Custom, Excise & Service Tax Tribunal
Yes vs Represented By : Shri S.K. Mall, A.R on 31 May, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad COURT-II Appeal No.E/1092/11; E/CO/121/11 Arising out of OIA No.BC/124/SURAT-II/2011, dt.10.06.11 Passed by Commissioner of Central Excise, Customs & Service Tax (Appeals), Surat For approval and signature : Hon'ble Mr. M.V. Ravindran, Member (Judicial) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Appellant (s) : CCE Surat Represented by : Shri S.K. Mall, A.R. Respondent (s) : M/s. Mahavir Crimpers
Represented by : None CORAM :
Hon'ble Mr. M.V. Ravindran, Member (Judicial) Date of Hearing/Decision:31.05.13 ORDER No. _____________ /WZB/AHD/2013, dt.31.05.13 Per : Mr. M.V. Ravindran;
This appeal is filed by the Revenue against order in appeal No.BC/124/SURAT-II/2011, dt.10.06.11.
2. Brief facts of the case in brief are that the appellant opted for SSI exemption w.e.f.10.07.94 and paid concessional rate of duty under Notification No.1/93-CE dated 28.2.03, which was objected by the department that the concessional benefits under the said notification cannot be opted at any time in the middle of the year as they were paying full rate of duty. The appellant paid the differential duty amounting to Rs.7,21,793/-under protest. The appellant filed the refund claim of the duty paid subsequently. The appellant's claim of refund was rejected by the JAC vide OIO No.52/REFUND/96 dated 17.09.96. In appeal, the Commissioner (Appeals) directed the JAC to re-determine the amount. The JAC re-adjudicated the case and rejected the refund claim. The appellant again fired the appeal with the commissioner (Appeal), who remanded the case back for de-novo adjudication. The JDC re-adjudicated the case and rejected the claim. The appellant again filed appeal against the said order which was also rejected by the Commissioner (Appeal). In appeal, the CESTAT remanded the case to the Commissioner (Appeals) to decide the matter afresh in view of findings that the issue of availability of SSI exemption is settled by Honble High Court in case of Dhanlaxmi Texturising Vs. UOI reported in 2005 (l79) ELT. The commissioner (Appears) allowed the appeal of the appellant vide his order No.MS/22SRT-II/08 dared 12.02.08. Accordingly the appellant requested the JAC to grant the refund and the amount was granted by the JAC vide his order No.ANK-III/BCP/195 dated 27.02.08 without any interest under Section 11B and as per Boards circular No.670/61/2002-C.EX dated 01.10.02. The appellant requested the JAC on 13.10.08, for grant of interest and the JAC vide his order No.ANK/BCP/271/REFUND/2008 dated 22.01.09 sanctioned the interest amounting to Rs.28,120/- from the date of final order i.e. 12.02.08 to 05.10.08. The appellant was paid remaining amount of interest amounting to Rs.8,78,293/- and did not order any interest on the amount of interest paid belatedly as requested by the appellant vide OIO No.ANK-III/RSR/151/Refund/10-11 dated 13.09.10.
3. Aggrieved by such an order, the assessee preferred an appeal before the first appellate tribunal. The first appellate authority after following the due process of law, set aside the impugned order and directed the lower authorities to pay interest on belated payment of interest to the assessee.
4. None appears on behalf of the respondent despite notice. I find that the matter was listed for disposal on 23.01.13 and 15.03.13 on which dates none appeared. Notices intimating the hearing of appeal today were sent to the assessee on the given addresses. Since the issue involved lies in a narrow compass, I take up the appeal for disposal in the absence of any representation from the assessee.
5. Ld. D.R. would take me through the facts of the case and order-in-appeal. He would then submit that the issue is now settled by the Larger Bench of the Tribunal in the case of Sun Pharmaceuticals Industries Ltd. 2005 (185) ELT 253 (Tri. LB). He would produce the copy of the said judgment of the Larger Bench for my perusal. He would also rely upon the judgment of the Honble High Court of Madras in the case of VBC Industries Ltd. 2011 (270) ELT 314 (Mad.) for the same proposition that interest on belated payment of interest is not envisaged in the indirect taxation.
6. On careful consideration of the submissions made by the ld. D.R. and perusal of the records, I find that the first appellate authority has sanctioned/allowed the appeal of the respondent-assessee for payment of interest on interest, relying upon the judgment of the Honble Supreme Court in the case of Sandvik Asia Ltd. I find that the said judgment of the apex court is in facts and circumstances of a case dispute arising out of the Income Tax Act, for the payment of interest on belatedly payment of interest and hence the ratio of the apex courts decision would apply in similar facts.
7. I find that the judgment of the Honble High Court of Madras in the case of VBC Industries Ltd. has specifically considered the said judgment and held that:
18.?A perusal of the judgment shows that the Income Tax Act recognises the principle that a person should only be taxed in accordance with law and hence, where excess amount of tax are collected from an assessee or any amounts are wrongfully withheld from an assessee without authority of law, in spite of a decision of the Court in favour of the assessee, the Revenue must compensate the assessee. Section 240 of the Income Tax Act deals with refund on appeal. The expression used therein is refund of any amount. The supreme Court held that the said phrase has to be interpreted in the same manner as under Section 244(1A) of the Income Tax Act, that the expression referred not only to tax, but also to interest.
19.?The Supreme Court referred to the decisions in the case of CIT v. Goodyear India Limited - [2001] 249 ITR 527, D.J. Works v. Deputy CIT - [1992] 195 ITR 227, CIT v. Needle Industries Private Limited - [1998] 233 ITR 370 and CIT v. Ambat Echukutty Menon - [1988] 173 ITR 581 and rejected the view of the Bombay High Court. The Apex Court held that the assessee was entitled to interest as per the provisions of Sections 244 and 214 of the Income Tax Act. On the interest payable on the belated refund of interest paid by the assessee, in paragraphs 75 and 76, the supreme Court considered the general principles and ultimately held that the assessee was entitled to interest.
20.?It must be noted herein that the decision of the Apex Court is based on the interpretation of the word any amount as appearing in Sections 240 and 244(1A) of the Income Tax Act and in the absence of any specific provision on grant of interest on the belated refund of the interest component, it applied the general principles. Quite apart, even otherwise, the facts therein indicated that the claim of the assessee was by way of writ Petition, challenging the order of the Commissioner, rejecting the claim of the assessee for interest. Hence, the decision relied on by the learned Senior Counsel appearing for the assessee has to be understood in the context of the facts therein and the provisions of law and the same cannot be of any assistance to the assessee herein.
8. I also find that strong force in the argument of the ld. D.R. that the issue of payment of interest on belated payment of interest does not arise in the case of indirect taxation is covered by the decision of the Larger Bench of this Tribunal in the case of Sun Pharmaceuticals Industries Ltd. (supra). The ratio of the said Larger Bench decision is as under:
7.It has not been disputed before us that Section 214? of the Income Tax Act relates to the payment of advance tax by an assessee and when the tax so paid had been found to be excess at the time of final assessment that has to be refunded by the department with interest. But no such provision regarding payment of duty in advance by the assessee, exists in the Central Excise Act. Rather duty is payable by an assessee at the time of clearance of the goods from the factory. The Central Excise Act only speaks of provisional assessment under Rule 9B which can be claimed by the assessee or adopted by the deptt., when there is dispute regarding classification of the goods, and the correct Tariff rate of duty leviable on these goods or, where the clearance of the goods has to be made by an assessee under an agreement containing price variation clause. It is only on finalisation of that provisional assessment, the excess found duty, if any is required to be refunded to the assessees by the department and even for that refund period of three months has been allowed to the revenue under Section 11BB of the Act. However, while introducing this provision w.e.f. 28-9-96, the legislature thought it fit not to provide for any interest on interest even in case of delay in payment of interest on refund amount. To read the liability to pay interest on interest in the provisions of law contained in Section 11BB of the Act, would virtually amount to legislate upon the Act and that is not the function of the Tribunal which is creation under the said Act itself and has to exercise power conferred upon it under the Act. It may also be added that before the introduction of Section 11BB, the Tribunal had no power to award interest by exercising inherent power, on the amount of refund of duty even if paid late. In this context, reference may be made to the judgment of the Honble Allahabad High Court in the case of Prestige Engineering (India) Pvt. Ltd. v. Union of India [1991 (51) E.L.T. 255 (All.)] wherein it was ruled as under :-
When the Act (Central Excise) and the Rules made thereunder did not provide for payment of interest in case of refund of duty, - It is to be presumed that the Parliament advisedly did not provide for the same, while enacting Section 11B in 1978. The authorities under the Act have to operate within the four corners of the Act and the Rules made thereunder. Since the Act or the Rules did not provide for grant of interest, the authorities under the Act, including the CEGAT, had no power to award interest.
8.In the light of what has been discussed above, on? the basis of the above referred two judgments of the Gujarat High Court, which are under different Tax statute, interest on delayed payment of interest, cannot be held to be permissible under the Central Excise Act and the Rules made thereunder, for want of any specific provision in the Act or the Rules. Therefore, the Tribunal has no power to award such a interest to the assessee. The law laid down in Hindustan Motors v. CCE (supra), to the contrary, being not a good law, stands overruled. The reference stands accordingly answered.
9. It can be seen from the above reproduced judicial pronouncements of the Honble High Court and the Larger Bench of the Tribunal, there are no provisions in the Central Excise Act, 1944 to grant interest on belated payment of interest. Accordingly respectfully following the said judgments, I hold that the impugned order is incorrect and is unsustainable. The impugned order is set aside and the appeal is allowed.
(Dictated and pronounced in the Court) (M.V. Ravindran) Member (Judicial) .JK 6