Custom, Excise & Service Tax Tribunal
M/S.Gillooram Gaurishankar vs Cce & St, Ranchi on 28 August, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.EA-229/08
(Arising out of Order-in-Appeal No.19/RAN/2008 dated 04.02.2008 passed by the Commissioner(Appeals) of Central Excise & Service Tax, Ranchi.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.Gillooram Gaurishankar
Applicant (s)/Appellant (s)
Vs.
CCE & ST, Ranchi
Respondent (s)
Appearance:
Shri Kartik Kurmi, Advocate & Shri S.B.Sharma, Advocate for the Appellant (s) Shri A.K.Biswas, Supdt.(AR) for the Revenue (s) CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Date of Hearing/Decision :- 28.08.2015 Date of Pronouncement :- 20.11.2015 ORDER NO.FO/A/75664/2015 Per Dr. D.M. Misra.
1. This Appeal is directed against Order-in-Appeal No.19/RAN/2008 dated 04.02.2008 passed by the Commissioner(Appeals) of Central Excise & Service Tax, Ranchi.
2. Briefly stated facts of the case are that the Appellant had filed four refund claims during the period July, 1994 to April, 1995 under Rule 57F of the erstwhile Central Excise Rules, 1944. After protracted litigation, ultimately they became eligible to the refund, pursuant to the Orders of This Tribunal. The refund claims were finally settled and paid by the sanctioning authority. Consequently, the appellant had filed a claim for interest, initially on 25.03.2002, under section 11BB of the Central Excise Act, 1944 amounting to Rs.36,67,461/-, which later revised to Rs.37,28,253/- on 10.08.2002 shown as below:
S. No. Amount of refund claim (Rs.) Date of submission of refund claim Date of sanction of refund claim Date of payment of refund amount No. of days of delayed payment after deducting 90 days Amount of interest calculated @ 15% per annum(Rs.) 1 2,78,604.54 25.07.94 03.04.01 03.04.01 2265 2,59,331.41 2 11,25,758.53 25.07.94 03.04.01 03.04.01 2265 10,47,880.71 3 14,85,860.37 29.11.94 03.04.01 03.04.01 2138 13,05,521.70 4 10,56,610.00 28.04.95 03.04.01 09.08.02 2559 11,15,519.36 TOTAL 37,28,253.18 Rounded to 37,28,253/-
3.The said claim was rejected by the Assistant Commissioner of Central Excise, Dhanbad by an order dated 07.11.2007. Aggrieved by the said order, the appellant preferred an appeal before the ld. Commissioner(Appeals), Ranchi, who has upheld the order of the adjudicating authority and dismissed the appeal filed by the appellant. Hence, the present appeal.
4. The ld.Advocate Shri Kartik Kurmi for the appellant submits that there is no dispute on the eligibility of refund which arose, on account of export of goods, in accordance with Rule 57F(4) of erstwhile Central Excise Rules, 1944 pertaining to unutilized MODVAT Credit on inputs used in the manufacture of final products exported to Nepal. He submits that the refund of interest was erroneously rejected on the grounds that section 11BB of Central Excise Act, 1944 is not applicable to refunds arising out of Rule 57F(4); secondly since the refund relates to the period 1993-94 and the provisions of section 11BB inserted thereafter i.e. from 26.05.1995, therefore section 11BB would not be applicable to earlier refunds; lastly the period of three months for payment of interest prescribed under section 11BB would be applicable from the date of final order of CESTAT and not from the date of filing of the claims..
5. It is his contention that the principle of law on the above issues has been settled and therefore interest on delayed refund is admissible to them. On the issue of applicability of section 11BB of CEA1944 to to MODVAT credit refunds, the ld. Advocate referred to the judgement of the Honble Gujarat High Court in the case of Commissioner of Central Excise vs. Reliance Industries Ltd. 2010 (259) ELT 356(Guj.) which has been upheld by the Honble Supreme Court reported as Commissioner vs. Reliance Industries Ltd. 2011 (274) ELT A-110(SC). Also, similar opinion has been expressed by the Honble Madras High Court in the case of Commissioner of Central Excise, Salem vs. Rajalakshmi Textile Processors (P) Ltd. 2008 (221) ELT 38(Mad.) and Honble Uttarakhand High Court in the case of Rishabh Velveleen Ltd. vs. CESTAT 2014 (305) ELT 386(Uttarakhand). On the issue of applicability of section 11BB to the refund claims pending and filed prior to 26.05.1995, the ld.Advocate referred to the decision of Honble Rajasthan High Court in the case of J.K.Cement Works vs. Asstt. Commissioner of Central Excise & Customs 2004 (170) ELT 4 (Raj.) which has been confirmed by the Honble Supreme Court in the case of Ranbaxy Laboratories Ltd. vs. UOI 201 (273) ELT 3 (SC). Further, he has pleaded that in the case of Siddhant Chemicals vs. UOI 2014 (307) ELT 44(Allahabad), their Lordships following the Circular No.670/61/2002-CX dated 01.10.2002 held that payment of interest under section 11BB of Central Excise Act, 194 is not dependent on the claim of the party, but the authorities are statutorily obliged to pay the interest for delay in allowing the refund.
6. The ld.AR for the Revenue reiterated the findings of the ld. Commissioner(Appeals). He has requested to furnish a written submission in support of his argument, however the same has not been filed till date.
7. I have carefully considered the submissions and perused the records. There is no dispute about eligibility of refund as the department has already sanctioned and refunded the amount to the appellant. The dispute centers around the claim of interest for delayed period of the refund. It is the case of the appellant that even though they were eligible to refund of CENVAT Credit, the refund was not sanctioned to them within three months from the date of incorporation of section 11BB in the Central Excise Act, 1944 ( i.e. 26.05.1995), hence they are eligible to the interest amount for the delayed period from 26th Aug.1995. I find that the Revenue has rejected the interest on the delayed refund mainly on the following counts: Firstly, It is the contention of the Revenue that interest on MODVAT credit refund is out of the purview of section 11BB of Central Excise Act,1944; Secondly, the said provisions of section 11BB is not applicable to refunds filed prior to date of incorporation of the said provision in the Central Excise Act, 1944 and finally the interest if at all is payable, then it is due on expiry of three months from the date of Final Order of this Tribunal. From the above rival contentions, it is clear that there is no dispute on facts, but the issues revolve around pure questions of law which need to be addressed in the present appeal. I need not have to dwell on the detailed arguments advanced by both sides on the said issues in analyzing the relevant provisions of law as these issues are settled by now. On the issue of applicability of 11B & Sec.11BB to CENVAT Credit refunds under Rule 5 of CENVAT Credit Rules,2002/2004, the Honble Gujrat High Court taking into consideration the Circular No.130/41/95-CX dt,30.091995 issued after insertion of Sec.11BB referring to erstwhile Rule 57F erstwhile Central Excise Rules,1994, in Reliance Industries Ltds case(supra) observed as:
12.?On the facts and in the circumstances of the present case, admittedly the refund has been ordered under Rule 5 of the Rules and there was a delay in sanctioning the refund, in the circumstances, the provisions of Section 11BB of the Act would clearly be attracted and as such the Tribunal was justified in holding that the provisions of clause (c) of the proviso to sub-section (2) of Section 11B and consequently Section 11BB of the Act are clearly applicable to the facts of the present case and as such the respondent is entitled to interest on delayed refund of Cenvat Credit as claimed by it.
13.?Another aspect of the matter is that when Section 11BB of the Act had newly been inserted by the Finance Act, 1995, the Government of India, Ministry of Finance (Department of Revenue) has issued Circular : 130/41/95-CX., dated 30th May, 1995 (which finds reference in the impugned order of the Tribunal) issuing instructions regarding refunds claimed under Section 11BB of the Act. The Annexure thereto provides for the checklist of documents which are required to be filed with refund claims. Item No. 3 thereunder relates to Refund of credit of duty paid on excisable goods used as input in accordance with Rule 57FD. Thus, as per the instructions issued by the Central Government refunds under Rule 57F of the erstwhile Central Excise Rules, 1944 would be governed by the provisions of Section 11BB of the Act. Rule 57F of the said Rules made provision for the manner of utilisation of inputs and credit allowed in respect of duty paid thereon. Sub-rule (13) of rule 57F made provision for refund of accumulated credit in case where for any reason it was not possible to adjust the same in the manner provided under the said sub-rule. Sub-rule (13) of Rule 57F of the said Rules is more or less in pari materia to the provisions of Rule 5 of the Cenvat Credit Rules, 2002/2004. Thus, the instructions issued by the Central Government under the aforesaid Circular would also be applicable to refunds under rule 5 of the Rules, which instructions are binding on the revenue
8. On Appeal against the above judgment by the Revenue, the same was rejected by the Honble Supreme Court reported as Commissioner Vs. Reliance Industries Ltd. 2011 (274) ELT A110(SC). Thus, provisions of Sec.11BB of CEA,1944 is applicable to Modvat Credit Refunds under Rule 57F of erstwhile Central Excise Rules,1944.
9. The Applicability of Sec.11BB to the refunds filed prior to incorporation of the said provision in the Central Excise Act,1944 has been addressed by the Honble Rajastan High Court in J.K.Cement Works case(supra) as follows:
21.?The perusal of Section 11B goes to show that it prescribed a period within which the amount of refund can be claimed by the applicant. It also prescribes three months from the date of application as the period within which such refund is to be paid. Consequence of not paying refund within three months of making such application under Section 11B is that the Revenue becomes liable to pay interest on amount of refund with effect from the expiry of three months from the date of application until date of actual payment. The liability to pay interest is not tagged with decision to pay interest but in case it is ultimately found to be payable liability is with effect from expiry of three months of the date of receipt of application required to be made under Section 11B(1). The rate of interest is to be prescribed by the Board and the interest is payable with effect from the date commencing from the expiry of three months from the date of receipt of such application till the refund of such duty.
22.?The proviso to Section 11BB also takes care of the cases where refund became due prior to the insertion of proviso but the refund has not been paid until the insertion of Section 11B. In such event the date with effect from which liability to pay interest runs is with effect from the date of the expiry of three months from the date of the receipt of the assent of the President to the Finance Bill 1995, as the provision in the Bill became Act on 26-5-95. If the amount of refund claim was pending at the date of commencing of the new provisions and were not to be paid by 25-8-95, the Revenue became liable to pay interest w.e.f. 26-8-95 until the date of actual payment.
23.?The scheme of payment of interest on belated payment of refund under the Central Excise Act, 1944 is one integrated within the provisions of Section 11B and 11BB. They have to be read together
10. Rejecting the argument that the date of application for refund is not relevant but the date of final Order of the Tribunal is relevant for computation of interest under Sec.11BB, their Lordships have observed as:
32.?This brings in the question whether in such circumstances the petitioner could lay claim to the interest for the period prior to the expiry of three months, from the date of order, dated 15-12-2002.
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.
11. Finally, allowing the interest under Sec.11BB for the refund application filed prior to 26.05.1995, even though the Order of the CEGAT was passed on 15.12.2002, their Lordhsips have held as:
39.?Viewed from this point, in this matter it is apparent that notwithstanding the order under sub-section (2) of Section 11 has been passed by CEGAT in appeal only on 15-12-2002, but as the application to claim refund has been filed much earlier before the date when it was required to be filed and the amount having not been made within three months from the date of application, the applicant became entitled to interest with effect from the such date on principal amount to be refunded to him ultimately pursuant to an order made u/s 11B(2) at the rate notified by the Board from time to time, with effect from the date of expiry of three months from the date of application until date of payment of arrears of amount of excess Duty to Consumer Welfare Fund.
40.?Since we have noticed above that prior to insertion of Section 11BB there was no statutory provision providing for interest on refund of amount of excess Duty if not paid within a specified date, there is no statutory provision providing for interest on non refund of amount of excess duty within a specified period or on specified date until insertion of Section 11BB. In the absence of any statutory provision for payment of interest no mandamus could be issued for payment of interest for the period prior to one provided in Section 11BB.
41.?However, Proviso to Section 11BB which makes the provision applicable to pending applications if the refund amount is not paid within three months from the date Finance Bill received assent of the President, the entitlement of the petitioner to claim refund from such date cannot be denied to him.
42.?Accordingly the petition is allowed, the respondents are directed to pay interest on the amount of refund ordered to be paid to the applicant under sub-section 2 of Section 11B with effect form the expiry of three months from the date Section 11BB came into force that is to say w.e.f. 26-5-1995 which is the date of expiry of three months from 26-5-1995, until the date of actual payment. The interest shall be computed at the rate or rates which have been notified from time to time during the period for which the interest has to be paid to the petitioners. The order shall be complied within a period of two months from the date of receipt of writ or submission of certified copy of this order before appropriate officer whichever is earlier.
12. The aforesaid judgment was upheld by the Honble Supreme Court while rejecting the SLP filed by the Revenue reported as Asst. Commissioner Central Excise Vs. J.K.Cement Works 2005 (179) ELTA150(SC). Also, the principle laid in J.K.Cement Works case that date of application for refund would be the relevant date for computing three months to allow interest under Sec.11BB rather than the Order date as referred to under sub. Sec.(2) of Sec.11B, has been endorsed by the Honble Supreme Court in Ranbaxy Laboratories Ltds case(supra) observing:
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.
13. In view of the above analysis, the Appellant are entitled to the claim of interest on delayed refund of CENVAT Credit on the four applications filed between 25.07.1994 and 28.04.1995. From the table mentioned as above it seems that the interest amount against the delayed refund claims were calculated taking the date of filing of such claims as the relevant date. However, for pending refund claims as on 26.05.1995, the date of enactment of Sec.11BB, the payment of interest shall be computed in accordance with proviso to Sec. 11BB i.e from 26.08.1995 and not from the date of application of refund in view of the judgment of Honble Rajastan High Court in J.K.Cement Works Case(supra). Thus, the case is remanded to adjudicating authority only for the limited purpose of verification/computation of interest amount claimed/to be paid, as the case may be, taking the relevant date as 26.08.1995. It is expected that the entire exercise of verification and payment of the interest be completed within three months from the date of communication of the Order. Appeal disposed of as above.
(Pronounced in the open court on 20.11.2015.) SD/ (D.M.MISRA) MEMBER(JUDICIAL) sm 10 Appeal No.EA-229/08