Gujarat High Court
Commissioner vs J on 15 December, 2010
Author: Harsha Devani
Bench: Harsha Devani
Gujarat High Court Case Information System
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TAXAP/2017/2009 6/ 6 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2017 of 2009
=========================================
COMMISSIONER
OF CENTRAL EXCISE AND CUSTOMS - Appellant(s)
Versus
J
M BAXI & CO - Opponent(s)
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Appearance :
MR
YN RAVANI for
Appellant
None for
Respondent
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CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 15/12/2010
ORAL
ORDER
(Per : HONOURABLE MS.JUSTICE HARSHA DEVANI) In this appeal under section 35G of the Central Excise Act, 1944 (the Act), the appellant, Commissioner of Central Excise & Customs, Rajkot has challenged the order dated 24.4.2009 made by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal), proposing the following two questions:
"[a] Whether the Tribunal committed error in treating the voluntary payment made by the respondent to avoid interest penalty, as pre-deposit under section 35-F of the Central Excise Act, 1944 and accordingly, the refund of the same not subjected to the test of unjust enrichment?
[b] Whether the Tribunal committed error in not following the decision of Hon'ble Supreme Court in the case reported at 2000 (120) ELT 50 (SC) in the case of Union of India v. M/s Raj Industries, squarely applicable in the facts of the case of voluntary payment by assessee and further erred in following the cases which were factually on different aspects?"
The respondent assessee is engaged in the business of Customs House Agent. In connection with the cenvat credit availed by it on input services, a show cause notice came to be issued to the assessee, which culminated into an order dated 24.8.2006 passed by the adjudicating authority disallowing cenvat credit of Rs.4,80,440/- under rule 14 of the Cenvat Credit Rules, 1944 and confirming the duty along with interest and penalty. The assessee paid a total amount of Rs.5,80,367/- by way of T.R. Challan. Being aggrieved by the order passed by the adjudicating authority, the assessee preferred appeal before the Commissioner (Appeals), who held that that cenvat credit availed by the assessee on the services in question was admissible as input service for its out put service except service of travel agent which had no nexus with the out put service, and also waived the penalty. The order-in-appeal was accepted by the Department. On the basis of the decision of the Commissioner (Appeals), the assessee filed three refund claims before the Assistant Commissioner, Service Tax Division, Rajkot (hereinafter referred to as the "lower authority") who called upon the assessee to produce documentary evidence establishing that the amount of service tax in relation to which the refund was claimed was collected from, or paid by it, and the incidence of such service had not been passed on by it to any other person. Vide order dated 1.2.2008, the lower authority sanctioned the refund claim of Rs.5,79,971/- and ordered the sanctioned refund amount to be credited to the Consumer Welfare Fund as provided under sub-section (2) of section 11B of the Act. Being aggrieved, the assessee preferred appeal before the Commissioner (Appeals) and succeeded. The revenue took the matter in appeal before the Tribunal, but did not succeed.
Mr. Y. N. Ravani, learned Senior Standing Counsel for the appellant submitted that both, the Tribunal, as well as the Commissioner (Appeals) had erred in treating the voluntary payment made by the assessee immediately after issuance of the order in original to avoid payment of interest as pre-deposit under section 35F of the Act. It was urged that any amount paid voluntarily to avoid interest liability cannot be equated with pre-deposit under section 35F of the Act and as such, the refund claimed by the assessee was subject to the test of unjust enrichment and as the burden of tax has been passed to other parties the said amount was required to be deposited in the Consumer Welfare Fund.
It was, accordingly, submitted that the appeal deserves consideration and that the question as proposed or as may be deemed fit by the Court, be formulated.
The undisputed facts of the case are that the assessee had deposited the amount payable under the order made by the adjudicating authority voluntarily without there being any order of the appellate authority directing the assessee to deposit the amount as a precondition for hearing the appeal. The issue that arises for determination in the present appeal is as to whether or not the amount paid voluntarily after the order of the adjudicating authority, pending the appeal before the appellate authority is to be treated to be a deposit made under section 35F of the Act.
The controversy involved in the present appeal is no longer res integra inasmuch as, this Court in the case of Commissioner of Customs (Preventive) v. Ghaziabad Ship Breakers Ltd. vide judgement and order dated 7.10.2010 rendered in Tax Appeal No.2042 of 2009, in the context of the provisions of section 129E of the Customs Act, 1962 which are in pari materia with the provisions of section 35F of the Central Excise Act, 1944, has held thus:
"On a plain reading of section 129E of the Act, it is apparent that the same provides that a person desirous of appealing against an order relating to any duty or interest demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under the Act, is required to deposit the duty and interest demanded or penalty levied with the proper officer. Under the section such amount has to be paid by such person on his own and does not require any order to be passed before making such deposit. Deposit of the said amount is a pre-condition for entertaining the appeal. What is important to note is that the amount to be deposited before the appeal can be entertained on merits is nothing else but the amount of duty and/or interest, or penalty demanded in consequence of an order-in-original. In principle the deposit is of duty or interest or penalty. The term "pre-deposit" is conveniently used to denote payment before entertaining the appeal. It is only a mode of payment prescribed by legislature with an intention to protect interest of Revenue.
However, if the person desirous of preferring appeal seeks waiver of the pre-deposit on the ground of undue hardship as contemplated under sub-section (2) of section 129E, he is required to file an application seeking dispensation of such deposit, in which case he is required to make the pre-deposit in terms of the order that may be passed by the Commissioner (Appeals) or the Appellate Tribunal. Thus, the contention that it is only the payment made pursuant to any order of any appellate authority or judicial forum under section 129E or section 131 of the Act which would fall within the ambit of pre-deposit under the said provision is fallacious and contrary to the provisions of the section itself and as such does not merit acceptance."
The court accordingly held that any amount deposited during the pendency of an appeal would be by way of pre-deposit under section 129E of the Customs Act and has to be treated accordingly. The controversy in issue in the present appeal, therefore, stands concluded against the revenue, by the said decision of this Court.
In the circumstances, for the reasons stated in the judgement and order dated 7.10.2010 rendered in the case of Commissioner of Customs (Preventive) v. Ghaziabad Ship Breakers Ltd. in Tax Appeal No.2042 of 2009, this appeal is also dismissed.
[HARSHA DEVANI, J.] [H.B.ANTANI, J.] parmar* Top