Custom, Excise & Service Tax Tribunal
Pfizer Products India Pvt Ltd vs Commissioner Of Customs And Service Tax ... on 21 May, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 22049 / 2014 Appeal(s) Involved: C/610/2012-DB [Arising out of OIA No.02-2012/ CUS(B) dated 18/01/2012 passed by CC(Appeals), Bangalore] PFIZER PRODUCTS INDIA PVT LTD PFIZER CENTRE, PATEL ESTATE, OFF S.V.ROAD, JOGESHWARI (W), MUMBAI.401102 Appellant(s) Versus Commissioner of Customs and Service Tax BANGALORE-CUS NULL C.R. BUILDING,QUEENS ROAD, P.B.NO. 5400, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Shri R.G. Sheth, Advoate For the appellant.
Shri N. Jagdish, Superintendent(AR) For the respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 21/05/2014 Date of Decision: 21/05/2014 Order Per : S.K. MOHANTY This appeal is preferred by the appellant against the Order-in-Appeal No. 02/12/CUS. (B) dated 13.01.2012 (for short, the 'impugned order') passed by the Commissioner of Customs (Appeals), Bangalore. Vide the said impugned order, interest claim of the appellant for late sanction of refund of Customs duty was disallowed on the ground that the refund amount has been sanctioned within three months from the date of judgment of Hon'ble Supreme Court in dismissing the Special Leave Petition (SLP) filed by the department; and that for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department. Thus, according to impugned order, since there is no delay in sanction of refund by the Customs Department, the appellant is not entitled for interest thereon.
2. The brief facts of the case, leading to the present appeal, are as follows :-
The appellant filed the Bill of Entry on 04.06.1998 for imported Milling Machines along with parts and accessories and paid Customs duty attributable to the imported consignment. Subsequently, it was detected by the appellant that the duty has been wrongly paid into the Government exchequer, owing to the reason that the imported goods were exempted from payment of duty under Notification No. 23/98 - CUS., dated 02.06.1998. Upon realization of such mistake, the appellant filed the application on 24.12.1998 before the Deputy Commissioner of Customs (Refund), Air Cargo Complex, Bangalore, claiming refund of Customs duty of Rs.1,06,74,049/-. The refund application was rejected vide order dated 23.10.2001 on the ground that the imported goods were not exempted from payment of Customs duty. However, in the said order, it was held that the refund claim was within time limit and is not hit by the doctrine of unjust enrichment. Appeal filed by the appellant against the said order, though was allowed by the Commissioner (Appeals) vide order dated 16.10.2002, but it was ordered for transferring the refund amount to the Consumer Welfare Fund on the ground of unjust enrichment. Appeal against the said order was allowed by this Tribunal vide order dated 27.07.2005 in favour of the appellant by holding that the refund claim is not hit by the principles of unjust enrichment. Appeal filed by the revenue against the above referred order of the Tribunal was dismissed by the Hon'ble Karnataka High Court vide order dated 01.04.2010. The said order was challenged by the revenue before the Hon'ble Supreme Court by filing the SLP, which was dismissed on 21.02.2011 on the ground of delay as well as on merits. Consequent upon dismissal of SLP by the Hon'ble Supreme Court, the original authority vide order dated 13.04.2011 had sanctioned the refund claim and released the payment of the excess customs duty to the appellant. However, the interest for delayed sanction of refund was not paid, despite specific request being made by the appellant for the same. Hence, feeling aggrieved by such an order, the appellant preferred appeal before the Commissioner (Appeals), which was rejected on the ground indicated in the preceding paragraph. Hence, the present appeal before this Tribunal.
3. The learned Advocate appearing for the appellant submitted that interest is liable to be paid by the Revenue within three months from the date of filing the original refund claim; that provisions of Section 27A of the Customs Act, 1962 are attracted automatically for any refund sanctioned beyond the period of three months. The learned Advocate has referred to the CBEC Circular No.670/61/2002 - CX, dated 01.10.2002, wherein the time limit for disposal of refund application by the Central Excise officers has been prescribed. Further, to substantiate the stand that the appellant is entitled to interest for delayed sanction of refund claim, the learned Advocate has cited various judgments/decisions rendered by the judicial forums including the Hon'ble Supreme Court.
4. The learned A.R. appearing for the revenue-respondent has reiterated the findings recorded in the impugned order and further submitted that there is no scope under the Customs statute for payment of interest in the circumstances of the present case.
5. Heard the learned counsel for the parties and perused the case records. The issues for determination by this Tribunal in the present case is whether payment of interest for delayed sanction of the refund amount is in consonance with the provisions under the Customs statute. If the reply to the same is in affirmative, then what should be the relevant date from which the interest amount has to be computed.
6. It is an undisputed fact that the appellant had lodged the refund application before the jurisdictional Customs authorities on 24.12.1998, claiming refund of excess Customs duty paid on the importation of goods, which was ultimately sanctioned in favour of the appellant on 13.04.2011, involving a time gap of more than 12 years.
7. The provisions governing claim for refund of Customs duty is contained in Section 27 of the Customs Act, 1962. Sub-section (1) of the said section provides that any person desirous of claiming refund of duty paid or borne by him, has to file an application before the Assistant/Deputy Commissioner of Customs in the prescribed form and the documents that may be necessary for deciding the application are also to be submitted. As per the requirement of sub-section (2) of the said section, the said empowered authority under the statute is required to hold enquiry; and thereafter, if the said authority is satisfied that the duty amount paid by the applicant is refundable, then an order is required to be passed by such authority in sanctioning the refund in favour of the applicant.
8. Section 27A of the Customs Act, 1962 deals with the provisions for payment of interest on delayed sanction of refund. According to the statutory mandates, once an order sanctioning refund under sub-section (2) of Section 27 of the Act has been passed to refund the amount to the applicant, then the same has to be refunded within three months from the date of filing the refund application under sub-section (2) of Section 27; and due to any reason, if such amount is not refunded within such prescribed time limit, then interest on the refund amount is liable to be paid by the Customs department at the prescribed rate, on expiry of period of three months from the date of receipt of such refund application.
9. An explanation has been appended to Section 27A of the Act, which introduced the deeming fiction that in case of any order of refund passed by the Commissioner (Appeals), Appellate Tribunal or any Court against the order of Assistant/Deputy Commissioner of Customs under sub-section (2) of Section 27 of the Act, the order passed by such Appellate Authorities or by the Court(s) shall be deemed to be an order passed under such sub-section.
10. On a conjoint reading of Section 27 and 27A of the Act (discussed supra), it transpires that once an order is passed by the competent Customs authorities pursuant to the refund application filed by the applicant, then the refund shall be paid forthwith within a period of three months; and if claimed amount is not paid within such stipulated time frame, then such statutory authorities are under the statutory obligation to pay interest on the refund amount paid belatedly. The explanation added to Section 27A of the Act is in context with or has the relevance only for the purposes of sub-section (2) of Section 27A, and not for the purpose of the period of computation of the interest liability.
11. In the present case, it is an admitted fact on record that the refund claim application filed by the appellant on 24.12.1998 was ultimately sanctioned by the Assistant Commissioner (Refund) on 13.04.2011 i.e. after a lapse of more than 12 years. As per the statutory mandates of Section 27 read with Section 27A of the Act, the time limit for payment of the refund amount to the appellant by the Customs authorities (without interest) expired on 23.03.1999. Since, claimed amount was finally paid to the appellant on 13.04.2011, in our considered view, the appellant is entitled for the statutory interest from 24.03.1999 to the date when the refund was eventually paid i.e. 13.04.2011. Though, the refund amount was paid to the claimant-appellant consequent upon dismissal of SLP filed by the revenue, but the date of computation of the interest amount will commence from the date of cessation of three months of the refund application, and not from the date, when the refund amount was finally paid. The explanation inserted in Section 27A has nothing to do with the deferment of the date from which interest becomes payable. In context with payment of interest on delayed refund of the Customs duty amount, we rely on the judgment of Hon'ble Supreme Court delivered in the case of M/s Ranbaxy Laboratories Ltd. - Vs. - Union of India, reported in 2011 (273) ELT 3 (S.C.). The principles enunciated in the said judgment though relate to Section 11B and Section 11BB of the Central Excise Act, 1944, but the same squarely applicable to the case in hand The relevant paragraphs of the said judgment are extracted herein below :-
"8.?Before evaluating the rival contentions, it would be necessary to refer to the relevant provisions of the Act. Section 11B of the Act deals with claims for refund of duty. Relevant portion thereof reads as under :
11B. Claim for refund of 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 Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act :
Provided further that the limitation of one year shall not apply where any 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 of excise 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 current account 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 of any Court 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) (5) Section 11BB, the pivotal provision, reads thus :
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 or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate 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.
9.?It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays 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 claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable."
12. The observations by the Commissioner (Appeals) in the impugned order that since, for a considerable time, the refund amount was lying with the Consumer Welfare Fund and not with the department, and therefore, no interest is payable to appellant, in absence of any delay of sanction of refund amount, is implausible and is contrary to the statutory provisions. The object behind insertion of interest provisions in Section 27A of the Act is that interest is compensatory in character. The beneficiary of the principal amount is entitled for compensation in the form of interest because; he is deprived of its right of claim for a considerable period of time at the discretion of the person responsible for paying the amount. In context with the issue in hand, the Hon'ble Rajasthan High Court in the case of J.K. Cement Works -Vs. - Asst. Commissioner of Central Excise & Customs, reported in 2004 (170) ELT 4 (Raj.) has held as follows :-
?"33. A close reading of Section 11BB, which now governs the question relating to payment of interest on belated payment of interest, makes it clear that relevant date for the purpose of determination the liability to pay interest is not the determination under sub-section (2) of Section 11B to refund the amount to the applicant and not to be transferred to the Consumer Welfare Fund but the relevant date is to be determined with reference to date of application laying claim to refund. The non-payment of refund to the applicant claimant within three months from the date of such application or in the case governed by proviso to Section 11BB, non-payment within three months from the date of the commencement of Section 11BB brings in the starting point of liability to pay interest, notwithstanding the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant.
?34. If ultimately it is decided that notwithstanding the refund has become due as per final adjudication and amount is to go to the Consumer Welfare Fund it brings an end to the claim of the applicant whether to refund or interest thereon. However, ultimately if it is found that amount is not to go to the Consumer Welfare Fund but is to be refunded to the applicant, in such event merely because of the time taken in deciding the issue the applicant cannot be deprived of the interest on delayed payment of refund which ought to have been paid by the authorities in the first instance within three months of the application for claiming refund."
13. In view of the foregoing, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant.
(Operative portion of the order has been pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja 7