Custom, Excise & Service Tax Tribunal
M/S. Kairalli Handlooms vs Commissioner Of Central Excise on 28 February, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/21026/2016-SM [Arising out of Order-in-Appeal No. CAL-EXCUS-000-APP-99-16-17 dated 14.6.2016 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Cochin.] M/s. Kairalli Handlooms Water Tank Road, Chovva, Kannur. Kerala 670 006. Appellant(s) Versus Commissioner of Central Excise, Customs & Service Tax C.R. Building, Calicut 673 001. KERALA Respondent(s)
Appearance:
Mr. Ramachandarn. C, Consultant For the appellant Dr. J. Harish, AR For the respondent Date of Hearing: 21/02/2017 Date of Decision: 28/02/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20273_/ 2017 Per : S.S GARG The present appeal is directed against the impugned order dated 14.6.2016 wherein the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the case are that the appellants are engaged in the manufacture and export of handloom made-ups and designer textile fabrics. They had been availing the services from the agents from abroad for procuring export orders and for marketing their products abroad. Earlier the appellant was of the bona fide belief that since this service is provided from abroad and utilized for marketing the products abroad; there was no service tax liability on their part. Further, the Superintendent of Central Excise visited the appellants premises on 20.3.2007 and directed the appellant to pay the service tax on the commission paid to overseas agent. Accordingly, the appellant took the service tax registration on 2.4.2007 and made a total payment of Rs.37,37,123/- towards their past service tax liability. Thereafter, a show-cause notice dated 23.11.2007 was issued to the appellant and after following the due process of law, the Commissioner adjudicated the show-cause notice vide Order-in-Original dated 16.4.2012. As per the Commissioner, the liability to pay service tax would arise only from 18.4.2006, accordingly, the actual liability of service tax was found to be Rs.16,22,354/- and Education Cess of Rs.32,446/- (total Rs.16,54,800/-) and this demand was confirmed and was appropriated from the amount deposited by the appellant. Penalty was dropped. After the appropriation of the demand confirmed of Rs.16,54,800/- from the total amount of Rs.37,37,123/-, there arose a balance of Rs.20,82,323/- for which the appellant filed refund claim on 23.5.2012. The refund was sanctioned by the Assistant Commissioner vide Order-in-Original dated 16.8.2012. The interest for the delayed payment of tax for the period after 18.4.2006 to 31.3.2007 amounting to Rs.95,814/- was appropriated from the amount of refund sanctioned and only the balance amount of Rs.19,86,509/- was refunded to the appellant. Thereafter the appellant filed a refund for Rs.6,52,258/- being the interest accrued on excess amount retained by the department, from its payments made by the appellant to the date of refund. This interest was arrived at by calculating at the rate of 6% per annum on the basis of certain case laws decided by the Tribunal viz., Binjrajka Steel Tubes Ltd. vs. CCE, Hyderabad: 2007 (218) ELT 563; Omjai Bhavani Silk Mills vs. CCE: 2009 (243) ELT 560. Thereafter, a show-cause notice dated 31.12.2012 was issued proposing to reject the refund of interest paid voluntarily by the appellant during investigation. The Assistant Commissioner vide order dated 4.3.2013 rejected the claim for refund of interest. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) and the Commissioner (A) has also rejected the appeal of the appellant and hence the present appeal.
3. Heard both the parties and perused the records.
4. Learned consultant for the appellant submitted that the impugned order denying the interest on the amount illegally retained by the department is not sustainable in law. In support of his submission, he relied upon the two case laws:
I. Binjrajka Steel Tubes Ltd. vs. CCE, Hyderabad: 2007 (218) ELT 563; II. Omjai Bhavani Silk Mills vs. CCE: 2009 (243) ELT 560
5. On the other hand, the learned AR submitted that there is no delay in granting the refund claim which was paid within a period of three months from the date of application seeking refund. He further submitted that Section 11B and Section 11BB are the only provisions under the Central Excise Act governing the field of refund. He further submitted that the original authority has denied the refund of interest on the ground that, as per Section 11BB, interest becomes payable only after three months from the date of application. As per section 11B, a refund claim can only be made against any duty of excise and interest, if any, paid on such duty and not against any interest that may arise holding that the tax paid is not due from them. Section 11B states that if any duty ordered to be refunded under sub section (2) of Section 11B and to an any applicant is not refunded within three months from the date of receipt of application under sub section (1) of said Section, they shall be paid to that applicant interest at such rate not below 5% and not exceeding 30% 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. Further, the learned commissioner (A) has observed that the appellant paid an amount of Rs.37,37,123/- towards the service tax and says under the category of Business Auxiliary Service for the period from 1.7.2003 to 31.3.2007. As per the Order-in-Original dated 16.4.2012, it was held that assessee is liable for payment of service tax under the said category for the period from 18.4.2006 to 31.3.2007 only and as such appropriated the amount of Rs.16,54,800/- due for the period. The learned AR further submitted that as per the decision of the Honble Supreme Court in the case of Ranbaxy Laboratories Ltd. vs. UOI reported in 2011 (273) ELT 3. The Honble Supreme Court has held that interest on delayed refund is payable under Section 11BB of the Central Excise Act, 1944 on the expiry of three months from the date of receipt of refund application under Section 11B(1) and not from the date of order of refund or the appellate order allowing such refund. He further submitted that in view of the Honble Supreme Courts judgment cited supra, there is no infirmity in the impugned order.
6. After considering the submissions of both the parties and the judgments of the apex court in the case of Ranbaxy Laboratories Ltd. cited supra, I am of the view that there is no infirmity in the impugned order which is upheld and the appeal of the appellant is dismissed.
(Order was pronounced in Open Court on 28/02/2017.) S.S GARG JUDICIAL MEMBER rv 6