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TMI Blog2024 (12) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... rayed for the following relief: "(b) this Hon'ble Court may be pleased to issue an appropriate writ, direction or order under Article 226 of the Constitution quashing and setting aside the order dated 26.06.2018 (Annex. D) passed by CESTAT, Order dated 09.12.2014 (Annex. C) passed by learned Commissioner (Appeal-I) and order dated 18.09.2014 (Annex. B) passed by learned Deputy Commissioner to the extent it rejected/refrained from granting interest from the date of deposit of the amounts by the petitioner and/or direct the respondent to grant interest from the date of deposit at such rate as this Hon'ble Court deems fit in the interest of justice." 4. Brief facts of the case are as under: 4.1 The petitioner is engaged in business of manufacture of goods falling under Chapter 73 of the Central Excise Tariff Act, 1985. The petitioner was served with letter dated 06.12.2005 from the Superintendent of Central Excise (Preventive) whereby the petitioner was asked to pay amount of Rs. 22,93,439/- towards central excise duty alleging that the petitioner had cleared the finished goods without including the value of sales tax paid on raw materials in the assessable value of goods manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT who, by order dated 03.07.2018, rejected the appeal of the petitioner relying upon the decision of the Hon'ble Supreme Court in case of Ranbaxy Laboratories Ltd vs. Union of India reported in 2011 (273) ELT 3 (SC) wherein, it was held that interest on refund under section 11B is payable only from the date of expiry of three months from the date of receipt of the application for refund. Being aggrieved, the petitioner has preferred this petition. 5. Learned advocate Mr. Rahul Gajera for the petitioner submitted that the petitioner was asked to deposit the amount of Rs. 22,93,439/- by letter dated 06.12.2005 without any authority of law by the respondent and the petitioner accordingly under protest deposited the said amount as directed by the said letter. It was therefore, submitted that though the petitioner was not required to pay such amount, the petitioner under protest deposited the said amount and therefore, the amount which was deposited by the petitioner would continue as 'deposit'. Reliance was placed on the Circular dated 16.09.2014 of Central Board of Excise and Customs (CBEC) in support of his submissions. 5.1 It was submitted that the provision of section 11B of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that provision of section 11B read with section 11BB of the Act would not be applicable in the facts of the case. * Kuil Fireworks Industries vs. Collector of Central Excise reported in 1997 (95) E.L.T. 3 (SC); * Hindustan Coco-cola Beverages Private Limited vs. UOI reported in 2015 (324) 299 (Guj). 5.5 It was further submitted that the judgement of the Hon'ble Supreme Court in case of Mafatlal Industries Ltd vs. Union of India reported in 1997 (89) E.L.T. 247 (S.C.) would not be applicable and the reliance was placed on paras 14 and 15 of the said judgement to distinguish the same from the facts of the case. Reliance was also placed on the decision of this Court in case of Swastik Sanitary wares Ltd vs. Union of India reported in 2013 (296) ELT 321 (Guj.) wherein, this Court after considering the decision of Apex Court in case of Mafatlal Industries ltd. (supra) held that second deposit of the same amount on clearance of the same goods, in the facts of the said case, did not amount to deposit of excise duty and was a pure mistaken deposit of an amount with the Government which the Revenue cannot retain or withhold and such claim would not fall within section 11B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment cited above and we hold that refund can be granted in respect of excise duty paid by the processors within three years immediately preceding the institution of the Special Civil Applications. In the instant case, the excise duty claimed on the basis of the market value of the processed cotton fabrics or man-made fabrics cannot be levied because, assuming that process amounts to manufacture, all that they have done is to manufacture processed cloth, processed fabric, either cotton or man-made and that not being a taxable event in the light of section 3 read with section 2(d) of the Act and Items 19 and 22, levy of excise duty on this basis was ultra vires and contrary to law Therefore, the petitioners are entitled to the refund of the excess of excise duty paid by them during the period of last three years immediately preceding the filing of the Special Civil Application over what they were bound to pay on the footing that processing of cotton fabrics is an excisable activity covered by them 68. Item 68 refers to "All other goods not specified elsewhere manufactured in a factory." Therefore processed cotton fabrics and processed man-made fabrics were manufactured in the factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount by the petitioner, the Order-in-original was passed adjudicating the levy of excise duty which was also confirmed by the Commissioner (Appeals) and thereafter the CESTAT allowed the appeal of the petitioner. It was therefore, submitted that the petitioner was entitled to refund of the amount of deposit made which was subsequently adjusted as duty paid, only after the passing of the order of the CESTAT and accordingly, the provisions of section 11B as well as 11BB would be applicable in the facts of the case. 6.1 In support of his submissions, reliance was placed on the following averments in the affidavit-in-reply filed on behalf of the respondent: "16. With regard to para 13, I say that whatever stated in para 13, are denied and disputed in toto and petitioner is entitled to put strict proof in respect of whatever is stated these Para 13. I further say that the in this para, the Petitioner has heavily relied upon the decision of Futura Ceramics Pvt Ltd Vs. CCE & ST, Vadodara -1, Final Order No. A/13764/2017 dated 21.11.2017 whereby the Hon'ble CESTAT was of opinion that the assessee shall be entitled to refund of the amount deposited during the investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interest on Central Excise duty was realized, and that the Central Excise duty refunded was not paid by them during pendency of any appeal. 19. With regard to para 16, I say that whatever stated in para 16, are denied and disputed in toto and petitioner is entitled to put strict proof of respect of whatever is stated this Para 16. I further say that the judgments cited by the Petitioner are not applicable to the present case as the facts of the present case are different from the cited judgments | further say that the refund was sanctioned to the petitioner under Section 118 of the Central Excise Act 1944. 20. With regard to para 17, I say that whatever stated in para 17, are denied and disputed in toto and petitioner is entitled to put strict proof of respect of whatever is stated this Para 17. I further say that the action of the Respondent authority is just, proper and according to provision of law. To support this action, the answering respondent relies on following judgments: A. Judgment of the Hon'ble Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (273) E.L.T. 3 (S.C.)]. For the sake of convenience, Para 9 of the said judgement is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals-III) Ahmedabad". The refund was thus sanctioned under Section 11B of Central Excise Act, 1944. It Is further submitted that the refund amount of Rs. 22,93,439/sanctioned to the Petitioner in cash was as per the OIA No. AHM-EXCUS-003-APP-094-1415 dated 10.10.2014. In the OIA dated 10.10.2014, the Commissioner(Appeal-III), Central Excise, Ahmedabad has held that "During the course of personal hearing, the appellant has also produced Certificate dated 25.07.2014 of Chartered Accountant M/s. S. R. Sanghvi & Co, certifying that the appellant has not passed on the said duty paid under protest to any other person and is appearing in Receivable account of the Books of Account maintained by them. Thus, the impugned order crediting refund claimed amount to Consumer Welfare Fund is not just, legal and proper. B. Judgment of the Hon'ble High Court of Gujarat in the case of Kamakshi Tradexim (India) Pvt Ltd Vs. Union of India [2017 (351) ELT 102(Guj)}. For the sake of convenience, Para 8 of the said judgement is reproduced below : "8. Thus, the Supreme Court, in the above decision has clearly held that the liability of the Revenue to pay interest under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the order, which was challenged before the Tribunal under Section 35F of the Act. The Tribunal, while entertaining the claim of interest of the present nature, cannot overtook the provisions of Section 11BB of the Act, which would apply in all cases of interest of delayed refunds. The decision in Kuil Fireworks Industries in which the Hon'ble the Supreme Court while directing the refund of duty, awarded interest cannot generate power to award interest for the Tribunal contrary to the provisions of Section 11BB of the Act since the award of interest under that decision is obviously relatable to the plenary powers of the Supreme Court. Even the award of interest by the High Courts in exercise of their writ jurisdiction will not constitute a ratio creating power of the Tribunal or revenue authorities to award interest contrary to the provisions of Section 11BB on the delayed refunds. As held by the Hon'ble Gujarat High Court Padmanabh Silk Mills Vs. Union of India (Supra), where specific application is made under Section 11B (2) of the Central Excise Act 1944 for interest on delayed refund then the same had to be considered and decided by the authority in the light of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by, him and the incidence of such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act : Provided further that the limitation of six months shall not apply where any duty has been paid under protest. xxxx 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 ten per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Board, 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 of such duty : Provided that where any duty ordered to be ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B 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 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts received from field formations on such representations, it has been observed that in majority of the cases, no reason is cited. Wherever reasons are given, these are found to be very vague and unconvincing. In one case of consequential refund, the 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, Board would like to stress that the provisions of section 11BB of 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 for instructions in the orders of higher appellate authority for grant of interest. Simultaneously, Board would like to draw attention to Circular No.398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T. T16] wherein Board has directed that responsibility should be fixed for not disposing of the refund/rebate claims within three months from the date of receipt of application. Accordingly, jurisdictional Commissioners may devise a suitable monitoring mechanism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the decision of this Court in Shreeji Colour Chem Industries (supra), relied upon by the Delhi High Court. It is evident from a bare reading of the decision that insofar as the reckoning of the period for the purpose of payment of interest under Section 11BB of the Act is concerned, emphasis has been laid on the date of receipt of application for refund. In that case, having noted that application by the assessee requesting for refund, was filed before the Assistant Commissioner on 12th January 2004, the Court directed payment of Statutory interest under the said Section from 12th April 2004 i.e. after the expiry of a period of three months from the date of receipt of the application. Thus, the said decision is of no avail to the revenue. 15. In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made." 10. This Court, in case of Kamakshi Tradex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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