Customs, Excise and Gold Tribunal - Delhi
Sharda Synthetics Ltd. And Hindustan ... vs Cce, Mumbai-Iii And Cce, Chandigarh on 18 June, 2003
Equivalent citations: 2003(89)ECC85, 2003(156)ELT730(TRI-DEL)
JUDGMENT V.K. Agrawal, Member (T)
1. The issue involved in these two appeals is whether the interest is payable to the Appellants on delayed refund of the amount deposited by them under Section 35F of the Central Excise Act 2.1 Shri L.P. Asthana, learned Advocate for M/s. Sharda Synthetics Ltd., submitted that they are an independent textile processor; that the Assistant Collector, under Adjudication Order dated 14.1.1993, confirmed Central Excise duty amounting to Rs. 3,04,27,882.43 paise which was confirmed by the Collector (Appeals) under Order-in-Appeal dated 30.8.93; that the Appellate Tribunal vide Stay Order No. 237/93-A dated 30.9.93 directed them to deposit Rs. 75 lakhs and execute two personal bonds for the remaining amounts; that subsequently the Tribunal, vide Final Order No. 303/94-A dated 19.10.94 allowed their appeal by remanding the matter to the jurisdictional Assistant Collector to decide the assessable value afresh in the light of law laid down by the Supreme Court in Ujagar Prints case as well as other various decisions.
2.2 He mentioned that the Assistant Commissioner, under Adjudication Order dated 29.5.95, again confirmed the demand of duty and matter travelled to the Tribunal again; that the Tribunal, vide Order No. 871-72/97-WZB dated 3.3.1997 allowed their appeal by remanding the matter to the Assistant Commissioner with direction to decide the matter afresh in the light of the earlier Order No. 303/94-A dated 19.10.94 of the Tribunal.
2.3 The learned Advocate mentioned that the Appellants filed an application for refund on 2.3.1997 claiming refund of Rs. 75 lakhs deposited by them alongwith interest thereon; that the Suptd., under letter dated 10.6.97 directed them to submit Order-in-Original, Order-in-Appeal dated 1.6.96 and statutory statement of payment of deposit which were submitted by the Appellants under letter dated 6.7.1997; that the Assistant Commissioner, under letter dated 22.8.97 called for Tribunal's Order dated 19.10.97. The learned Advocate contended that it is thus apparent that they had furnished all the documents required by the Department for processing the refund claim filed by them.
2.4 He continued to mention that the Assistant Commissioner, in second remand proceedings, confirmed the demand of duty of Rs. 92,59,931.80 only, under Order-in-Original No. 382/RCB/97-98 without seeking to adjust the amount of Rs. 75 lakhs; that their appeal was dismissed by the Commissioner (Appeals) under Order-in-Appeals dated 25.9.98 for non-compliance with Section 35F of the Central Excise Act; that the Appellate Tribunal, vide Final Order No. C-II/2820/WZB/1999 dated 26.10.99 set aside the Order and remanded the case to the Assistant Commissioner with direction to grant them hearing and determine the issue by passing a speaking Order within the framework of the Tribunal's previous Order dated 3.3.1997.
2.5 In the adjudication proceeding, the Assistant Commissioner, under Order-in-Original No. 12/2000 dated 18.4.2000 allowed a deduction 20% profit margin and confirmed a demand of Rs. 8,78,738.03 paise.
3.1 The learned Counsel further mentioned that the Appellants moved a Misc. Application before the Tribunal for refund of amount pre-deposited by them and the Tribunal vide Order No. E-II/61/2000 dated 1.3.2000 directed the Department to refund the same; that the amount was refunded by the Department under Order dated 22.6.2000.
3.2 The Appellants thereafter, under their letter dated 16.1.2001 directed the attention of the Department to their refund application dated 2.3.97 wherein they had sought refund of Rs. 75 and had also claimed interest thereon and submitted that they are entitled to interest right from 19.10.94 when the Tribunal had remanded the matter to jurisdictional Assistant Collector; that under their letter dated 5.3.2001, they claimed interest up to 22.6.2000; that the Assistant Commissioner rejected their claim for interest under Order-in-original dated 22.6.2000; that Commissioner (Appeals) also rejected their appeal under the impugned Order on the ground that as the refund claim filed on 6.6.97 was incomplete, the same was returned to them on 22.8.97 and there is no evidence that they had resubmitted the claim with all the documents; that the Commissioner (Appeals) has also given his findings that the refund claim submitted by them on 25.4.2000 has been sanctioned on 22.6.2000 within three months as stipulated under Section 11BB of the Central Excise Act.
4.1 The learned Counsel submitted that in Kuil Fireworks Industries v. CCE, 1997 (72) ECR 529 (SC) in view of demand having been quashed, the Supreme Court directed that the amount "deposited by the appellant be refunded to the appellant with interest @ 12%......."; that the Tribunal, in Gulf defines (P) Ltd. v. CCE, Madurai, 2000 (126) ELT 1225 (T), following the said judgment of the Supreme Court, directed the Commissioner to make payment of interest on the amounts from the date of deposit of the amount @ 12% per annum. He also relied upon the decision in the case of Voltas Ltd. v. UOI, 1999 (65) ECC 879 (Del) : 1999 (112) ELT 34 (Del) wherein the Delhi High Court has held that even in a case where the Tribunal remands the matter for re-adjudication, the amount deposited as pre-deposit should be immediately returned as in terms of Section 35F, pre-deposit is a deposit pending appeal and that once an appeal has been decided by setting aside the Order and remanding the matter to the adjudicating authority, the amount of pre-deposit cannot be retained as it is deposit pending appeal and that after the matter has been remanded, there is no appeal which is pending.
4.2 The learned Advocate contended that no formal refund claim is to be filed for seeking refund of amount deposited in terms of Section 35F of the Act; that since the amount of pre-deposit was not returned, the Appellants became entitled for interest on the same from the date of Order till the date of refund in terms of the Madras High Court judgment in CCE v. Calcutta Chemical Co. Ltd., 2001 (133) ELT 278 (Mad). The Madras High Court has held that the respondent-company is entitled to get 15% interest from the date of the Order of CEGAT till the actual realization. Reliance has also been placed on the decision in Bharat Heavy Electricals Ltd. v. CCE, Meerut, 2002 (79) ECC 402(T): 2002 (139) ELT 591(T) wherein the Tribunal has held that "the entitlement for refund would arise only when the appeal was finally disposed of in favour of the appellant by the Tribunal. If that be so no interest can be claimed for the period prior to the date of Final Order." Reliance has also been placed on the decision in Suvidha Ltd. v. UOI, 1996 (82) ELT 117 (Bom) wherein the Bombay High Court has held as under:
"Petitioners' prayer for refund of the amount deposited under Section 35F has not received a favourable response. On the contrary the impugned show cause notice is issued why the amount deposited should not be forfeited. In our judgment, the claim raised by the Department in the show cause notice is thoroughly dishonest and baseless. In respect of a deposit made under Section 35F, provisions of Section 11B can never be applicable. A deposit under Section 35F is not a payment of duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief."
He also mentioned that, appeal filed by Revenue has been dismissed by the Supreme Court as reported in 1997 (94) ELT A 159.
4.3 Reliance has also been placed on the decision in Nelco Ltd. v. UOI, 2002 (144) ELT 56 (Bom) wherein the Bombay High Court has held that once the Tribunal has remanded the matter for re-adjudication by the adjudicating authority, the parties are put back to the situation of a show cause notice against the Petitioner being adjudicated by the authority and the Government is not entitled to hold on the money merely because the adjudication was proceeding on the original show cause notice. The Bombay High Court ordered payment of interest from the date of Tribunal's Order remanding the Order. The appeal filed by Revenue has been dismissed by the Supreme Court on 26.1.2001 in Appeal (Civil) No. CC8437 of 2001.
4.4 He also referred to Board's Circular No. 275/37/2K-CX 8A, dated 2.1.2002 wherein it is mentioned that Pre-deposit had all along been considered to be deposits other than duty and "such deposits should be returned in the event the appellant succeeds in appeal or the matter is remanded for fresh adjudication. The Board has also clarified that refund applications under Section 11B of the Central Excise Act or Section 27 of the Customs Act need not be insisted upon. A simple letter from the person who has made such deposit requesting the return of the amount alongwith copy of Order-in-Appeals and attested copy of the Challan will suffice for the purpose.
4.5 Finally the learned Counsel relied upon the decision of the Larger Bench of the Tribunal in the case of Sheela Foam Pvt. Ltd. v. CCE, Noida, Misc. Order No. 78/2003-NB(A) dated 1.5.2003. The Larger Bench, after relying upon the decision of the Calcutta High Court in Eastern Coils Pvt. Ltd. v. CCE, Calcutta, 2003 (153) ELT 290 (Kol) has directed the revenue to refund the amount deposited by the Appellants "with interest @ 12% from the date of receipt of copy of the final order of this Tribunal date 12.2.2002."
4.6 The learned Advocate thus finally submitted that the Appellants were entitled to the refund of amount deposited by them under Section 35F of the Central Excise Act at least within 3 months from 19.10.94 when the Tribunal allowed their appeal and as the amount was not refunded, they are eligible to interest from 19.1.95 till 22.6.2000 when the refund was granted by the Revenue.
5.1 Shri Joy Kumar, learned Advocate for M/s. Hindustan Wire Products Ltd., mentioned that the Appellants were directed by the Tribunal vide Order No. 32/86-B1 dated 23.1.86 to deposit Rs. 10 lakhs; that the High Court of Delhi modified the Tribunal's Order to the effect that they should furnish a Bank guarantee for 50% of the duty demanded (Rs. 21,84,692); that however, they debited Rs. 10,92,346 in their PLA on 19.1.88; that finally the Tribunal allowed their appeal vide Final Order No. E/402/95-B dated 26.9.95; that they filed a refund claim on 22.2.96 for refund of the amount deposited by them.
5.2 He further mentioned that the Assistant Commissioner has rejected their refund claim under Order dated 8.5.96 which has been remanded by the Commissioner (Appeals), under Order dated 22.1.96 to the Adjudicating Authority; that again the Assistant Commissioner rejected their claim for refund of amount deposited by them under Order dated 20.6.97 which has been set aside by the Commissioner (Appeals), under Order dated 9.10.1998.
5.3 The Assistant Commissioner finally allowed the Appellant No. 2 to take credit in their RG 23A, Part-II, though they were entitled to get refund in cash.
5.4 Their request for interest filed on 8.2.1999 for the period from 8.5.1996 to 14.1.99 has been rejected by the Assistant Commissioner under Order dated 1.6.99 which has been confirmed by the Commissioner (Appeals) under the impugned Order dated 31.7.2000.
5.5 The learned Advocate adopted the submissions made by Shri L.P. Asthana and submitted that the Appellants No. 2 are eligible for the interest on the amount deposited by them and withheld for the period 8.5.1996 to 14.1,1999.
6.1 Countering the arguments, Shri Vikas Kumar, learned SDR, submitted that the dispute between the Appellant No. 1 and the Department initially was about the determination of assessable value of the cloth in their hands as processor; that the Appellate Tribunal, vide Order dated 19.10.1994 had merely remanded the matter to the jurisdictional Assistant Commissioner to consider the determination of the assessable value afresh in the light of the Ujagar Prints v. UOI, 1988 (18) ECC 435 (SC) : 1988 (38) ELT 535 (SC); that the said decision was not a final decision as the matter was only remanded; that in the second remand Order Nos. 871-72/97-WZB dated 3.3.1997, the Tribunal again remanded the matter for ascertaining the margin of profit of the traders and to exclude the same from the assessable value; that it is apparent from the third Tribunal Order No. CII/2820/WZB/1999 dated 26.10.1999 that M/s. Sharda Synthetics Ltd. did not have all the copies of the declarations involved in the disputed proceedings and they had produced only 29 declarations; that thus for want of complete records on the part of the Appellant No. 1 the matter had to travel a number of times to the Appellate Tribunal and could not be finalized; that as such the delay in resolving the issue was not on part of the Revenue and the benefit of delay thus should not go to them.
6.2 The learned SDR, further, submitted that when the matter reached second time before the Tribunal, the deposit of Rs. 75 lakhs made earlier by the Appellate Tribunal was taken into consideration by the Tribunal and as such it cannot be claimed by the Appellant No. 1 that they are eligible for the interest from the period after three months from 19,10.94 (when the matter was first time remanded by the Tribunal).
6.3 The learned SDR also contended that the Tribunal in Bharat Heavy Electricals case, supra, has specifically held that interest on the pre-deposit amount is payable only from the date of the Final Order of the Tribunal and that "the entitlement for refund would arise only when the appeal was finally disposed of in favour of the appellant by the Tribunal. If that be so no interest can be claimed for the period prior to the date of Final Order." He emphasized that the Tribunal has only remanded the matter and has not disposed the appeal in favour of the appellants and as such question of payment of interest does not arise. He also mentioned that in NELCO case, supra, facts are different inasmuch as on appeal filed against the Tribunal's Order dated 24.1.97 remanding the matter to the adjudicating authority, the Supreme Court held that all the demands were time barred and quashed the Order dated 24.1.97 and fully allowed the Appeal; that in these circumstances M/s. NELCO had asked for return of the pre-deposit amount; that in the present matter the demand has not been held time barred. In reply, the learned advocate for M/s. Sharda Synthetics Ltd. submitted that the issue in the present proceedings is not about the delay in passing the Final Order by the Assistant Commissioner but the refund of pre-deposit amount after the remand to the Appellants and as the amount has been refunded only in June 2000, they are eligible for the interest in terms of the various decisions cited by him.
7. We have considered the submissions of all the sides. We observe that it is now settled law that in case the matter is decided in favour of the assessee or the Appellant who has made pre-deposit under Section 35F of the Central Excise Act (or under Section 129E of the Customs Act) the said amount is to be refunded to him and in case of delay in making the refund of such amount by Revenue, he will also be eligible to interest on such amount at the appropriate rate. This was the judgment of the Supreme Court in the case of Kuil Fireworks Industries, supra, wherein the Apex Court has directed that the amount "deposited by the Appellant be refunded to the appellant with interest @ 12%." We also observe that in the said matter out of Rs. 2 lakh deposited by the appellant, Rs. 1.5 lakh pertained to the payment made by them towards the impugned demand and only Rs. 50,000 was paid by the Appellant in pursuance of the interim order of the Tribunal. The Madras High Court has taken quite a serious view in Oswal Agro Mills Ltd. v. UOI, 2000 (115) ELT 302 (Mad) by holding that "When once the appeal is allowed by the CEGAT, there is no justification or reason, or rhyme, for the respondents to retain the sum of Rs. 12.5." The Madras High Court has also held that "When once the Order has been set aside by the CEGAT, it follows automatically that the respondents could have sent a advise intimating the refund of the pre-deposit made by the Petitioner, which the respondents had not also chosen to do.
8. We also do not find any force in the submissions of the learned SDR that the amount pre-deposited would be returnable only when the Final Order is passed and not in a case where only the matter has been remanded for re-adjudication. The Delhi High Court has considered this aspect in Voltas Ltd. v. UOI, 1999 (65) ECC 879 (Del) : 1999 (12) ELT 34 (DEL). In this case the Petitioners deposited Rs. 50 lakhs on 27.5.97 as per direction of the Tribunal. The appeal was finally decided on 4.3.98 and Tribunal remanded the matter to the adjudicating authority for deciding the issue afresh in the light of the. technical literature made available by the Petitioner. The Delhi High Court has held as under:
"It is clear that the amount so deposited remains as deposit pending appeal and is therefore available for appropriation or disbursal consistently with the final order maintaining or setting aside the Order of adjudication.....once the order of adjudication was set aside, the Tribunal could not have ordered the amount of pre-deposit to be retained awaiting the order of adjudication. There is no provision in the law requiring certain amount to be retained as a pre-deposit pending finalization of the adjudication proceedings."
It is thus settled that even when matter is remanded to the adjudicating authority, amount of pre-deposit is to be refunded. Similar views have been expressed by the Tribunal in Krishna & Company v. CCE, Jaipur, 2000 (125) ELT 503 (T). The Board has also clarified under Circular No. 275/37/2K-CX8A, dated 2.1.2002 that "deposits should be returned in the event the appellant succeeds in appeal or the matter is remanded for fresh adjudication."
9. Both the Appellants are thus entitled to interest as the amount of pre-deposit has not been refunded to the Appellants immediately after the Order was passed by the Tribunal either allowing the appeal or remanding the matter for afresh adjudication. The question which is now to be decided is the date from which interest is to be paid. Recently the Larger Bench of this Tribunal in the case of M/s. Sheela Foam Pvt. Ltd. v. CCE, Noida, Misc. Order No. 78/2003-NB(A) dated 1.5.2003 has directed the Department to pay "interest at the rate of 12% from the date of expiry of three months from the date of receipt of copy of the final Order of this Tribunal dated 12.2.2002." The learned Advocate for M/s. Sharda Synthetics Ltd. has pleaded for payment of interest after three months from the date of Tribunal's Order dated 19.10.94. Thus following the decision of the Larger Bench in the case of Sheela Foam Pvt. Ltd., supra, we hold that the Appellant No. 1 is eligible to interest on the amount of Pre-deposit from the date of expiry of three months from the date of receipt of the Final Order of the Tribunal dated 19.10.1994 till the date of payment i.e. 22.6.2000. M/s. Hindustan Wires Products have claimed the interest from 8.5.1996 to 14.1.99 which is admissible to them.
Thus both the appeals are allowed.