order dated 21-12-2000 finding that grant of refund to the petitioners would unduly enrich them while sanctioning the refund, it was ordered to be transferred to Consumer Welfare Fund only. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the petitioners are not entitled to any relief as prayed for in the petition and the petition deserves to be dismissed." 21. Coming to law, the learned senior advocate for the petitioners submitted that the law is very clear on the point. The learned senior advocate for the petitioners submitted that under Section 11BB of the Central Excise Act, it is mandatory to pay interest on delayed refund made by the department. Section 11 BB reads as under :- "11BB. Interest on delayed refunds. - If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent, and not exceeding thirty per cent, per annum as is for the time being fixed by the Central Government by notification in the Official Gazette on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund on such duty : Provided where any duty ordered to be refunded under sub-section (2) of section 11IB in respect of an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon a decision of the Rajasthan High Court in the matter of J.K. Cement Works v. Asstt. Commissioner of Central Excise & Customs, reported in 2004 (170) E.L.T. 4 (Raj.). The learned senior advocate for the petitioners submitted that the Rajasthan High Court was pleased to hold that the scheme of payment of interest is integrated by reading together Sections 11B and 11BB of the Central Excise Act, 1944. The learned senior advocate for the petitioners further submitted that the Rajasthan High Court was pleased to hold that after refund having become due, delay in deciding whether it was to be paid to assessee or credited to Consumer Welfare Fund would not alter the fact that department could not have retained the tax collected without authority of law. The learned senior advocate for the petitioners submitted that what is held in that decision is that assessee would be entitled to interest for period of delay in refund which ought to have been granted within three months from the date of application for the same. 22.2 The learned senior advocate for the petitioners also relied upon a decision of the Hon'ble the Apex Court in the matter of Ranadey Micronutrients v. Collector o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Section 11BB of the Central Excise Act, 1944 is clear. It provides for payment of interest to the applicant in whose favour there is an order of refund of the duty paid by him and which is not refunded within three months from the date of application under sub-section (1) of Section 11B. 25.1 The decision of the Hon'ble the Apex Court in the matter of Union of India v. E. Merck (India) (supra) is in Civil Appeal No. 6033 of 1993 was rendered on 8-12-1994, i.e. prior to insertion of Section 11BB by the Finance Act (22 of 1995) Section 75 on 26-5-1995. In that case, the question which arose for consideration of the Hon'ble the Apex Court was, 'the High Court to issue a writ of mandamus, directing the revenue to pay interest on the amount of excess duty refund to the respondent'. The Hon'ble the Apex Court has observed as under in paragraph No. 3:- "3. Admittedly, there is no statutory basis for the claim of interest made by the respondent in its writ petition inasmuch as there is no provision in the statute imposing an obligation on the revenue to pay interest on the amount refunded. The respondent's claim for interest was also not based on any other statutory provision." 25.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners by note dated 27-3-2008, a copy of which was served to the learned Assistant Solicitor General of India Mr. Harin P. Raval. The learned senior advocate for the petitioners submitted that there, it was the plea of the revenue itself that interest payable after the expiry of three months from the date of application for refund has to be on different rates for different periods, as fixed by different notifications and the said plea was accepted by the CESTAT. The learned senior advocate for the petitioners submitted that accepting the aforesaid plea of the revenue, the CESTAT was pleased to rectify its earlier order. 28.1 The calculation at various rates is also furnished by the learned senior advocate showing the difference after the interest is calculated at a flat rate of interest at 9% and after it is varied from time to time for different period blocks. 29. The learned Assistant Solicitor General of India submitted that the challenge to order dated 22-8-2005 passed by the CESTAT is required to be turned down in view of the submissions made by the revenue. 29.1 As stated earlier, the revenue has filed affidavit of one Shri A.B. Lala, Assistant Commissioner, Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22-8-2005 or order dated 5-10-2006 will amount to doing away with the statutory period prescribed for filing an appeal against such order, which is 180 days. 31. Coming to the crux of the matter, what is required to be seen is that the petitioners filed application for refund on 30-12-1999; on the said application, an order was passed on 21-12-2001, whereby the department admitted the refund, but transferred the amount to Consumer Welfare Fund; being aggrieved by that order, the petitioners filed an appeal before the Commissioner (Appeals), which was allowed by order dated 1-10-2003 holding that there was no unjust enrichment on the part of the petitioners; against this order, the department filed an appeal before the CESTAT; in the said appeal, the petitioners filed cross objections; the CESTAT by order dated 12-1-2005 dismissed the appeal filed by the department and allowed the cross-objections; against that order, the department filed before the High Court and that appeal was finally dismissed by the High Court on 18-7-2005. That being so, the petitioners finally became entitled to refund on 18-7-2005, whereas the department has already paid refund amount to the petitioners o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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