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2016 (2) TMI 288 - CESTAT NEW DELHI

2016 (2) TMI 288 - CESTAT NEW DELHI - 2016 (332) E.L.T. 351 (Tri. - Del.) - Demand of Interest - Refund by taking credit of the amount in their cenvat account and thereby taking a suo motto refund of pre-deposit - Held that:- As per the appellate order dated 22.6.2007 the pre-deposit amount has to be refunded to the respondent. The act of the respondents in taking refund of the amount by crediting the amount in their cenvat credit account, is only a procedural lapse. After taking credit, the res .....

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r in any case ought to have considered the letter dated 22.2.2008 as an application for refund. As the amount is payable/refundable to the respondents w.e.f.22.6.2007, do not find any ground to demand interest on the very same amount alleging that the respondents took credit irregularly. The impugned order calls for no interference. - Decided in favour of assessee - Appeal No. E/52862/2014-Ex-SM, with E/CO/54535/2014 - Final Order No. A/53429/2015-SM(BR) - Dated:- 12-11-2015 - Sulekha Beevi CS, .....

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o get refund of pre-deposit. For better understanding of the issue under consideration, it is necessary to narrate the events chronologically which is as under: 1.1 M/s. Sainsons Paper Industries Ltd., the respondents herein, are engaged in the manufacture of paper and paper board. On scrutiny of the records, it was observed by the department, that during the period March, 2000 to May, 2000, the respondents herein availed modvat/cenvat credit on the inputs which were also used in the manufacture .....

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ed the appeal in favour of the respondents herein with consequential relief, if any. During the pendency of this appeal, the respondents herein had made pre-deposit of ₹ 10,91,728/- under section 35F of Central Excise Act, 1944. 2. The appeal having been allowed in their favour with consequential relief, the respondents herein under the belief that they could take refund of pre-deposit by suo moto credit in their cenvat credit account took credit of ₹ 10,91,728/- in June, 2007 and de .....

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en credit of ₹ 10,91,728/- being the amount of pre-deposit on the basis of the Order-in-Appeal dated 22.06.2007. That respondents could not take credit of the amount of pre-deposit of ₹ 10,91,728/- without filing an application for refund. After adjudication of this show cause notice, Order-in-Original dated 2.4.2009 was passed confirming the disallowance of credit and ordered recovery of the same along with interest, besides imposing penalty. 3. Being aggrieved by the above order, t .....

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application for refund of ₹ 10,91,728/- dated 31.12.2010 which is said to be received by department on 11.1.2011. Thereupon a show cause notice dated 4.4.2011 was issued proposing to reject the refund claim on the ground that the application is time barred. After adjudication, the order-in-original dated 26.4.2011 was passed rejecting the refund claim for the reason that the application is time barred as per section 11B of the Central Excise Act, 1944. The said order was challenged by res .....

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cause notice dated 9.4.2012 was issued to the respondents proposing to consider afresh the very same refund application dated 11.01.2011. The grounds alleged in this show cause notice are twofold (i) That the application for refund is time barred as per section 11B of Central Excise Act, 1944 (ii) That the said amount of ₹ 10,91,728/- was under demand vide order dated 2.4.2009 and as upheld by Order-in-Appeal dated 3.11.2010 which disallowed taking suo motto credit. After adjudication of t .....

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ed 29.6.2012 was challenged by the respondents herein by filing an appeal. The Commissioner (Appeals) vide order-in-appeal dated 23.1.2014 which is the order impugned in the present appeal before me, set aside the demand of interest and allowed the appeal filed by the respondents herein, on the ground that no demand for interest was raised in the show cause notice. The Revenue is in appeal now challenging the said order, which set aside the demand for interest. 7. The contention of the Revenue i .....

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8. The respondents have filed cross objections and denied their liability to pay interest. The main argument raised by the counsel for the respondents is that the respondents had submitted a letter dated 22.2.2008 requesting to order sanction of refund. That as per Board's circular, no application is required to be submitted for refund of pre-deposit. That from the date of Order-in-Appeal dated 22.6.2007, when the appeal was allowed in their favour with consequential relief, they were entit .....

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l by debit entry in their Cenvat Credit account in May 2006. The Order-in-Appeal dated 22.6.2007 allowed their appeal with consequential relief. Thus they became entitled to get refund of the pre-deposit amount. The respondents took refund of the amount by taking credit of the said amount in their Cenvat credit account in June, 2007. They declared the same in their ER-I returns of July, 2007. On 22.2.2008 they submitted a letter to Assistant Commissioner, Ambala requesting to issue formal orders .....

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t may kindly be passed at the earliest. We may add that we had approached the Superintendent Central Excise of our range for the above and that he has advised us to make a request to you directly in the matter. We may add that Central Excise Board had clarified vide their circular No.275/37/200-CC 8A dated 02.01.2002 that in such cases the pre deposits will be refunded without any application from the assessee." 11. It is seen that the department has then issued a show cause notice dated 28 .....

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.T.C. Ltd. reported in 2005 (179) ELT 15 (SC) held that interest is payable to the party on delayed refund of pre-deposit @ 12% p.a. commencing from three months after final disposal of the dispute between the parties. The relevant portion of the order is reproduced as under: The issue in this appeal and in several other appeals is whether the pre-deposit made as a pre-condition for the hearing of the appeal under the Central Excise Act, 1985 was, on the assessee being ultimately successful, ref .....

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ft circular. The draft circular shall be appended to and the contents form part of this order. The appeal is disposed of. In view of this order any judgment of any High Court holding to the contrary will no longer be good law. 12.2 The above judgement held that interest is payable on the pre-deposit commencing from three months after the final disposal of the dispute between the parties. This Tribunal after referring to the C.B.E. & C Instruction No.F.275/37/2k-Cx.8A dated 2.1.2002 and C.B.E .....

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rest on delayed refund of pre-deposit. The relevant section is reproduced as under: "Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner (Appeals) or the Appellate Tribunal (hereinafter referred to as the appellate authority), under the first proviso to section 35F, is required to be refunded consequent upon the order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the a .....

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fund of pre-deposit, as per Board circulars even without submitting an application, and was also entitled to interest for delayed refund as per the dictum laid in the case of ITC Ltd. (supra). After 10.5.2008, the new section 35FF provides that the pre-deposit, is required to be refunded consequent upon the order of the appellate authority, and such amount if not refunded within three months from the date of communication of such order to the adjudicating authority, the party is entitled to get .....

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