TMI Blog2023 (10) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... tive excise duty to be utilized by the assessee at the stage of removal of excisable goods from his manufacturing unit from time to time. From careful perusal of sub-Section 2 along with proviso thereof, it clearly comes out that the refund of duty of excise claimed by an assessee may be credited to the welfare fund except when such refund is relatable inter alia to unspent advance deposits lying in balance in applicant s current account maintained with the Principal Commissioner of Central Excise or Commissioner of Central Excise - The term unspent advance deposit would mean, unspent advance deposit of excise duty refund whereof can be claimed by an assessee under Section 11B read with Rule 173G. Such refund in terms of proviso to Section 11B (2) is required to be made by tendering payment directly to the applicant-assessee. Hon ble Supreme Court in the case of Modipon [ 2017 (11) TMI 1429 - SUPREME COURT] answered the question in the context of provisions of Section 43-B of the Income Tax Act, nonetheless, what was held qua the amount lying in PLA is binding here - From the judgment of Supreme Court, it is now beyond any pale of discussion or debate that the amount cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he excise duty on the subject goods manufactured by the petitioner came to be withdrawn with effect from 01-03-2008 and on this date, an amount of Rs. 75,01,664/- was lying in Current Account (PLA) of the assessee-petitioner. 6 Since no amount was anymore required to be kept in the Current Account due to withdrawal of excise duty of the goods manufactured by the petitioner, as such the petitioner on 04.04.2008 had filed an application for refund of unspent amount lying in Current Account. 7 As is the stand of the revenue, the payment of unspent amount in PLA was subject to determination of previous self credit refund claims of the petitioner which were running in dispute. It was only on 06-05-2010, the jurisdictional Commissioner determined the disputed self credit refund claims and as a result refund of unspent amount in PLA was sanctioned in favour of the petitioner vide order dated 27-07-2010. 8 Since, admittedly, the refund was sanctioned beyond period of three months from the date of application, as such, the petitioner lodged a claim for payment of interest envisaged under Section 11BB of the Act. 9 The Assistant Commissioner Central Excise Division Jammu i.e. Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents : 15 Per contra, Mr. Jagpaul Singh, the learned counsel for the Revenue argues that the refund envisaged under Notification No. 56/2002-CE is not on account of any excess payment of duty by the manufacturer/assessee but is basically designed to operationalise exemption. He submits that unspent amount lying in Current Account (PLA) is an amount belonging to the manufacturer, kept in PLA only to pay the excise duty as and when due without any hassles. He vehemently urges this Court to draw a distinction between the amount for payment of duty and the amount of duty actually paid on the removal of excise goods from manufacturing unit. He submits that such amount lying in the PLA belongs to the manufacturer where as duty of excise goes to the coffers of the Excise Department. He concludes his arguments by reiterating his submission that refund claim in respect of unspent amount in PLA was not covered under Section 11B and Section 11BB of the Act and, therefore, respondent No.2 was perfectly justified to reject the claim of the petitioner for interest under Section 11BB of the Act. He places reliance on the following judgments:- (i) 2007 (210) E.L.T 417 M/S Navdeep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). ................................................................... . 18 As is evident from bare reading of Section 3, in particular sub-section 1 thereof, duty of excise is leviable on all excisable goods which are produced or manufactured in India in the manner prescribed and at the rates set forth in Fourth Schedule. It is, thus, crystal clear that event of levy and collection of duty of excise is the production and manufacture of the excisable goods though, as prescribed, the duty is actually paid by the manufacturer at the stage of removal of excisable goods from the manufacturing unit or production house as the case may be. Relevant extract of Rule 9 of the Central Excise Rules, 1944, [ the Rules of 1944 for short] substantiates this position and is thus reproduced hereunder:- 9. Time and manner of payment of duty :- (1) No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h goods unless he has paid the duty so determined. 173-G. Procedure to be followed by the assessee- (1) Every assessee shall keep an account current with the Collector separately for each excisable goods falling under different [Chapters of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) in such form and manner as the Collector may require, of the duties payable on the excisable goods and in particular such account ( and also the account in Form R.G.23, if the assessee is availing of the procedure prescribed in rule 173-K) shall be maintained in triplicate by using indelible pencil and double-sided carbon, and the assessee shall periodically make credit in such account current, by cash payment into the treasury, [so as to keep the balance, in such account current] sufficient to cover the duty due on duty determined by him for each consignment by debit to such account-current before removal of the goods: Provided that- (i) the duty due on the goods consumed within the factory in a continuous process may be so paid at the end of the factory day, except that in the case of cellulosic spun yarn and cotton yarn in respect of which duty is payable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to keep balance sufficient to cover the duty due on the goods intended to be removed. 22 Each time, an assessee removes a consignment of excisable goods, he shall pay the duty as self determined by his in terms of Rule 173-F by debit to such current account (PLA). The amount lying in the current account is meant to be utilized only for payment of duty so as to enable the assessee to remove excisable goods in a hassle free process. He may not be required to deposit excise duty in bank to get a challan each time he has to remove a consignment of excisable goods. 23 As we find further from clause (1-A) of the Rule, the amount lying in PLA is subject to the control and under the dominion of Collector and shall be released in favour of the assessee only on an application moved by him and after recording reasons for permitting withdrawal requested by the assessee. Such is the nature of the current account where the amount lying belongs to the assessee but control and dominion is exercised by the Collector. 24 Viewed thus, it becomes abundantly clear that amount credited into the current account (PLA) by an assessee is, in a way, prospective excise duty to be utilized by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Commissioner of Central Excise (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the [duty of excise and interest, if any paid on such duty] paid by the manufacturer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty] to any other person; (e) the [duty of excise and interest, if any paid on such duty] borne by the buyer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty] to any other person; (f) the [duty of excise and interest, if any paid on such duty] borne by any other such class of applicants as the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of refund of such duty: Provided that where any duty ordered to be refunded under sub-section (2) of Section 11-B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty. 26. Indisputably, Section 11B deals with claim for refund of duty of excise and interest, if any, paid on such duty. As we have already explained that the amount kept in current account (PLA) by an assessee is tentatively determined duty payable on the manufactured excisable goods to be paid at the stage of the excisable goods removal from the Unit, as such, any amount remaining unspent in the current account is nothing short of duty of excise deposited or kept with Collector in advance. It is because of this understanding the Legislature introduced proviso to sub-section 2 of Section 11B. 27. From careful perusal of sub-Section 2 along with proviso thereof, it clearly comes out tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary co-operative agricultural and rural development bank] in accordance with the terms and conditions of the agreement governing 11[such loan or advances], 12[or] 12[ (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his 13[employee, or]] 14[ (g) any sum payable by the assessee to the Indian Railways for the use of railway assets,] 1. 243 shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: 1 [Provided that nothing contained in this section shall apply in relation to any sum 2 *** which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. Explanation [1]. For the removal of doubts, it is hereby decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue's contention that the amounts in credit also relate to goods not manufactured, and therefore not relatable to any liability incurred is, in the opinion of this Court, without any basis. The arrangement prescribed by the rule is both a collection mechanism - dictated by convenience, as well as mandatory. It is convenient, for the reason that if the assessee were to be asked to pay the exact amount, through some other method, by deposit, as a precondition for clearance, that would have been cumbersome to it as well as the revenue; it would also have led to problems of storage of goods, and slow down their supply and distribution. The Rule makers pragmatically directed that sufficient amounts ought to be maintained in the account, to cover the removals. Therefore, at any given point of time, there had to be an excess in the account, if the assessee were to remove the goods. Each clearance mentions the quantum of goods, and the duty amount, which is apparently reconciled at the end of the period, and shortfalls if any are appropriated from the account. The excess credit is likewise adjusted for the next day's clearances. The point to be underlined is that there is no ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the description of liability paid, to escape the mischief of Section 43B. (CA 6721/2012 : CIT Vs. Shri Ram Honda Power Equipment Corporation, decided on 19.09.2012). As a result of the above discussion, the first question is answered in favour of the assessee, and against the revenue. (underlined by me) 33. Hon ble the Supreme Court in Modipon Limited (supra), while answering the question in affirmative, in para 10 held thus:- 10. Deposit of Central Excise Duty in the PLA is a statutory requirement. The Central Excise Rules, 1944, specify a distinct procedure for payment of excise duty leviable on manufactured goods. It is a procedure designed to bring in orderly conduct in the matter of levy and collection of excise duty when both manufacture and clearances are a continuous process. Debits against the advance deposit in the PLA have to be made of amounts of excise duty payable on excisable goods cleared during the previous fortnight. The deposit once made is adjusted against the duty payable on removal and the balance is kept in the account for future clearances/removal. No withdrawal from the account is permissible except on an application to be filed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the question formulated. 37. Once we hold that the unspent amount in PLA is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid. 38. The judgments relied upon by Mr. Jagpaul are contrary to the view taken by Hon ble the Supreme Court in Modipon case (supra). CESTAT Benches in the cases relied upon have not adverted to proviso to Section 11B(2) and the Rule 174-G have erroneously come to a conclusion that unspent amount lying in PLA is money belonging to assessee kept in advance for payment of duty of excise and not the excise duty actually paid and, therefore, outside the preview of Section 11B. 39. We also see no good reason to subscribe to the view that current account was created to give effect to exemption under Notification No. 56/2002-CE. The Notification only provided incentive to the manufacturing units set up in the specified areas by providing refund of excise duty actually paid on clearance/removal of excisable goods from their industrial units and was not intended to supplant th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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