Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Eveready Industries India Ltd on 10 July, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 22109 / 2014 Appeal(s) Involved: E/319/2007-SM [Arising out of Order-in-Appeal No. 04/2007 (HY-III) dated 23/02/2007 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Hyderabad.] Commissioner of Central Excise, Customs And Service Tax Hyderabad-III Opp.: LB Stadium Road, Basheerbagh, Hyderabad 500 004 Andhra Pradesh Appellant(s) Versus M/s. Eveready Industries India Ltd. IDA, Moula-Ali, Hyderabad Respondent(s)
Appearance:
Mr. Ganesh Haavanur, Addl. Commissioner (AR) For the Respondent Mr. Raghavendra B, Advocate 505-508, North Block, Brigade Plaza, 71/1, Subedar Chatram Road, Anandrao Circle, Bangalore - 560 009 For the Respondent CORAM:
HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 10/07/2014 Date of Decision: 10/07/2014 Order Per: S.K. MOHANTY This appeal filed by the Revenue-appellant is directed against the impugned order dated 23.02.2007 passed by the Commissioner (Appeals), Customs, Central Excise and Service Tax, Hyderabad, wherein interest claim under Section 11BB of the Central Excise Act, 1944 has been allowed in favour of the respondent herein.
2. The brief facts of the case, leading to the present appeal are stated hereunder :-
The Respondent filed the application on 19.03.1998 before the original authority, claiming refund of Central Excise Duty of Rs. 54,97,351/- paid under protest on the cost of secondary packing. Vide the adjudication order dated 18.06.1998, the refund claim application was rejected on the ground that the assessee failed to produce documentary evidence to prove that the incidence of duty has not been passed on to any other person as required under Section 11B of the Central Excise Act, 1944. The matter was contested in different appellate forums by both the sides and ultimately the same was resolved vide order dated 31.03.2005 by the Commissioner (Appeals) by allowing the appeal in favour of the respondent with consequential benefits. Pursuant to the said appellate order, the Respondent filed refund claim for Rs. 54,97,351/- on 24.05.2005. Out of the said claimed amount, the original authority vide order dated 22.08.2005 had sanctioned refund of Rs.30,53,576/-. Subsequently, the respondent filed the application before the original authority, claiming interest amount of Rs.22,82,401/- for delayed sanction of the refund amount. The said interest amount was computed by the respondent from the date of filing the original refund application, till its sanction by the Department. On 08.09.2006, the said interest claim application was rejected by the original authority, holding that payment of interest under Section 11BB of the Act does not arise. Appeal filed by the respondent against the said order was allowed by the Commissioner (Appeals) vide the impugned order dated 23.02.2007, holding that the respondent is entitled for interest for the period from 19.06.2008 to 22.08.2005 (i.e. the date immediately after the expiry of three month from the date of application, till the date of refund of the duty amount). Being aggrieved with the said impugned order, the appellant-Revenue has preferred the appeal before this Tribunal.
3. In the grounds of appeal, the Revenue has contended that the relevant date for calculating interest amount commences after three months from the date of filing the refund application dated 24.05.2005, filed in pursuance to the Final Order of Commissioner (Appeals) dated 31.03.2005; that the refund amount having been sanctioned on 22.08.2005, which is within the period of three months from the date of application for refund, there is no delay in sanction of refund, and accordingly, no interest is required to be paid. The learned A.R. appearing for the Revenue has cited the following decisions to substantiate that in absence of delay in sanction of refund, no interest is payable to the respondent.
a) Coronation Spinning India -Vs.- Commissioner of Customs, Kolkata [2004 (170) E.L.T. 143 (Tri.-LB)]
b) Indian Thermoplastics (P) Ltd. -Vs.- Commissioner of Customs, Kolkata [2004 (164) E.L.T. 156 (Tri.-LB)]
c) Commissioner of Central Excise, Hyderabad -Vs.- I.T.C. Ltd. [2005 (179) E.L.T. 15 (S.C)
d) Eastern Coils Pvt. Ltd. -Vs.- Commissioner of Central Excise, Kolkata-I [2003 (153) E.L.T. 290 (Cal.)]
4. Per contra, the learned Advocate appearing for the respondent submitted that the refund application initially filed on 19.03.1998 was considered for payment by the Central Excise department on 22.08.2005, consequent upon the order dated 31.03.2005 passed by the Commissioner (Appeals); thus, according to the provisions of Section 11BB of the Central Excise Act, 1944, the respondent is entitled for interest for the period from 19.06.1998 to 22.08.2005 (i.e. the date immediately after the expiry of three month from the date of application, till the date of refund of the duty amount). He has cited the judgment of Honble Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India [2011 (273) E.L.T. 3 (S.C)] to justify the stand for claim of interest.
5. I have heard the learned counsel for the parties and perused the records. The issue involved in the present case for determination by this Tribunal is as to whether the respondent is entitled to get the interest for the period of delay in late sanction of the refund amount. If the answer is in affirmative, from which date the interest is payable to the respondent.
6. The provisions governing claim for refund of duty is contained in Section 11B of the Central Excise Act, 1944. Sub-section (1) of the said section provides that any person desirous of claiming refund of duty, may file an application before the Assistant/Deputy Commissioner of Central Excise in the prescribed form and the documents that may be necessary for deciding the application are also to be submitted. As per the requirement of sub-section (2) of the said section, the empowered authority under the statute is required to hold enquiry; and thereafter, if he is satisfied that the duty amount paid by the applicant is refundable, then an order is required to be passed in sanctioning the refund in favour of the applicant.
7. Section 11BB of the said Act deals with the provisions for payment of interest on delayed sanction of refund amount. According to the statutory mandates, once an order sanctioning refund under sub-section (2) of Section 11B of the Act has been passed to refund the amount to the applicant, then the same has to be refunded within three months from the date of filing the refund application under sub-section (1) of Section 11B; and due to any reason, if such amount is not refunded within such prescribed time limit, then interest on the refund amount is liable to be paid by the Central Excise department at the prescribed rate, on expiry of period of three months from the date of receipt of such refund application.
8. An explanation has been appended to Section 11BB of the Act, which introduced the deeming fiction that in case of any order of refund passed by the Commissioner (Appeals), Appellate Tribunal or any Court against the order of Assistant/Deputy Commissioner of Central Excise under sub-section (2) of Section 11B of the Act, the order passed by such Appellate Authorities or by the Court(s) shall be deemed to be an order passed under such sub-section.
9. On a conjoint reading of Section 11B and 11BB of the Act (discussed supra), it transpires that once an order is passed by the competent Central Excise authorities pursuant to the refund application filed by the applicant, then the refund shall be paid forthwith within a period of three months; and if claimed amount is not paid within such stipulated time frame, then under the statutory obligations, the authorities are required to pay interest on the refund amount paid belatedly. The explanation added to Section 11BB of the Act is in context with or has the relevance only for the purposes of sub-section (2) of Section 11B, and not for the purpose of the period of computation of the interest liability.
10. In the present case, it is an admitted fact on record that the refund claim application filed by the respondent on 19.03.1998 was ultimately sanctioned vide the adjudication order dated 22.08.2005 i.e. after a lapse of more than seven years. As per the statutory mandates of Section 11B read with Section 11BB of the Act, the time limit for payment of the refund amount to the respondent by the Central Excise authorities (without interest) expired on 18.06.1998. Since, claimed amount was finally paid to the respondent on 22.08.2005, in my considered view, the respondent is entitled for the statutory interest from 19.06.1998 to the date when the refund was eventually paid i.e. 22.08.2005. Though, the refund amount was paid to the respondent consequent upon the final order dated 31.03.2005 passed by the Commissioner (Appeals), but the date of computation of the interest amount will commence from the date of cessation of three months of the refund application, and not from the date, when the refund amount was finally paid. The explanation inserted in Section 11B of the Act has nothing to do with the deferment of the date from which interest becomes payable. The issue in the present case regarding payment of interest on delayed refund of the Central Excise duty amount is no more res-integra, in view of the judgment of Hon'ble Supreme Court delivered in the case of M/s Ranbaxy Laboratories Ltd. - Vs. - Union of India, reported in 2011 (273) ELT 3 (S.C.). The relevant paragraph of the said judgment is extracted herein below :-
"9.?............ 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."
11. The case laws cited by the learned A.R. for Revenue have no application to the facts of the present case. In the case of Coronation Spinning and Indian Thermoplastics (supra), the refund applications were filed consequent upon the orders passed by the Appellate Tribunal; whereas, in the present case, the refund application was filed by the respondent prior to the date of order of the Appellate Commissioner in allowing the appeal with consequential benefits. The issue involved in the case of ITC Ltd. and Eastern Coils (supra) relates to payment of interest on delayed refund of the pre-deposited amount; whereas, in the case in hand, dispute pertains to payment of interest on delayed sanction of refund of Central Excise duty, which is specifically governed under the provisions of Section 11BB of the Act. Hence, the cases cited by Revenue are distinguishable.
12. In view of the foregoing reasons, I do not find any merits in the appeal filed by the revenue and reject the same.
(Operative portion of the order has been pronounced in open court on 10.07.2014) (S.K. MOHANTY) JUDICIAL MEMBER iss 2