Custom, Excise & Service Tax Tribunal
Hindalco Industries Ltd vs Commissioner Of Central Excise, ... on 22 January, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Applications(s) Involved: E/Misc./28994/2013 in E/1421/2012-SM Appeal(s) Involved: E/1421/2012-SM [Arising out of Order-in-Appeal No 07/2012 Central Excise dated 29/02/2012 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Cochin.] For approval and signature: HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes HINDALCO INDUSTRIES LTD ALUPURAM, KALAMASSERY 683104 KERALA STATE Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax COCHIN-CCE C R BUILDING, I S PRESS ROAD, COCHIN 682 018. KERALA Respondent(s)
Appearance:
Mr. V. G. Ranganathan, Advocate VI/268, Jairang, Palace Orchards Apartments, Near CTO (BSNL), Anavathil, Mattancherry, Kochi 682 002.
For the Appellant Dr. A. K. Nigam, Addl. Commissioner (AR) For the Respondent Date of Hearing: 22/01/2015 Date of Decision: 22/01/2015 CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 20124 / 2015 Per : B.S.V.MURTHY During the period from 3.7.2001 to 31.3.2002, the appellant who is a manufacture of aluminium extrusion and parts of electric meters had availed CENVAT credit of Rs.14,53,805/- on the materials rejected by the customers and returned to the factory for refining, reprocessing, etc. In fact, the event happened when the appellants factory was owned by the Indian Aluminium Company Ltd., which was subsequently taken over by the present appellant. A view was taken by the Revenue that the conditions laid down under Rule 16 of Central Excise Rules have not been fulfilled and as a result, the demand for duty of Rs.13,93,690/- being the credit involved was confirmed with interest. The matter travelled to the Tribunal and the Tribunal had directed the appellant to deposit 50% of the amount as pre-deposit and in the Final Order No.482/2005 dated 24.2.2005 had held that appellants are not entitled to CENVAT credit and appeal was rejected. Since the present appellant was in the process of taking over the unit and the company; and Department did not allow transfer of registration and cancellation of registration, the appellant had to make the payment of balance dues with interest even though the period for filing the appeal before the Honble High Court of Kerala against the impugned order had not expired. Thereafter, appellant filed an appeal before the Honble High Court who in their judgment dated 24.1.2008 held that appellant was eligible for the credit and allowed the appeal. Thereafter the appellant filed a refund claim for Rs.14,74,012/- paid in cash by them comprising of inadmissible credit of Rs.6,96,710/- and interest of Rs.7,77,302/-. As a result of the order of the lower authority and the Commissioner (A), the claim of the appellant for the principal amount paid by them and the interest of more than Rs.7 lakhs have been held to be admissible. The appellants are before me seeking payment of interest on the interest amount paid by them.
2. The learned counsel vehemently argued that the amount was illegally and forcibly collected from the appellant. Appellant was compelled to pay since the lower level officers refused to cancel the registration of Indian Aluminium Company and make registration in the name of the appellant and to ensure that the transfer of unit from one company to another company takes place smoothly, the appellant had to pay the amount. He submits that the principal and interest were collected illegally and the department is bound to pay the interest.
3. Learned AR would argue that there was no illegality in the collection of the amount. The matter had travelled up to the level of Tribunal and had been confirmed. The cancellation of registration normally is not allowed unless all the dues are cleared. In this case, the amount collected was a confirmed demand in accordance with law and the matter had already crossed two appellate levels. Therefore, it cannot be said that there was anything illegal in collection. In the absence of stay, it cannot be said that collection was illegal. He submits that the legal provisions relating to payment of interest does not allow interest on interest and therefore, it cannot be said that appellant is eligible to interest on interest.
4. Learned counsel also relied upon several decisions to support his submissions that interest on interest is payable.
5. I have considered the submissions made by both sides. First of all, I find that several decisions relied upon by the counsel in the Misc. Application No.28994/2013 are not applicable to the facts of this case.
(i) In Binjrajka Steel Tubes: 2008 (12) S.T.R. 788 (Tri.-Bang.), the Tribunal had taken a view that when the amount is collected without the authority of law, Department is liable to pay interest. In this case, the matter had already crossed two appellate levels and there was no stay granted by the Honble High Court and therefore it cannot be said that the amount collected was illegally collected.
(ii) In the case of Sandvik Asia Ltd. [2006 (196) E.L.T. 257 (S.C.)] also, it was held that collection can only be in accordance with law and when such collection is made without authority of law, Revenue has to compensate the assessee. I find myself in agreement with the submissions made by the learned AR that in this case it cannot be said that the amount was collected without the authority of law. Assessee may have a grievance that cancellation of registration was used as a tool to collect the money but that does not make the collection illegal. There was an order passed by the Tribunal upholding the stand taken by the Department that CENVAT credit amount is required to be paid back and therefore, it would be unfair and illegal to say that the amount was collected illegally without authority of law. Therefore this decision is also not applicable to the facts of this case.
6. Now I proceed to examine the legal position. Section 11B and Section 11BB of Central Excise Act, 1944 are reproduced below.
SECTION 11B. Claim for refund of duty and interest, if any, paid on such duty (1) 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, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on 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 one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest.
(2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :
Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central 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 applicants 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 Central Government may, by notification in the Official Gazette, specify :
Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person.
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the? Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).
(4) Every notification under clause (f) of the first proviso to sub-section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.
(5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of? the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.
[Explanation. For the purposes of this section, -
(A) refund includes 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) relevant date means, -
(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods, -
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
(ii) if the goods are exported by land, the date on which such goods pass the frontier, or
(iii) if the goods are exported by post, the date of dispatch of goods by the Post Office concerned to a place outside India;
(b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;
(c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;
(d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction;
(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person;
(ea) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 5A, the date of issue of such order;
(eb) in case where duty of excise is paid provisionally under this Act or the rules made there under, the date of adjustment of duty after the final assessment thereof;
(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction;
(f) in any other case, the date of payment of duty.
SECTION 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 five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette, 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 refunded under sub-section (2) of section 11B 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.
Explanation. - Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or any court against an order of the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, under sub-section (2) of section 11B, 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 sub-section (2) for the purposes of this section.
6.1 After going through the records, it was found that interest was added to the duty in Section 11B in May 2008. However, the Parliament did not consider it appropriate that the word interest should be added in Section 11BB also. If interest was also to be added in Section 11BB while providing for payment of interest on duty, the claim of the appellant could have been sustained. When the statute does not provide for payment of interest while sanctioning the refund of interest on duty, the Tribunal has no power to order refund of interest on interest being creation of the statute.
7. In view of the above, appeal has no merit and is rejected.
(Operative portion of the Order was pronounced in open court) B.S.V.MURTHY TECHNICAL MEMBER rv 7