Customs, Excise and Gold Tribunal - Bangalore
Vbc Industries Limited vs The Commissioner Of Central Excise And ... on 7 January, 2008
Equivalent citations: 2008(225)ELT375(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. These appeals have been filed against the following Orders.
Sl. No. Appeals No. Orders-in-Appeal No. & Date Passed by
1. C/238/2006 23/2005(V)CH dated 14.12.2005 CC&C (Appeals) Visakhapatnam
2. C/254/2006 24/2005(V)CH dated 14.12.2005
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3. C/254A/2006 25/2005(V)CH dated 14.12.2005
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4. C/473/2007 04/2007(V)CH dated 02.07.2007
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The subject matter of the above appeals is one and the same. Even though four appeals have been listed, the appellant says that the Appeals No. C/254A/2006 and C/473/2007 gets merged. Therefore, there are three appeals. The subject matter is, the granting of interest on account of the inordinate delay in sanctioning the refund. There is a prayer for granting of interest on interest in view of the inordinate delay in granting the interest due to the appellants.
2. The cases have a very long and chequered history. The appellants have been manufacturing Ammonium Nitrate at their factory situated in Sirkakulam Andhra Pradesh. They used to import Anhydrous Liquid Ammonia, which is the main raw material. At the time of import, the appellants claimed concessional rate of duty on account of the relevant exemption Notification. The Department did not grant the concessional rate of duty on account of some dispute over end-use condition. The appellants were forced to discharge the full rate of duty and they were not given the concessional rate benefit. There was a legal battle and the Tribunal, in the GSFC Case, vindicated the stand of the appellant that they were entitled for concessional rate or duty vide Customs Notification No. 24/94 and Customs Notification No. 36/96. Therefore they filed refund claim in respect of six bills of entry on 11.1.1996 and for four bills of entry on 13.2.1997. The department accepted all the ten claims and kept the matter pending for a long time. The Department rejected two claims as time barred, since the relevant bills of entry were finalized. In respect of other bills of entry, the assessments were provisional. However, the Apex Court, in the case of Gujarat State Fertilisers Co. v. Collector of Central Excise and Abrol Watches Pvt. Ltd. v. CC, Bombay 1937 (92) ELT 311 (SC), gave finality to the issue and decided the same in party's favour. In spite of the above fact, the Revenue did not sanction the refund claim of the party. Therefore, they were forced to approach the Andhra Pradesh High Court. The Andhra Pradesh High Court directed the party to approach CEGAT, Chennai Bench. The CEGAT, Chennai Bench granted the benefit to the appellant in the Final Order No. 2173/1999 dated 25.8.1999. Based on the above order, the appellants filed the refund claim for Rs. 3,14,940/-. The Department did not sanction the refund claim despite several reminders and the appellant filed a writ Petition in 2002 before the Hon'ble Andhra Pradesh High Court and obtained a direction to the Department to take appropriate action within three months from the date of receipt of the order. The refund in respect of Rs. 3,14,940/- was sanctioned on 19.1.2004. But, interest was not granted. The appellants approached the Commissioner (Appeals), who, in his order No. 24/2005 dated 14.12.2005, dismissed the appeal of the appellant. Aggrieved by the order, the appellants filed the appeal before this Bench in their appeal No. C/254/2006. There were some more claims remaining and they were also not sanctioned on the ground that the department took the stand that the assessments were provisional. But, when the claims were filed by the appellants in 1996-97, the claims were accepted and they were not told that they could not be processed. The claims were simply kept. The appellants were put to great hardship. Their goods were sold below the cost of imported inputs due to depressed international market conditions. Their claims were never settled. The appellant had to take up the matter with various authorities, as no relief was given to them in spite of the Supreme Court's and CESTAT's decision on the issue. Finally, on express direction and query by Member (Customs), CBEC, to settle immediately the matter pending for 7 to 8 years, some action was taken reluctantly by the Department. In all the above appeals, their main point is that after so much agitation by the appellant, the refund amount due to them was sanctioned. However, the grant for interest was not acceded to. The appellants challenged the order before the Commissioner of Customs who passed the other orders and allowed the appeal with consequential benefit but he did not grant the interest due to them in terms of Section 27A of the Customs Act. In view of the above, the appellant has approached this Tribunal for relief for grant of interest and since there is an inordinate delay in the grant of interest, there is a request for payment of interest on interest in view of the decision of this Tribunal in the party's own case in VBC Industries Ltd. v. CC, Chennai, vide Final Order No. 202/2005 dated 14.2.2095 as reported in 2005 (192) ELT 275 (Tri.-Bang.) wherein this Tribunal, based on the decision of the Hon'ble Apex Court in the case of Commissioner of Income Tax v. Narendra Doshi 254 ITR 606 (SC), ordered payment of interest on interest in view of the inordinate delay in granting of interest.
3. The appellant was represented by Shri Madhusudan, Vice-President. He has brought to our notice a large number of case-laws, wherein interest was granted for inordinate delay in sanctioning the refund. He has also drawn our attention to the provisions of Section 27A of the Customs Act, 1962 and also according to the explanation given in 27A and the interpretation of this Tribunal and the various other judicial fora, which held that interest on refund is payable immediately after expiry of three months from the date of filing of the refund claim.
4. The amounts claimed under three appeals are as follows:
Para-1B(I) Appeal No. C/238/2006-Annex-B a.
Interest payable from three months from the date of filing claim till date of receipt Rs. 57,30,716/-
b.
Interest payable from 3 months from the date of receipt of payment but non-receipt of original interest payable i.e., interest on interest Rs. 15,13,658/-
Total:
Rs. 72,44,374/-
Para-1B(II) Appeal No. C/254/2006-Annex-C a.
Interact payable from three months from the date of filing claim till date of receipt Rs. 1,83,135/-
b.
Interest payable from 3 months from the date of receipt of payment but non-receipt of original interest payable i.e., interest on interest Rs. 67,384/-
Total:
Rs. 2,50,619/-
Para-1B(III) Appeal No. C/254A/2006 merged with C/473/2007-Annex-D a.
Interest payable from three months from the date of filing claim till date of receipt - since the amount is yet to be received, interest calculated upto 31.12.07 Rs. 11,18,937/-
Total:
Rs. 11,18,937/-
5. The learned SDR pointed out that refund is due only after the appellant received a favourable order from the Commissioner's office. In any case, she reiterated the orders of the lower authority.
6. On a very careful consideration of the entire issue, it is seen that in all these cases, the refund has already been sanctioned. In one appeal, the refund has been sanctioned, but the amount has not yet been received. In any case, in none of the appeals, interest has been paid. It is very clear from the brief history of the case that right from the time of import, the party was claiming concessional rate of assessment and their claim was vindicated by the Supreme Court's decision. In spite of that, for one reason or the other, the Revenue was delaying the refund and in spite of specific direction by the Hon'ble A.P. High Court and CEGAT decision, there was inordinate delay in the sanctioning of the refund and finally, we find that only due to the intervention of the Member (Customs), CBEC, the Department has sanctioned the same with great reluctance and they have not cared to grant the interest in accordance with Section 27A of the Customs Act, 1962. Section 27A grants interest on delayed refund. For the understanding of the Departmental Officers, we are reproducing the entire Section 27A of the Customs Act.
SECTION [27A. Interest on delayed refunds. -- If any duty ordered to be refunded under Sub-section (2) of Section 27 to an 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 27 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 data, 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 Customs or Deputy Commissioner of Customs] under Sub-section (2) of Section 27, 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 that sub-section for the purposes of this section.] 6.1. On a very careful reading of the above provision, it is very clear that the interest clock starts ticking immediately after the expiry of three months from the date of filing of the refund claim. In this case also the same rule will apply. Therefore, in all these cases, the interest has to be granted right from the date of expiry of three months from the date of filing of the refund claim till the sanctioning of the refund. In view of this bench's decision in the appellant's own case (cited supra) to grant interest on interest when the grant of interest itself is inordinately delayed, the appellant is entitled for interest on interest also till the date of payment of the interest. Thus, we allow the appeals of the appellant with consequential relief.
(Pronounced in open Court on 7 JAN 2008)