Custom, Excise & Service Tax Tribunal
Eternis Fine Chemicals Ltd vs Commissioner Of Central Excise And ... on 13 February, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 87809 of 2019
(Arising out of Order-in-Appeal No. NSK/EXCUS/000/APPL/094/19-20 dated
08.07.2019 passed by the Commissioner of GST & Central Excise (Appeals),
Nashik)
Eternis Fine Chemicals Ltd. .... Appellant
(Formerly known as Atlas Fine Chemicals Pvt. Ltd.)
Plot No. 948/2, Sinnar,
Dist. - Nashik, Maharashtra
Versus
Commissioner of GST & Central Excise, Nashik .... Respondent
Plot No. - 155, Sector P-34, Jaistha and Vaishakh, CIDCO, Nashik - 422 008 APPEARANCE:
Shri Chirag Shetty, Advocate for the Appellant Shri C.S. Vinod, Authorized Representative for the Respondent CORAM:
HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) FINAL ORDER NO. A/85177/2025 Date of Hearing: 14.10.2024 Date of Decision: 13.02.2025 Per: M.M. Parthiban This appeal has been filed by M/s Eternis Fine Chemicals Ltd. (Formerly known as Atlas Fine Chemicals Pvt. Ltd.), Nashik (herein after, referred to as 'the appellant', for short)assailing the Order-in-Appeal No. NSK/EXCUS/000/APPL/094/19-20 dated 08.07.2019 passed by the Commissioner of GST & Central Excise (Appeals), Nashik.
2.1 The brief facts of the case leading to this appeal are given below: -
2.2 The appellant herein is, inter alia, engaged in the manufacture of Flavours, Fragrances, Pharmaceuticals, Specialty Chemicals, Coumarin, and Aerated Water falling under Chapter 29 of First Schedule to the Central Excise Tariff Act, 1985. For the purpose of payment of central excise duty and for compliance with Central Excise statute, they are registered with 2 E/87809/2019 jurisdictional Central Excise authorities and are holding a Central Excise Registration No. AAACA3780AXM001.
2.3 The appellant had inadvertently removed 500 Kgs. of 'Coumarin' declaring it as 'Sodium Sulphate' without payment of appropriate duty from their factory, which was detected by the officers of Central Excise (Preventive) and the said goods were seized on 24.01.2004. During the course of investigation, the appellant had paid a sum of Rs.20 lakhs vide three challans being No. 08/2003-2004 dated 03.03.2004 for Rs.10 lakhs, challan No. 09/30-04 dated 18.03.2004 for Rs. 5 lakhs and challan No. 11/2003-04 dated 19.03.2004 for Rs.5 lakhs. Upon investigation of the case, five show-cause notices were issued covering the period 1999-2004 to March, 2007. The dispute relating to this case, after adjudication at the original stage and at the first appellate stage, came before the Tribunal in various appeals. The issue attained finality in the Final Order No. A/91672-
91681/2017 dated 29.12.2017 passed by this Tribunal. In the said order, the Tribunal had confirmed the duty liability, interest on irregular clearance of 500 kgs. of Coumarin and the confiscation of such goods. However, the adjudged demands and penalties imposed on the appellant, other than the demand of duty on 500 Kgs. of Coumarin, was dropped by allowing the appeals filed by various appellants with consequential relief.
2.4 In pursuance of such order, the appellant had filed refund claim on 10.01.2019 with the jurisdictional authorities for Rs.20 lakhs of pre-deposit paid by them during investigation along with interest thereon and got an acknowledgement of its receipt/registration with the department on 10.01.2019 vide Divisional office Entry 01-03, as recorded in paragraph 1 of the original order. In adjudication of the case, the jurisdictional Deputy Commissioner, GST & Central Excise, Nashik-II Division had sanctioned the refund claim of Rs.19,47,750/- after deducting an amount of Rs.52,250/- towards the amounts to be appropriated on account of penalty and redemption fine. Being aggrieved with the said order to the extent of not sanctioning interest on the refund amount, the appellant had filed the appeal before the Commissioner (Appeals). In the first appellate proceedings, the learned Commissioner (Appeals) had given a finding that interest on refund of amount deposited during investigation was not liable to be paid as per provisions of Section 35FF of the Central Excise Act, 1944. Accordingly, he upheld the order of the original authority and rejected the 3 E/87809/2019 appeal filed by the appellants. Feeling aggrieved with the impugned order, the appellants have filed this appeal before the Tribunal.
3. Heard both sides and perused the case records. The additional submission made in the form written paper books by both sides was also perused carefully.
4. The short issue for determination in the present factual matrix of the caseis whether interest is payable to the appellants in respect of voluntary payments/deposit made towards alleged removal Coumarin without payment of duty from 19th May, 2001 to 24th January, 2004, or otherwise?
5.1 On the above issue, the learned Advocate appearing for the appellant prayed that this Tribunal had examined the issue on the similar set of facts in the case of Parle Agro Pvt. Ltd. Vs. Commissioner, Central Goods & Service Tax, Noida - 2021 (5) TMI 870 - CESTAT Allahabad, wherein it was ordered that in interest shall be granted to the appellant @ 12% from the date of deposit till the date of payment. Accordingly, learned Advocate prayed that their appeal also be entertained on the same basis and relief of payment of interest be granted.
5.2 On the other hand, learned AR appearing for Revenue stated that erstwhile Section 35FF ibid mandates payment of interest only if there is a delay in sanction of refund beyond three months from the date of communication of such order, and inasmuch as the amended provision of Section 35FF ibid is brought into effect from 06.08.2014, the same is not applicable in this case and stated that the appeal filed by the appellant is liable to be dismissed.
6. I find that the basic issue of removal of excisable goods i.e. Coumarin (manufactured out of imported Benzopyrone etc.) removed in the guise of base Sodium Sulphate/Organic Acid, was examined by the Tribunal initially at the time of admitting the appeal on 20.09.2007. On the basis of the amount of Rs.20 lakhs already deposited by the applicant and appropriated by the Commissioner in the adjudication order, the Tribunal had granted the stay vide Order No. S/699 to 704/2007/C-I/EB dated 20.09.2017. Subsequently, the Tribunal has disposed of the various appeals filed in this case by ten appellants confirming the duty liability, interest, penalty on 500Kgs. of seized Coumarin alone and its confiscation; however, the 4 E/87809/2019 adjudged demands against the illegal clearances for the subsequent period till March, 2007 were set aside and the penalties imposed on the appellants were also dropped by the Tribunal in its Final Order dated 29.12.2017 (supra). Thus, I find that that the final demand confirmed by the Tribunal is limited to the adjudged demands in respect of above seized goods alone and the issues have attained finality. These have been duly taken into account by the original authority in his order dated 01.04.2019 and he had accordingly sanctioned the refund of Rs.19,47,750/- and ordered for the said amount to be remitted separately by RTGS/NEFT to the appellant. Thus, the amount of refund has been sanctioned as per law by the original authority and the same bas been duly confirmed by the first appellate authority also.
7. As regards the appellant's claim of interest, I find that the issue with regard to payment of interest on voluntary deposit made during investigation has been examined by the co-ordinate Bench of the Tribunal in the similar set of facts in the case of Parle Agro Private Limited (supra) and it was held that interest is payable from the date of deposit till the date of payment. The relevant paragraphs of the said order dated 25.05.2021 are extracted and given below: -
"28. Section 11B of the Excise Act deals with claim for refund of duty and interest, if any, paid on such duty. It provides that any person claiming refund of any duty of excise and interest may make an application for such refund of duty and interest.
29. Section 11BB provides for interest on delayed refund. It states that if any duty ordered to be refunded under sub-section (2) of section 11B is not refunded within three months from the date of receipt of the application, than the applicant shall be entitled to interest after the expiry of three months from the date of receipt of the application at such rate not below 5% and not exceeding 30% as may be notified by the Central Government in the Official Gazette.
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. xxx xxx xxx
32. xxx xxx xxx 5 E/87809/2019
33. There is no provision in the Excise Act, which deals with refund of revenue deposit and so rate of interest has not been prescribed, when revenue deposit is required to be refunded.
34. To be able to have some guidance regarding the rate of interest in case revenue deposit has to be refunded, the aid of the interest provisions under section 11AA (which deals with interest on delayed payment of duty), section 11BB (which deals with interest on delayed refunds under section 11B(2) and section 11DD (which deals with interest on the amount collected in excess of the duty) can be taken.
35. The Notification issued under section 11AA of the Excise Act provides interest at the rate of fifteen per annum. The notification is reproduced below:
"Notification No. 15/2016-C.E. (N.T.), dated 1-3-2016 Notification Under Section 11AA Rate of interest on delayed payment of duty (w.e.f. 1-4- 2016). - In exercise of the powers conferred by section 11AA of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 5/2011 - Central Excise (N.T.), dated the 1st March, 2011 published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide, number GSR 136(E), dated the 1st March, 2011, except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at fifteen per cent per annum for the purpose of the said section.
2. This notification shall come into force from the 1st day of April, 2016."
36. The Notification issued under section 11BB provides interest at the rate of six per cent per annum. It is reproduced below:
"Notification No. 67/2003-C.E. (N.T.), dated 12-9-2003 Notification Under Section 11BB Interest @ 6% per annum on delayed refunds. - In exercise of the powers conferred by section 11BB of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 17/2002-Central Excise (N.T.), dated the 13th May, 2002 [GSR 353(E), dated the 13th May, 2002], except as respect things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at six per cent per annum for the purpose of the said section."
37. The Notification issued under section 11DD provides interest @ of 15% per annum on the amount collected in excess of duty. It is reproduced below:
"M.F. (D.R.) Notification No. 68/2003-C.E. (N.T.), dated 12-9-2003 Notification Under Section 11DD Interest @ 15% per annum on amounts collected in excess of duty.
- In exercise of the powers conferred by section 11DD of the Central Excise Act, 1944 (1 of 1944) the Central Government hereby fixes the rate of interest at Fifteen percent per annum for the purpose of the said section."
38. It would also be pertain to refer to the Notification issued under section 11AB of the Excise Act, as it existed prior to 08.04.2011. It 6 E/87809/2019 provides interest @18% per annum. The said Notification is reproduced below:
"Notification No. 6/2011-C.E. (N.T.), dated 1-3-2011 Notification Under Section 11AB Rate of interest on delayed payment of duty. - In exercise of the powers conferred by section 11AB of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 66/2003-Central Excise (N.T.), dated the 12th September, 2003 [GSR (E), dated the 12th September, 2003], except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at eighteen percent per annum for the purpose of the said section.
This notification shall come into force from the 1st day of April, 2011."
39. In this connection reference can also made to the decisions of the Allahabad High Court in Pace Marketing Specialities and Ebiz. Com Private Limited, wherein after making reference to the decision of the Supreme Court in Sandvik Asia Ltd., the High Court granted interest at the rate of 12% per annum in matters relating to refund of amount deposited during investigation and adjudication.
40. In Riba Textiles, the Tribunal also granted interest at the rate of 12% on refund of amount deposited during investigation and at the time of entertaining the stay application.
41. In view for the aforesaid decisions, and the fact that the rate of interest varies from 6% to 18% in the aforesaid Notifications issued under sections 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant of interest @12% per annum seems to be appropriate.
42. Thus, for the reason stated above, Excise Appeal No. 70628 of 2019 is allowed and the order dated 28.05.2019, passed by the Commissioner (Appeals) is modified to the extent that interest shall be granted to the appellant @12% instead of @6% from the date of deposit till the date of payment. Excise Appeal No. 70674 of 2019 filed by the Principal Commissioner for setting aside the order dated 28.05.2019, passed by the Commissioner (Appeals) is dismissed."
8. The learned Authorized Representative in his additional written submissions has stated that against the decision of the Tribunal in the case of Parle Agro Pvt. Ltd. (supra), the Department had filed an appeal before the Hon'ble High Court of Allahabad, in Central Excise Appeal (CEXA) - 18/2021 and, therefore, submitted that the same may be taken into consideration.
9. In this regard, I find that the status of the aforesaid appeal against the decision of the Tribunal is still showing as pending as on 12.02.2025 in the website of the Hon'ble High Court of Allahabad, and there is neither any stay nor any judgment setting aside the above order of the Tribunal, brought to my notice by either sides. On the other hand, in the case of Pace 7 E/87809/2019 Marketing Specialties (supra), the Hon'ble High Court of Allahabad upon consideration of the judgement of the Hon'ble Supreme Court in the case of Sandvik Asia Limited (supra) had granted interest at the rate of 12% in similar case. In view of the specific stand taken by the co-ordinate Bench of the Tribunal in the case of Parle Agro Pvt. Ltd. (supra), this Bench cannot take a different view contradicting the stand already taken therein.
10. I also find that the Central Board of Excise and Customs (CBE&C) has also issued instructions to the departmental field formations vide Circular No. 984/8/2014-CX dated 16.09.2014, wherein it has been clarified that the appellant is entitled for interest on refund of pre-deposit from the date of deposit to the date of refund.
11. In view of the above legal position clarified by the CBE&C and on the basis of the order of this Tribunal in the case of Parle Agro Pvt. Ltd. (supra), I find that the interest on the amount of Rs.19,47,750/- is payable to the appellant at the rate of 12% p.a. considering the rate(s) in force during the disputed period.
12. In the result, the impugned order dated 08.07.2019 to the extent it had denied interest on the amount of refund of pre-deposit is set aside and the appeal filed by the appellant is allowed with consequential relief, as per law.
(Order pronounced in open court on 13.02.2025) (M.M. PARTHIBAN) MEMBER (TECHNICAL) Sinha