Custom, Excise & Service Tax Tribunal
M/S. Narendra Raja Textiles Pvt. Ltd vs Cce, Coimbatore on 23 May, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E /44/06
(Arising out of Order-in-Appeal No. 285/2005-CE dated 13.12.2005 passed by the Commissioner of Central Excise (Appeals), Coimbatore).
E/661/06
Arising out of Order-in-Appeal No. 39/06-CE dated 20.06.2006 passed by the Commissioner of Central Excise (Appeals), Coimbatore).
For approval and signature
Honble Shri P. KARTHIKEYAN, Member (Technical)
_______________________________________________
1. Whether Press Reporters may be allowed to see 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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether the Honble Member wishes to see the fair :
copy of the Order.
4. Whether order is to be circulated to the :
Departmental Authorities? _______________________________________________
M/s. Narendra Raja Textiles Pvt. Ltd., : Appellants
Vs.
CCE, Coimbatore : Respondents
Appearance Shri V. Ananthanarayanan, Consult. : for appellants Smt. Bhagya Devi, SDR : for respondents CORAM Shri P. KARTHIKEYAN, Member (Technical) Date of hearing : 23.05.08 Date of decision : 23.05.08 Final ORDER No.________/2008 The captioned appeals have been filed by M/s. Narendra Raja Textiles Pvt. Ltd., Coimbatore (NRTPL) . One of the orders impugned namely, order in appeal No. 39/06-CE dated 20.06.2006 of the Commissioner (A) had rejected an appeal filed by NRTPL as the appeal was filed beyond the time prescribed for filing appeals before that forum. In the order in appeal No. 285/2005-CE dated 13.12.2005, the Commissioner (A) upheld the order of the lower authority rejecting claim for cash refund of Rs. 2,62,709/- made by NRTPL.
2. In a nutshell, the facts are that a demand of Rs.9.65,230/- had been raised against the appellants vide order No. 164/96 dated 21.03.96 of the Assistant Commissioner, Erode. The demand related to inadmissible modvat credit availed. Following orders of the Commissioner (A), dated 26.11.96 the appellant made predeposit of an amount of Rs. 7,36,997/- for considering its appeal. Disposing the appeal filed before it, the Commissioner (A) allowed relief of Rs. 1,69,888/- vide his order in appeal dated 29.09.98. In denovo proceedings ordered by the Tribunal vide Final Order No. 293/03 dated 25.04.03, the appellants were able to furnish documentary proof to establish their eligibility to credit of Rs. 2,67,709/- out of the balance demand of Rs. 5,67,109/- remained as predeposit with the department. The appellants approached the authorities for refund of predeposit of this Rs. 2,67,709/- made under Section 35F of the Central Excise Act, 44 (the Act).
3. The Dy. Commissioner vide his order No. 62/2005 DC dated 10.06.05, sanctioned refund of Rs. 2,67,709/- to the assessee and ordered to credit it in their RG 23 A account. The assessee filed appeal before the Commissioner (A) against the order of the Dy. Commissioner. The Commissioner (A) rejected the appeal of the assessee vide his order No. 39/06 dated 20.06.06 as barred by limitation. The appeal No. E/661/06 has been filed against this order of the Commissioner (A).
4. After the order in original dated 10.06.05 was received, the assessee approached the Dy. Commissioner (Refunds), seeking sanction of the refund in cash. The Dy. Commissioner rejected the claim as there was no pending refund claim to be sanctioned. There was no provision in the rules for refund of the amount which had already been allowed as credit in the cenvat account of the assessee. The appeal filed against the above order by the assessee was disposed by the Commissioner (A) vide order in appeal No. 285/2005-CE dated 13.12.2005. He found that the impugned amount had been predeposited in cash and the appellants were eligible for refund of the said amount in cash. The refund of the impugned amount was not governed by Section 11B of the Act. He also found that the appellants had failed to challenge the first order of the Dy. Commissioner for appropriate modification before the Commissioner (A) in time. Therefore, though the assessee was eligible for grant of the refund in cash, he could not grant them the relief sought owing to the technical snags entailed by NRTPLs failure to file appeal in time.
5. Reiterating the grounds of appeal, the Ld. Consultant for the appellants submits that the impugned amount being predeposit under Section 35F of the Act, the assessee was eligible for the refund of the same in cash as rightly observed by the Commissioner (A). The provisions of Section 11B including limitation did not apply to granting refund of this amount. The department was bound to refund this amount suo motu when the appeal was finally disposed of finding NRTPL not liable to reverse credit to the extent of Rs.2,67,709/-. The appellants could not be penalized for an illegal order of the authorities on a claim not warranted in law.
6. The Ld. SDR submits that the appellants had failed to challenge the order of the original authority by not filing the appeal in time. Therefore, the order of the Commissioner (A) rejecting the appeal as barred by limitation vide his order No. 39/06-CE dated 20.06.06, was passed in accordance with law and deserved to be sustained. As regards the appeal against the order No. 285/2005-CE dated 13.12.2005, though the Commissioner found the assessee to be eligible for the refund claimed, he could not grant relief to the assessee as the party had not sought modification of the initial order of the Dy. Commissioner in time.
7.1 I have carefully considered the facts of the case and the submissions made by both parties. The assessee had filed the appeal against the initial order of the Dy. Commissioner and the Commissioner (A) had found the assessee to be eligible for the refund claimed on merits. He rejected the appeal as barred by limitation vide his order No. 39/06-CE dated 20.06.06. There is no dispute as regards this finding. Therefore the appeal No. E/661/06 filed by NRTPL is dismissed.
7.2 As regards the appeal against the order No. 285/2005-CE dated 13.12.2005, I find that it is nobodys case that the appellants were not entitled to refund in cash of an amount of Rs. 2,67,709/- deposited on 16.12.96 in terms of Section 35F of the Act. Once the proceedings before the appellate authorities were finally concluded in favour of the appellants, NRTPL should have been granted refund of Rs. 2,67,709/- on their filing reliable intimation of the details without their having to file any refund claim in terms of Section 11B. These are the instructions of the CBEC. Unnecessarily, the application was dragged into unproductive and unjustified adjudication proceedings which served no useful purpose except to cause delay for years. The appellant has so far not been granted the refund neither party denies is due to them. In the order impugned in this appeal the Commissioner(A) could have remedied the illegality and injustice by ordering the refund of the amount due to the assessee in cash instead of feeling fettered by technical snags.
7.3 As per CBECs Circular No.275/37/2K-CX.8A dated 02.01.02, once the appellant succeeds in appeal before the Commissioner(A)/Tribunal, or the matter is remanded for fresh decision, the amount of predeposit should be refunded to the parties. Pending claims for such refunds were to be treated as simple letters [and not claims under Section 11B (1)]. The Circular made it plain that such refunds are not governed by provisions of Section 11B. Field formations were required to return the deposits without delay lest the assessees should validly claim interest for the delay. The impugned order upheld the rejection of the refund claimed on the ground that NRTPL had not filed appeal against the initial order granting the refund wrongly in cenvat account. As per the Boards circular the predeposit had to be refunded in cash. The final products of the assessee had become exempt. I find that the Commissioner (A) was not right in upholding the order of the lower authority which was contrary to the Circular of the Board dated 02.01.02. The Commissioner (A) should have allowed the appeal considering that the original order in the instant case was an offshoot of an illegal order. The Commissioner (A) was competent to allow the appeal and thus the refund in view of the binding circular of CBEC.
7.4. A constitution bench of the Supreme Court in CCE Vs Dhiren Chemicals Ltd [2002(139)ELT3(SC) decided that, regardless of the interpretation that it had placed on a phrase, if there were circulars issued by the CBEC which placed a different interpretation upon the said phrase, that interpretation would be binding upon the Revenue. Thus the apex Court recognized the primacy the CBEC Circulars enjoyed in interpreting law by officers of Revenue. In C C Vs.IOC Ltd. [2004 (165) E.L.T. 257 (S.C.)] the apex Court held as follows:
For the purposes of these appeals, it is sufficient to hold, as we do, that demurrage was wrongly included by the adjudicating officer in the assessable value contrary to the directive of the CBEC.
And the Apex Court dismissed the appeals of Revenue. It was also held in that order that a show cause notice and demand contrary to existing circulars of the Board were ab initio bad. Vide Article 141 of the constitution, the law declared by the Supreme Court is made binding on all the Courts within the territory of India. The order of the original authority inconsistent with the CBECs Circular was ab initio bad. A timely appeal was uncalled for against an order not valid in law. In view of this legal position, the appellant was entitled to the refund in cash and the same was denied by orders of the lower authorities which cannot be sustained.
8. Therefore, the order of the lower appellate authority sustaining denial of the refund of Rs. 2,67,709/- is vacated and the appeal E/44/06 filed by NRTPL is allowed with consequential relief.
(Order pronounced in the open Court on 23.05.08) (P. KARTHIKEYAN) MEMBER (T) BB 2