Custom, Excise & Service Tax Tribunal
M/S Mehta Flex Pvt. Ltd vs Cc (Import) Mumbai on 4 August, 2014
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II IN APPEAL NO. C/673/11 (Arising out of Order-in-Appeal No. 147/MCH/ADC/Cont. Cell/2011 dated 16.06.2011 passed by the Commissioner of Customs (Appeals), Mumbai Zone-I.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
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 : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Mehta Flex Pvt. Ltd.
: Appellant
Versus
CC (Import) Mumbai
: Respondent
Appearance
Shri Vinay S. Sejpal, Advocate
: For Appellant
Shri J.R. Sharma, Supdt. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 04.08.2014 Date of Decision: 04.08.2014
ORDER NO.......................................................
Per: Anil Choudhary:
The appellant M/s Mehta Flex Pvt. Ltd. has filed this appeal against the Order-in-Appeal No. 147/MCH/ADC/Cont. Cell/2011 dated 16.06.2011 passed by the Commissioner of Customs (Appeals), Mumbai Zone-I.
2. Brief facts of the case are as under:-
(i) Appellant M/s Mehta Flex Pvt. Ltd. had imported machinery under project import vide Bill of entry No. 655769 dated 08.03.2006. It was assessed provisionally after furnishing appropriate bond along with Cash Security Deposit of Rs. 20,52,600/- by challan dated 03.03.2006. After completion of all the requirement & conditions of the project import, they had applied vide letter dated 10.07.2006 for finalization of provisional assessment and for release of the bond and the cash security deposit amount of Rs. 20,52,600/-. Refund of Security deposit of Rs. 20,52,600/- was sanctioned and paid to them vide Cheque No. 372495 dated 21.01.2008. However on pressing repeatedly for interest, vide the letter No. S/5-25/06 CC dated 21.08.2008, issued by Asst. Commissioner of Customs, contract Cell, New Custom House, Mumbai, their claim of interest, for the delayed period in respect of refund of pre-deposit Rs. 20,52,600/- was denied on the ground that there is no provision under Section 27-A of the Customs Act, 1962 for payment of interest on security deposit. Aggrieved by the same, the appellants field an appeal, before the Commissioner (Appeals), who was pleased to remand the matter. On further appeal by Revenue Challenging jurisdiction of Commissioner (Appeals) to remand, this Tribunal vide order dated 05.08.2010 set aside the order and remanded the matter to Commissioner (Appeals).
(ii) It is observed that the appellants had applied for refund of the cash security deposit and finalisation of assessment vide letter dated 10.07.2006 acknowledged on 20.07.2006. As per the CBEC Circular No. 275/37/2K-Cx 8A dated 02.01.2002 amount should have been returned within three months i.e. by 20.10.2006. Inspite of finalisation of assessment and cancellation of Bond on 30.11.2006 they were granted refund of the cash security amount vide Cheque No. 372595 dated 21.01.2008. However no interest was paid for delay in granting refund of cash security deposit on finalization of assessment from 20.10.2006 to 21.01.2008. The Dept. Vide letter dated 07.03.2011 informed that the delay was at the preaudit stage, when it was pointed out that doctrine of unjust enrichment was applicable in case of cash security deposit. The importer was requested to submit relevant documents. The appellants vide their letter dated 27.08.2007 furnished clarification from the Chartered Accountant that the security deposit of Rs. 20,52,600/- is included under the head Advances Recoverable in cash or in kind in the Balance Sheet as on 31.03.2006 has been shown separately. It was also certified by the Chartered Accountant that this amount has been kept as deposit from their own sources and has not been recovered from the customers, nor included the impact of this deposit in their cost of production. Hence, it has no effect on their sale price. Thus, after observing necessary checks and scrutiny for the purpose of granting refund of the aforesaid Cash security deposit amount of Rs. 20,52,600/- paid by the importer, at the time of registration of the contract, the same was refunded to the importer vide Cheque No. 372595 dated 21.01.2008. The receipt of this cheque was acknowledged by the Director of Mehta Flex Pvt. Ltd., Mumbai.
(iii) The appellants vide their letter dated 01.02.2008 and subsequent reminders claimed interest for delayed payment of refund on pre-deposit for 18 months and 10 days (from October, 2006 to 21st January, 2008) under Section 27-A of the Customs Act, 1962. They have relied upon CBEC Circular Nos. 275/37/2K-CX 8A dated 02.01.2002 & 802/35/2004-Cx. dated 08.12.2004, and case laws in the case of CCE Vs. I.T.C. Ltd., 2005 (179) ELT 65 (SC) wherein the Hon'ble Apex Court have held that interest is payable by Revenue @ 12 % per annum after three months of Refund becoming due.
3. The learned Commissioner (Appeals) was pleased to hold that interest on refund was allowable for the admitted period of delay on the ground as recorded in para 6 & 7 of the Order-in-Appeal are as under:-
6. It is observed that only vide letter dated 27.08.2007, the appellants had submitted suitable clarification on how their refund claim is not hit by the mischief of Doctrine of Unjust Enrichment. Therefore, the receipt date of this letter would be the relevant date for reckoning the time limit for issuance of refund in accordance with the instructions of the Board. As the refund cheque has been issued on 21.01.2008, there is not much delay beyond the three months prescribed by the Board.
7. It is further observed that the refund pertains to the period from July 2006 till 21.01.2008. It is also observed that the amount refunded was deposited towards provisional assessment. The circular and the case laws relied upon by the appellants deals with the Section 35 F of Central Excise Act 1944 and Section 129 E of the Customs Act, 1962. The deposit covered under these circulars and the case laws are in connection with the pending appeals. Such deposits are materially different with the deposit made towards provisional assessment. Therefore, the circular and the case laws cited by the appellants are not applicable in the instant case.
4. The learned Counsel for the appellant states that there has been delay in the sanctioning of refund and the said delay is beyond a period of three months, but interest for the delay was not paid. The appellant further argued that the circular and the case laws relied upon by the appellants deals with the Section 35 F of Central Excise Act 1944 and Section 129 E of the Customs Act, 1962. The deposit covered under these circulars and the case laws are in connection with the pending appeals. Such deposits are not materially different with the deposit made towards provisional assessment. Therefore, the circular and the case laws cited by the appellants are applicable in the instant case. Further, the appellant relies on the CBEC Circular dated 08.12.2004 which provided for refund to be sanctioned within 3 months in the case of deposit, as in the facts and circumstances. The appellant further relies on the ruling of Hon'ble Supreme Court in the case of Commissioner of Central Excise, Hyderabad Vs. ITC. Ltd. (supra) wherein it was held that payment of interest on such delayed refund exceeding 3 months have to given @ 12% per annum commencing from 3 months after final disposal of the dispute, interest has to be allowed. Thus prays for allowing the appeal.
5. The learned A.R. appearing for the Revenue relies on the impugned order.
6. Having considered the rival contentions, I find that the reasons assigned in the impugned order for denying refund are misconceived and wrong. The learned appellate authority has misconceived the provisions under Section 27-A of the Customs Act. The issue of refund in the facts and circumstances is covered on all four by Ruling of the Hon'ble Apex Court in I.T.C. Ltd. (supra). The impugned order is set aside. The appellant is entitled to interest for the period of delay being 20.10.2006 to 21.01.2008, I further direct the adjudicating authority to grant interest within 4 weeks from the date receipt of this order.
7. Thus the appeal is allowed and impugned order is set aside.
(Dictated and pronounced in open Court) (Anil Choudhary) Member (Judicial) Sp 6