TMI Blog2022 (12) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... ly making applicable the provisions of section 11BB of the Excise Act that deals with interest on delayed refunds. The claim of the appellant was under section 35F of the Excise Act and not under section 11B of the Excise Act. Mere mention of a wrong provision in the letter submitted by the appellant will not work to the prejudice of the appellant if in law the refund claimed by the appellant can be traced to section 35F of the Excise Act. Interest was, therefore, required to be paid to the appellant under the provisions of section 35FF of the Excise Act and not under section 11BB of the Excise Act. The Supreme Court in UNION OF INDIA VERSUS TATA SSL LTD. [ 2007 (10) TMI 16 - SC ORDER ] also relied upon its earlier judgment in COMMISSIONER OF CENTRAL EXCISE, HYDERABAD VERSUS ITC. LTD. [ 2004 (12) TMI 90 - SUPREME COURT ] and the Circular dated 08 December, 2004 to hold that pre-deposit made as a condition for hearing the Appeal has to be refunded to the assessee with interest when the assessee becomes successful. In view of the provisions of section 35FF of the Excise Act it has to be held that since the amount deposited by the appellant under section 35F of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2004 to March 2011 were also issued to the appellant proposing to deny CENVAT credit of Rs.97,51,884/- on port services, cargo handling services and custom house agent services. These eight show cause notices, were adjudicated by two separate orders, both dated 13.03.2012, passed by the Commissioner, wherein the entire demand totalling to Rs.2,03,24,058/- (Rs.1,05,72,174/- + Rs.97,51,884/-) was confirmed with interest and equal penalty. 3. The appellant deposited the duty demand of Rs.2,03,24,058/- through CENVAT credit account on 10.06.2012 and also deposited the interest amounting to Rs.1,19,85,629/- through the PLA account. Thereafter, the appellant filed two appeals before the Tribunal for setting aside the duty demands. The appellant also filed stay applications for waiver of penalty amount and by an order dated 08.10.2012 the Tribunal disposed of the stay applications by granting waiver of deposit of penalty amount since the duty and interest had already been deposited by the appellant. The Tribunal, ultimately allowed both the appeals filed by the appellant by an order dated 28.06.2017 and the entire demand of Rs.2,03,24,058/- was set aside. 4. The appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash instead of credit and interest should also be paid on the amount of Rs.3,23,09,687/- that had been sanctioned in favour of the appellant. The Commissioner (Appeals), by the order dated 23.08.2018, directed that the balance amount of Rs.2,03,24,058/-, should also be paid to the appellant in cash, but the claim for interest on the deposit of Rs.3,23,09,687/- was rejected. The relevant portion of the order dated 23.08.2018 passed by the Commissioner (Appeals) is reproduced below: 9. xxxxxxxxx. The adjudicating authority is directed to sanction the said amount in cash which has been ordered to be re-credited in the Cenvat credit account. 10. The appellant has also claimed interest on delayed sanction of refund for the period after 3 months from the date of the order of the Tribunal. The submission is not acceptable. As per section 11BB of the Act, interest is payable for the period after three months from the date of refund claim till the date of sanction. xxxxxxxx. 11. Consequent to favourable order of the Tribunal, the appellant filed a claim for refund of credit reversed by them on 19.04.2018 and the refund has been sanctioned within 3 months of the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest eligibility. Once it is accepted that amount of Rs.3,23,09,687/- is in the nature of pre-deposit, interest becomes payable for the entire amount in case of delayed refund; and (v) Interest is payable from the date when appeal was allowed till the date of disbursal of pre-deposit amount in cash. 8. Shri O.P. Bisht, learned authorised representatives appearing for the Department, however, supported the impugned order and made the following submissions: (i) The show cause notice issued to the appellant for recovery of the amount was adjudicated by the Assistant Commissioner on 13.03.2012. Thus, the duty of excise due from the appellant was determined under section 11A (10) of the Excise Act. As per section 11A (10) of the Excise Act, the appellant was liable to pay the said duty of excise so determined along with interest due on such amount whether or not the amount of interest is specified separately. Thus, the appellant deposited the duty along with interest on 10.06.2012, as per the requirement of the section 11A(14) of the Excise Act and not under section 35F of the Excise Act as claimed by the appellant; (ii) The application for refund filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of revenue: PROVIDED FURTHER that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing. Explanation:- For the purposes of this section duty demanded shall include,- (i) xxxxxxxxx (ii) xxxxxxxxx (iii) xxxxxxxxx (iv) xxxxxxxxx (v) Interest payable under the provisions of this Act or the rules made thereunder. Section 35FF prior to 6.8.2014 35 FF: Interest on delayed refund of amount deposited under the proviso to section 35F. 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 auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest, if any, paid on such duty. Sub-section (1) of section 11B of the Excise Act provides that any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest to the Assistant Commissioner of Central Excise before the expiry of one year from the relevant date. It is, therefore, clear that section 11B of the Excise Act would only apply for claim of refund of duty and interest, if any. It would have no application in a case where the applicant seeks refund of the pre-deposit amount. 15. The Assistant Commissioner, in the order dated 14.05.2018, did hold that the amount deposited by the appellant was in the nature of the pre-deposit and it is for this reason that the refund claim of Rs.3,23,09,687/- was allowed. However, the amount of Rs.2,03,24,058/- was refunded through CENVAT credit and the remaining amount of Rs.1,19,85,692/- was paid in cash. The appellant desired that the entire amount should be paid in cash and, therefore, filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals), in the order dated 23.08.2018, directed that the amount of Rs.2,03,24,058/- should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than duty, such deposits should be returned in the event of the Appellant succeeds in appeal or the matter is remanded for fresh adjudication. 2. It would be pertinent to mention that the Revenue had recently filed a Special Leave Petition against Mumbai High Court's order in the matter of NELCO Ltd, challenging the grant of interest on delayed refund of pre-deposit as to whether: (i) the High Court is right in granting interest to the depositor since the law contained in section 35F of the Act does in no way provide for any type of compensation in the event of an appellant finally succeeding in the appeal, and, (ii) the refund so claimed are covered under the provisions of Section 11B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under section 35F of the Central Excise Act, 1944. The Hon'ble Supreme Court vide its order dated 26.11.2001 dismissed the appeal. Even though the Apex Court did not spell out the reason for dismissal, it can well be construed in the light of its earlier judgment in the case of Suvidhe Ltd and Mahavir Aluminium that the law relating to refund of pre-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of orders of CESTAT or any Final Authority in relation to returning pre-deposits made as per directions of CESTAT or any other Final Authority in terms of Section 35F of the Central Excise Act, 1944 Section 129E of the Customs Act, 1962. The Board has taken a strict view with regard to non-returning of such deposits. 2. As we are all aware the CESTAT has in a number of such cases awarded interest on pre-deposits where its orders have not been implemented and the Department had challenged this and filed Civil Appeals in the Supreme Court. 3. The Board has noted the observations of the Hon'ble Supreme Court in its order dated 21.9.2004 and has decided that pre-deposits shall be returned within a period of three months of the disposal of the appeals in the assessee's favour. 4. Accordingly, the contents of the Circular No. 275/37/2000-CX.8A dated 02.01.2002, as to the modalities for return of the pre-deposits are reiterated. It is again reiterated that in terms of Hon'ble Supreme Court's order such pre-deposit must be returned within 3 months from the date of the order passed by the Appellate Tribunal/Court or other Final Authority unless there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of payment. Same order is to be made in this case also. 21. The Supreme Court in Union of India vs. Tata SSL limited [2007 (218) ELT 493 (SC)] also relied upon its earlier judgment in Commission of Central Excise, Hyderabad vs. ITC Limited [2005 (179) ELT 15 (SC)] and the Circular dated 08 December, 2004 to hold that pre-deposit made as a condition for hearing the Appeal has to be refunded to the assessee with interest when the assessee becomes successful. It needs to be noted that in ITC Limited the Supreme Court had observed as follows: 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, refundable to the assessee with interest. The learned Solicitor General has taken instructions and has stated before this Court that the Central Board of Excise Customs proposes to issue a circular in connection with the payment of interest on all such pre-deposits. A draft copy of the proposed circular has been handed over to this Court. Having regard to the contents of the draft circular we direct c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 are closed. (emphasis supplied) 23. It would also be useful to refer to the decision of the Delhi High Court in Rakesh Kumar Garg versus Dy. Commr. of Central Excise, Division-I [2019 (366) E.L.T. 244 (Del.)] and the relevant portion of the judgment is reproduced below: 2. The order-in-original, made by the Deputy Commissioner was that since the application (for refund) was made on 5-4-2016, it could be granted w.e.f. 13-5-2016 (i.e. within 3 months from the date of receipt of the application). The adjudicating authority therefore, declined to grant any interest even while sanctioning the refund of Rs. 5 crores to the present petitioners. xxxxxxxxxx 4. This Court is of the opinion that the petitioners are entitled to relief in view of the consistent view taken in this regard by the Courts. In Suvidhe Ltd. v. UOI, 1996 (82) E.L.T. 177 (Bom.), it was held that the amount paid as pre-deposit, for pursuing the appellate remedy or for any other reason mandated by law, cannot be treated as a tax as that is only a condition for pursuing the appellate remedy. This view was affirmed by the Supreme Court in Union of India v. Suvidhe Ltd., 1997 (94) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made without any further delay. Thus, the appeal is allowed in the above terms. (emphasis supplied) 25. The Chennai Bench of the Tribunal in Commissioner of Central Excise, Madurai v/s Servalakshmi Paper and Board Pvt. Ltd. [2011 (263) ELT 476 (Tri.-Chennai)] also held that in regard to a pre-deposit, the time limit provided for under section 11B of the Excise Act would not be attracted and, therefore, the impugned order sanctioning the refund claim was correct. 26. The Commissioner (Appeals) failed to follow the decisions of the Courts, the Tribunal and the instructions issued by the Central Board of Excise Customs through the Circulars dated 2 January, 2002 and 8 December, 2004. These Circulars were issued to ensure compliance of the decisions of the Supreme Court and in clear terms provide that all deposit, other than duty, should be returned in the event of the appellant succeeding in the Appeal. The Board clarified in the Circular dated 2 January, 2002 that in order to attain uniformity and to regulate such refunds, the refund applications should not be insisted upon and a simple letter from a person who had made such deposit for return of the amount ..... 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