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2016 (10) TMI 452 - BOMBAY HIGH COURT

2016 (10) TMI 452 - BOMBAY HIGH COURT - TMI - Rejection of refund claim partly - Rule 5 of CCR - non-payment of interest on the refund - Cocoa powder / Cocoa Butter - 'manufacture' - labeling/repacking of Cocoa Butter and other products at Taloja Factory which amounting to manufacture in terms of Note 3 of Chapter 18 of the First Schedule to the Tariff Act read with Section 2 (f) of the Central Excise Act, 1944 - refund granted subsequently - whether for the purpose of calculation of interest th .....

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ed within a period of three months of receipt of such application, there would be no liability to pay interest. However, if the refund is granted after the expiry of the period of three months from the date of receipt of the application, then interest would also be payable on the amount of refund granted, from the date immediately after the expiry of three months from the date of receipt of such application, till the date of refund. - The Petitioner would be entitled to interest on the sum o .....

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petition allowed - decided in favor of petitioner. - Writ Petition No. 3555 of 2016 - Dated:- 7-10-2016 - S. C. Dharmadhikari And B. P. Colabawalla, JJ. Mr. Prakash Shah a/w Mr. Mihir Mehta i/b PDS Legal, for the Petitioner Mr. M. Dwivedi a/w Mr. Sham V. Walve, for the Respondent JUDGMENT [ Per B. P. Colabawalla, J ] 1. Rule. Respondents waive service. By consent of parties, rule made returnable forthwith and heard finally. 2. By this Writ Petition filed under Article 226 of the Constitution of .....

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as M/s Jindal Drugs Ltd ) is engaged in manufacture of Cocoa powder / Cocoa Butter falling under Chapter sub-heading No.1804 00 00 and 1805 00 00 of the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff Act ). The Petitioner undertakes labeling/repacking of Cocoa Butter and other products at its Taloja Factory which amounts to manufacture in terms of Note 3 of Chapter 18 of the First Schedule to the Tariff Act read with Section 2 (f) of the Central Excise Act, 1944 ( for sh .....

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dent No.2 disputed the entitlement of the Petitioner to the CENVAT credit of the duty paid on inputs on the ground that the activities undertaken by the Petitioner did not amount to manufacture. However, this dispute has been resolved in favour of the Petitioner by a majority order of the Appellate Tribunal vide Order No. A/914/15/EB dated 20th March, 2015 pronounced on 16th April, 2015. 6. It is further stated that pending the decision of the Appellate Tribunal, the Petitioner continued to expo .....

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2012 11/06/13 75,22,938/- December - 2012 11/06/13 1,28,93,276/- January - 2013 12/06/13 77,71,702/- February - 2013 13/08/13 74,24,270/- March - 2013 14/08/13 99,65,764/- April - 2013 14/08/13 42,65,979/- May 2013 to June 2013 26/11/13 3,45,08,728/- July 2013 to September 2013 26/11/13 2,40,76,855/- October 2013 to December 2013 22/04/14 7,13,19,317/- January 2014 to March 2014 29/05/14 8,34,37,785/- April 2014 to June 2014 11/09/14 7,54,11,780/- July 2014 to September 2014 24/12/14 9,27,44,336 .....

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Commissioner (Appeals) was pleased to allow the aforesaid eight Appeals following majority orders of the Appellate Tribunal and held that the impugned orders of the Refund Sanctioning Authority (Respondent No.2) are liable to be set aside and ordered that refund be sanctioned to the Petitioner without any delay. 9. Pursuant to the aforesaid order passed by the Commissioner (Appeals), Respondent No.2, by the impugned order, sanctioned the refund of ₹ 42,79,82,902/- and ordered recredit of .....

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r value. Respondent No.2 allowed the re-credit of the same to the Petitioner. The other rejection of refund of ₹ 1,19,95,597/- was due to non-consideration of the revised refund claims that were filed by the Petitioner at the instance of the Revenue. This amount was neither granted as a refund nor allowed as a re-credit. Respondent No.2, in the impugned order also did not grant interest on the delay in sanctioning / granting the refund to the Petitioner under Section 11BB of the Act. It is .....

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total refund due to the Petitioner is ₹ 44,46,42,651/- out of which ₹ 42,79,82,902/- has already been paid. Hence, the Petitioner is entitled to the balance refund of ₹ 1,66,59,749/-. It is further agreed that the petitioner shall debit the Cenvat balance of ₹ 46,64,152/- from its Cenvat account. This being the position, the only issue now to be decided by us is whether the Petitioner is entitled to any interest under section 11BB of the Act. 11. In this factual backdrop, .....

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the date of receipt of the application under sub-section (1) of Section 11B, then, the Applicant would be entitled to such rate of interest (as notified), from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. He submitted that in the present case the original refund applications were filed on various dates ranging from June 2013 to December 2014 and reproduced earlier. 12. These applications were rejected by .....

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ed Appeals before the Commissioner of Central Excise (Appeals), who thereafter set aside the orders of Respondent No.2 and was pleased to grant the refunds. Mr. Shah further submitted that Respondent No.2 passed the impugned order ex-parte without giving the Petitioner any opportunity to be heard. Respondent No.2 then rejected part of the claim without hearing the Petitioner and without putting the Petitioner to notice of the purported rejection of the part of the refund claim. We must mention h .....

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ed purpose of calculating and paying interest to the Petitioner in terms of section 11BB of the Act. 14. On the other hand, Mr Dwivedi, learned counsel appearing on behalf of Respondent Nos.2 and 3, submitted that the interest-free period of three months for processing the refund claim would start from the date of receipt of a complete refund application. Mr. Dwivedi submitted that in the facts of the present case, the Department will be liable to pay interest only from the date on which the rev .....

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e refund application. In the facts of this case, such application was only received much later when the Petitioner filed its revised refund claim on a quarterly basis. Therefore, the Petitioner would be entitled to interest only from the date of the revised claim being filed and not from the date of the original refund application, was the submission. 15. We have heard the learned counsels at length and perused the papers and proceedings in the Writ Petition as well as the annexures thereto. Bef .....

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of such duty or interest. This section further stipulates that the application shall be accompanied by such documentary or other evidence as the applicant may furnish to establish that the amount of duty or interest in relation to which such refund is claimed was collected from, or paid by him, and the incidence of such duty or interest has not been passed on by him to any other person. Thereafter, section 11-BB deals with interest on delayed refunds and reads as under :- 11-BB Interest on delay .....

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iry of three months from the date of receipt of such application till the date of refund of such duty; Explanation - Where any order of refund is made by the Commissioner (Appeals) Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11-B, the order passed by the Commissioner (Appeals) Appellate Tribunal ((National Tax Tribunal) or, as the case may be, by the Court shall be deemed to be an order passed under the said s .....

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r the expiry of three months from the date of receipt of such application till the date of refund of the duty. In a nutshell, what this section stipulates is that, once an application for refund has been made and the same is granted within a period of three months of receipt of such application, there would be no liability to pay interest. However, if the refund is granted after the expiry of the period of three months from the date of receipt of the application, then interest would also be paya .....

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under :- 12. It is manifest from the aforeextracted provisions that Section 11-BB of the Act comes into play only after an order for refund has been made under Section 11-B of the Act. Section 11-BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11-B of the Act, then the applicant shall be paid interest at such rate, as .....

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ourt shall be deemed to be an order made under sub-section (2) of Section 11-B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11-BB of the Act. 13. Manifestly, interest under Section 11-BB of the Act becomes payable, if on expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11- .....

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hat is said in the relevant provision; there is nothing to be read in; nothing to be implied and there is no room for any intendment. (See Cape Brandy Syndicate v. IRC [(1921) 1 KB 64] and Ajmera Housing Corpn. v.CIT [(2010) 8 SCC 739] .) 15. At this juncture, it would be apposite to extract a Circular dated 1-10-2002, issued by the Central Board of Excise and Customs, New Delhi, wherein referring to its earlier Circular dated 2-6-1998, whereby a direction was issued to fix responsibility for no .....

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e (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject.: Non-payment of interest in refund/rebate cases which are sanctioned beyond three months of filing - Regarding I am directed to invite your attention to provisions of Section 11-BB of the Central Excise Act, 1944 that wherever the refund/rebate claim is sanctioned beyond the prescribed period of three months of filing of the claim, the interest thereon shall be paid to the applicant at the notified rate. The Boar .....

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jurisdictional Central Excise Officers had taken the view that since the Tribunal had in its order not directed for payment of interest, no interest needs to be paid. 2. In this connection, the Board would like to stress that the provisions of Section 11-BB of the Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look .....

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of refund/rebate claims. Whereas all necessary action should be taken to ensure that no interest liability is attracted, should the liability arise, the legal provision for the payment of interest should be scrupulously followed. (emphasis supplied) 16. Thus, ever since Section 11-BB was inserted in the Act with effect from 26-5-1995, the Department has maintained a consistent stand about its interpretation. Explaining the intent, import and the manner in which it is to be implemented, the circu .....

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he applicant would automatically be entitled to receive interest on the said refund, from the date immediately after the expiry of three months from the date of receipt of such refund application, till the date of refund of such duty. 19. Applying this law to the facts of the present case, we find that originally the Petitioner had made applications for refund on the various dates as set out above. However, these applications were not granted by Respondent No.2 on the ground that the activity un .....

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d by the rejection, the Petitioner subsequently filed an appeal before Respondent No.3, who granted the refund to the Petitioner. We find that the original refund applications were complete in all respects and the applications were rejected by Respondent No.2 on merits. 20. Looking to all these facts, we are unable to agree with the submission of Mr Dwivedi that the interest on the refund should be granted from the date immediately three months after the receipt of the revised refund claims. We .....

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