Custom, Excise & Service Tax Tribunal
Hindustan Mint & Agro Product Pvt Ltd vs Ce & Cgst Greater Noida, Noida -Ii on 28 January, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.70433 of 2022
(Arising out of Order-in-Appeal No.NOI-EXCUS-002-APP-38-2022-23 dated
04.05.2022 passed by Commissioner (Appeals) CGST & Central Excise, Noida)
M/s Hindustan Mint &
Agro Products Pvt. Ltd., .....Appellant
(Deverkhera, Moradabad Road,
Chandausi-244412)
VERSUS
Commissioner of Central Excise &
CGST, Gautam Budh Nagar ....Respondent
rd (Gautam Budh Nagar, 3 Floor, Wegmans Business Park, Knowledge Park-III, Greater Noida) APPEARANCE:
Shri Abhinav Kalra, Advocate for the Appellant Shri Santosh Kumar, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.- 70024/2026 DATE OF HEARING : 05.01.2026 DATE OF PRONOUNCEMENT : 28.01.2026 The Appellant has filed the present appeal against Order- in-Appeal No.NOI-EXCUS-002-APP-38-2022-23 dated 04.05.2022 passed by the Commissioner (Appeals), Customs, CGST & Central Excise, Noida.
2. The facts of the present case in brief are that the Appellant was registered as Central Excise assessee vide registration No.AAACH7447KXM001 and was engaged in the manufacture of various mentha products which were exported by them. The Appellant used to procure raw materials from the local market as well as from manufacturers located in the State of Jammu and Kashmir, who were availing benefit of Notification No.56/2002- CE dated 14.11.2002. This Notification provided the benefit of Excise Appeal No.70433 of 2022 2 refund of duty paid by the manufacturers located in the State of Jammu and Kashmir to such manufacturers, but materials supplied by them were treated as duty paid goods. The Appellant availed Cenvat Credit of duty paid on raw materials and used such credit for payment of duty on goods exported subsequently. The Appellant used to file rebate claim for refund of duty paid on goods exported. The Appellant filed 67 rebate claims for the period 2008-09 and 2009-10 claiming rebate of Rs.2,40,08,101/-. The rebate claims were kept pending in view of the fact that an investigation was initiated by the Central Excise Commissionerate, Meerut on the ground that the Appellant was not receiving any goods from the manufacturers based in the State of Jammu and Kashmir but only invoices were procured for availment of CENVAT credit. However, the Department rejected rebate claims in 34 cases out of 67, on the ground that the Appellant availed inadmissible Cenvat credit without receipt of goods. In remaining 33 cases, involving rebate of Rs.1,29,43,690/-, a Show Cause Notice1 was issued on 07.09.2010 for rejection on the ground on which rebate claim in 34 cases was already rejected.
3. Being aggrieved with the above rejection order of rebate claims, the Appellant filed an appeal before the Commissioner (Appeals), Meerut-II who vide Order-in-Appeal dated 30.10.2019 allowed the appeal and directed to quantify and verify the amounts in each claim with reference to documents. The Department filed revision application against the said order before the Revisionary Authority. Meanwhile, the Department issued four SCNs covering the period from 2003-04 to June 2009 for rejection of Cenvat credit availed by the Appellant in respect of invoices received from the manufacturers of Jammu and Kashmir. In the matter of revision application filed by the Department, 'Revisionary Authority' vide order dated 13.06.2011 set aside the Order-in-Appeal dated 30.10.2009 and remanded the case to the Original Authority for re-adjudication in view of the outcome of the ongoing adjudication proceedings in the 1 SCN Excise Appeal No.70433 of 2022 3 cases of denial of CENVAT credit. The said four SCNs issued to the Appellant were assigned to the common adjudicator namely Commissioner, Central Excise, Chandigarh for adjudication but no action was taken even after lapse of 12 years from the date of the first SCN. So, the Appellant filed writ petition before the Hon'ble High Court of Punjab and Haryana against action of keeping SCNs pending for such a long period. The Hon'ble Court ordered to quash all SCNs vide judgment dated 22.01.2021. Subsequent to the above judgement, rebate claim amounting to Rs.2,38,88,596/- in respect of 66 claims were sanctioned vide Order dated 06.10.2021. One rebate claim for Rs.1,19,505/- was not found to be in order, hence, not considered for sanction. However, no interest was paid for the delay of 12 years while sanctioning of the rebate claim.
4. The Appellant being aggrieved with the above order, filed an appeal before the Commissioner (Appeals) Noida, who held that interest on the above amount should be granted in accordance with provisions of Section 11BB of the Central Excise Act, 1944 vide the impugned Order-in-Appeal.
5. The Appellant being aggrieved with the impugned Order- in-Appeal, filed the present appeal before the Tribunal.
6. On behalf of the Appellant, Shri Abhinav Kalra, Advocate, pleaded the case and contended that the Order of the Commissioner (Appeals) to grant interest as per provisions of Section 11BB of the Central Excise Act, 1944 is erroneous in as much as the interest under Section 11BB of the Central Excise Act, 1944 would not be applicable in the case of inordinate delay in sanctioning rebate claim. It has been contended that grant of interest @6% is neither sufficient nor justified in view of long pendency of the amount involved and suffering borne by the Appellant. The Learned counsel further submits that 66 rebate claims involving amount of Rs.2,38,88,596/- were kept pending by the Department without any fault of the Appellant for a period of more than 12 years. It has been further submitted that the Commissioner (Appeals) has failed to appreciate the provisions of Section 11BB of the Central Excise Act, 1944 in its true sense.
Excise Appeal No.70433 of 2022 4 The learned counsel requested to pay interest at a higher rate not lower than 12%.
7. Learned Counsel for the Appellant has further submitted that in a number of judgments pronounced by the Hon'ble Supreme Court of India and various High Courts, higher rate of interest ranging from 12% to 15% have been granted. He placed reliance on the following judgments :-
(i) Commissioner of Central Excise, Hyderabad Vs. ITC Ltd. [2005 (179) E.L.T. 15 (SC)];
(ii) Govind Mills Ltd., Vs. Commissioner of Central Excise, Allahabad [2014 (35) S.T.R. (444) (All)];
(iii) Dinesh Tobacco Ind. Vs. Commissioner of CGST, Jodhpur [2020 (371) E.L.T. 303 ((Tri.-Del.)].
In the above judgments, the Hon'ble Courts have clearly held that if the refund/rebate has been withheld for an unreasonable time and because of which the Appellant suffers hardship, interest is required to be paid @12% till date of actual/ sanction of rebate. The Counsel has requested to grant interest @12% at least.
8. Learned Departmental Authorized Representative Shri Santosh Kumar appearing for the Revenue has defended the impugned Order-in-Appeal and contended that the interest is payable only as per provisions of Section 11BB of the Central Excise Act, 1944.
9. Heard both the sides and perused the appeal records.
10. The only issue for my consideration in this case is whether interest at higher rate is liable to be paid on the amount of rebate claims sanctioned after a delay of 12 years in accordance with the provisions of Section 11BB of the Central Excise Act, 1944 or otherwise. Before taking up the issue for consideration, it is pertinent to discuss that the provisions of Section 11B of the Central Excise Act, 1944 is equally applicable relating to rebate of duty of excise as per Explanation 'A' to the said section. I find that under Section 11BB interest is required to be paid from the expiry of 3 months period from the date of application for rebate of duty. In this case payment of interest under Section 11B of Excise Appeal No.70433 of 2022 5 the Central Excise Act, 1944 @6% is not justified as there is abnormal delay of more than 12 years in sanctioning due rebate claim. In series of judgments, it has already been held that if there is abnormal delay in sanctioning rebate/refund claim, interest at higher rate is required to be paid. In this context, reference is made to the decision of Hon'ble Delhi High Court in the case of Surinder Singh [2006 (204) E.L.T. 534 (Delhi)] which was subsequently upheld by the Hon'ble Supreme Court vide decision reported as [2016 (340) E.L.T. 97 (SC)]. In this decision it has been categorically held that petitioner is entitled to @12% interest for the delayed refund of the Central Excise duty. In this case delay of rebate was for the period of 11.06.1999 to 12.06.2003. The ratio of the above decision is squarely applicable in the present case also and accordingly the Appellant is entitled to interest @ 12% on the sanctioned amount of rebate claim amounting to Rs.2,38,88,596/-. The relevant paragraphs are reproduced for ready reference:-
"33. While there may be no specific provision concerning the payment of interest on the delayed refund of the excise duty component of drawback, we may take cue from Section 11BB of the Central Excises Act 1944 which provides for payment of interest on refund of excise duty at a rate not below 5% and not exceeding 30% as may be fixed by the Central Government, if the duty ordered to be refunded is not refunded within 3 months from the date of the application for refund. Section 11BB has been on the statute book since 26-5-1995 and therefore on the date the amount of duty drawback became refundable to the petitioner, i.e. 11-6-1999, this provision applied. Admittedly there is no specific provision regarding payment of interest in the event of delayed refund of a drawback wrongly recovered from an assessee. A reference may however be made to Section 75A read with Section 27A of the Customs Act, 1962 (both introduced from 26-5-1995) where the Parliament appears to have acknowledged the basic principle involved even in the context of drawback. Then there are the Circulars by the Central Board of Excise and Customs (dated 2-1-2002 and 8-12-2004) which broadly acknowledge the Government's liability to pay interest on delayed refunds.
Excise Appeal No.70433 of 2022 6
34. Even otherwise, we are fortified in our conclusion that the petitioner is entitled to interest on the delayed refund by the decisions of the Hon'ble Supreme Court which recognise generally this principle. In Prince Khadi Woollen Handloom Producing Co-operative Society (supra), the Hon'ble Supreme Court recognised the liability of the Government to refund the tax wrongly collected from the assessee even though there was no specific provision in that regard. Likewise in Kuil Fireworks (supra) refund was ordered to be made together with interest at 12 per cent per annum. We may mention here that the decision in Union of India v. Orient Enterprises does not apply here since this petition is not exclusively for the payment of interest. This petition mainly seeks the quashing of the order dated 12-6-2003 on the ground that it wrongly denies to the petitioner the customs component of the drawback. The prayer for payment of interest is a consequential prayer. Also, given the long history of this litigation, the petitioner would, in our view, be entitled to equitable relief.
35. In Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd. the Hon'ble Supreme Court entertained plea for interest on delayed refund beyond three months at 12 per cent per annum commencing from three months after the final disposal of dispute between the periods and till the date of payment. In the instant case, the excise component became refundable to the petitioner on 11-6- 1999. Since the sum was not refunded even after three months thereafter, interest became payable on the refund.
36. In Sandvik Asia Ltd. v. Commissioner of Income Tax, the Hon'ble Supreme Court was again considering the claim of interest on a delayed refund in the context of Sections 244 and 244A of the Income Tax Act, 1961. It was held that further interest was payable by the revenue on interest which had to be repaid to the assessee. The Hon'ble Supreme Court on the facts of that case directed the payment of simple interest at 9 per cent per annum.
37. This Court in Tata Infotech Ltd. v. Collector of Customs, New Delhi referred to the Circular issued on 2-6- 1998 by the Central Board of Customs and Excise which in principle recognised the liability of the Government to pay interest on delayed refund of customs and excise duties wrongly collected. It was directed that the petitioner would be entitled to interest at the rate of 12 per cent per annum Excise Appeal No.70433 of 2022 7 on the amount of refund from the date of the passing of the order of the Tribunal in that case till the actual payment of the principal amount. In Hello Minerals Water (P) Ltd. v Union of India, the High Court of Judicature at Allahabad explained that requirement of payment of interest on the delayed refund was neither a penalty nor a punishment. Interest was ordered to be paid in that case at 10 per cent per annum from the date of deposit till the date of refund."
11. Further, I find that the Tribunal in the case of M/s Modern Threads India Ltd. vide Final Order No.55944/2024 dated 28.06.2024 has observed as under:-
"6. Department has relied upon a decision of the Year 2005. I observe that much water has flown since then on this issue and the issue is no more remains res integra. Section 11B/11BB of Central Excise Act are held as not applicable to the given set of circumstances. I draw my support from the decision of this Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. Commissioner, GST, reported as 2021-TIOL-306-CESTATALL, wherein following findings have been endorsed:
"30. In the present case, the provisions of section 11B of the Excise Act would not be applicable. This is for the reason that the appellant was not claiming refund of duty. The applicant, as noticed above, had claimed refund of the revenue deposit. Such a finding has also been clearly recorded by the Tribunal in the order dated 31.01.2017, which order has attained finality.
31. Section 11D of the Excise Act deals with duties of excise collected from the buyer to be deposited with Central Government. It provides that every person who is liable to pay duty and has collected any amount in excess of the duty assessed from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government.
32. Section 11DD of the Excise Act deals with interest on the amount collected in excess of the duty. It provides that where an amount has been collected in excess of the duty from the buyer of such goods, the person who is liable to pay such amount shall, in addition to the amount, be liable to pay interest at such rate not below ten per cent., Excise Appeal No.70433 of 2022 8 and not exceeding thirty six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette.
33. There is no provision in the Excise Act, which deals with refund of revenue deposit and so rate interest has not been prescribed, when revenue deposit is required to be refunded."
The Tribunal in the said case had allowed the interest on the refund amount from the date of deposit till the date of payment thereof.
7. I further observe that Hon'ble Supreme Court also in the case of Commissioner of Customs (Import), Raigad vs M/s. Finacord Chemicals (P) Ltd. in Civil Appeal no. 1633-1638 of 2004 as decided on 08.04.2015 reported as 2015 (319) E.L.T. 616 (S.C.) while discussing the liability of the department to pay the interest has referred to Departments' own circular dated 02.01.2002 wherein the Board clarified that the matters of refund other than the amount of duty would not be covered under the provisions of Section 11B of Customs Act or Section 35FF of Central Excise Act. It was held by the Hon'ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Learned Apex Court has relied upon its decision in SLP titled as Union of India vs Suvidhe Ltd. in which decision of Bombay High Court in Suvidhe Ltd. vs Union of India reported as 1996 (82) ELT 177 has been upheld. The Bombay High Court has observed that in case of deposits which were not in the form of duty, provisions of 11B of Customs Act will have no applicability. The deposits made under Section 35FF since is not the payment of duty, Section 11B will not be applicable.
8. Another circular of department bearing No. 802/35/2004 CX dated 08.12.2004 was also being considered by the Apex Court in the above mentioned judgment dated 08.04 2015. In that circular the Board emphasised that the amounts other than the amount of duty if deposited it should be refunded immediately as non returning of deposits attract interest that has been granted by the Courts in number of cases. One similar case of Hon'ble Apex Court is the decision of Sandvik Asia Ltd. reported as 2006 (196) ELT 257 (SC) wherein it was held that the amount deposited under Section 35FF of Central Excise Act as far as the payment of interest is concerned shall be applicable only in the cases for such deposits as have been made under Section 35F of the Act. As already observed in the present case, the amount in question is Excise Appeal No.70433 of 2022 9 neither the amount of duty nor is the amount of pre deposit, the amount in question is an amount of interest claimed on the amount sanctioned as Refund. The said amount had no authority to retain as the appellant was the owner thereof.
9. From the above discussion, once it is clear that Section 11B and 11BB of Central Excise Act will not be applicable to the amount in question, the denial of the interest on the appellant's amount is held to be unjustified. As per the Article 300A of Constitution of India also, no person shall be deprived of his property, save by authority of law. He cannot be deprived of the same and is entitled for benefits arising out of said property. Hence interest accrued on the amount in question during the period it remained deposited with the department is the property of the owner of the amount i.e. the appellant herein. I draw my support from the decision of Hon'ble High Court of Allahabad in the case of RHL Profiles Ltd. Vs. Commissioner of Customs, Ex. and Service Tax, Kanpur reported as 2017 (352) ELT 349 (All) has held that once the confiscation has been set aside, confiscation of seized currency has been set aside and the fact is that the Department has earned interest during the period the currency was retained by it, it was held that payment of interest could not be denied merely for the reason that there is no express statutory provision. Bombay High Court also in the case of Union of India Vs. M P Desal reported as 2019 (366) ELT 251 (Bom) has held that amount seized in cash by the authorities is to be refunded along with the interest. Though in this case the rate of interest was held to be simple at the rate of 8%. However, there already has been decisions of Kerala High Court in the case of Sony Pictures Networks India Pvt. Ltd. Vs. UOI reported as 2017 (353) ELT 179 (Ker) wherein the decision of Hon'ble Apex Court in the case of Kuil Fireworks Inds. Vs. Collector reported as 1997 (95) ELT 3 (SC) is relied and it was held that rate of interest while refunding the amounts has to be 12% of the amount refunded.
10. I also draw our support from the decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd. which is now the law of land in terms of Article 141 of the Constitution of India. The Hon'ble Apex Court, in the said case, has observed as follows:
"45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the Excise Appeal No.70433 of 2022 10 appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department.
Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law.
COMPENSATION:
46. The word 'Compensation' has been defined in P. RamanathaAiyar's Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:
Excise Appeal No.70433 of 2022 11 "An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; something given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer."
The Hon'ble Apex Court thus held that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refund.
11. Following the said law of land, I hold that the appellants are entitled to claim the interest on the amount as has been refunded in their favour that too to be paid from the date of payment of initial amount till the date of its refund.
12. Now comes the question about the rate at which the such interest has to be awarded. From the several provisions of Central Excise Act, as quoted above, it is observed that the rate of interest has to be notified by the Central Government from time to time. I take note of following notifications:
(i) The Notification No. 15/2016-CE dated 01.03.2016 issued under Section 11AA of Central Excise Act vide which the Central Government has fixed the rate of interest at 15% per annum for the purpose of said section.
(ii) The Notification No. 67/2003-CE dated 12.09.2003 issued under Section 11BB vide which the Central Government has fixed the rate of interest at 6% per annum for the purpose of said section.
(iii) The Notification No. 68/2003-CE dated 12.09.2003 issued under Section 11DD vide which the rate of interest Excise Appeal No.70433 of 2022 12 fixed by the Central Government is at 15% per annum for the purpose of the said section.
(iv) The Notification No. 6/2011 dated 01.03.0211 under Section 11AB wherein Central Government has fixed the rate of interest at 18% per annum for the purpose of the said section.
From the above notifications, issued under the respective sections of the Act, it becomes clear that the rate of interest varies from 6% to 18%.
13. This Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. Commissioner, Central Goods & Service Tax, Noida (vice-Versa) reported as 2021 (5) TMI 870 - CESTAT ALLHABAD has held that in the light of the above discussed notifications the grant of interest at the rate of 12% per annum seems to be appropriate. The decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd. (supra) has also been relied upon. Hon'ble High Court of Kerala also in the case of Sony Pictures Networks India Pvt. Ltd. (supra) has held that the interest on the refund shall be payable at the rate of 12% per annum. The previous judgment of Hon'ble Apex Court in the case of I.T.C. Ltd. (supra) has been relied upon, where the Apex court confined the rate of interest to 12% and further held that any judgment or decision of any high court taking a contrary view will be no longer a good law. The case law as relied upon by the appellant has been discussed by this Tribunal in the case of Riba Textiles Ltd. (supra) holding that those decisions are not applicable for the refund of the amount of pre deposit.
14. The above entire discussion makes it clear that the amount in question was an amount in the form of pre- deposit. Hence, it is the refund in terms of Section 35FF. However, the interest on sanctioned amount of refund has been denied on the ground that refund has been sanctioned within three months from the date of communication of the order of appellate authority in terms of the pre amended Section 35FF of Central Excise Act, 1944. I observe that Section 35FF stands amended w.e.f. 06.08.2014 read as follows:
Section 35FF. Interest on delayed refund of amount deposited under Section 35F.-
"Where an amount deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent and not exceeding thirty-six per cent per annum as is for the time being fixed by the Excise Appeal No.70433 of 2022 13 Central Government, by notification in the Official Gazette, on such amount from the date of payment of the amount till, the date of refund of such amount.
Provided that the amount deposited under section 35F, prior to the commencement of the Finance (No.
2) Act, 2014, shall continue to be governed by the provisions of Section 35FF as it stood before the commencement of the said Act."
The bare perusal makes it clear that the proviso is applicable to such amounts which were deposited under Section 35F.
15. Consequent to the entire above discussions, the findings of the order under challenge are hereby set aside. The appellant is held entitled to have interest on the amount of refund sanctioned at the rate of 12% per annum since the amount was got deposited after denying the substantial benefit of MODVAT. I hold appellant is eligible for interest at the rate of 12% from the date of the deposit of the amount till the date of refund thereof. Resultantly, the Order-in-Appeal under challenge is hereby set aside and appeal is allowed."
12. In view of the above discussion and the various decisions, I modify the impugned Order-in-Appeal and the Adjudicating Authority is directed to pay interest @12% on the sanctioned amount for the period as provided under Section 11BB of the Central Excise Act.
13. The appeal filed by the Appellant is allowed with consequential relief.
(Order pronounced in open court on- 28.01.2026) Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS