Bombay High Court
Nelco Limited vs Union Of India (Uoi) on 22 January, 2001
Equivalent citations: 2002(144)ELT56(BOM)
Bench: B.N. Srikrishna, A.B. Naik
JUDGMENT
1. Rule, returnable forthwith. Mr. Jetley waives service for the Respondents. By consent, Rule called out and heard.
2. We come across cases of citizens trying to dodge their revenue dues by resorting to endless scries of litigation. This time the boot is on the other foot. It is Revenue which is trying to dodge and postpone the evil day.
3. The facts are as under :
The Petitioner is a registered company which manufactures goods exigible to duty under the Central Excise Act. There was a dispute between the Petitioner and the Central Excise authorities with regard to the value of certain computers. This dispute was finally resolved by an order made on 24th January, 1997 by the Central Excise & Gold (Control) Appellate Tribunal, New Delhi (CEGAT). The CEGAT, by the aforesaid order, partly allowed the Appeal and remanded the case to the adjudicating authority for fresh disposal after giving an opportunity of hearing to the Petitioner. Prior to the hearing the Appeal, the Petitioner was required to deposit a sum of Rupees Twenty lakhs as pre-deposit under Section 35-F of the Central Excise Act, 1944 (hereinafter referred to as "the Act"). The Petitioner-assessee was aggrieved by the remand order made by the CEGAT and carried the matter to the Supreme Court by way of Civil Appeal No. 3602 of 1997. By an order made on 3rd November, 1999, the Supreme Court held that all the demands made against the assessee were time barred, quashed the final order of the CEGAT dated 24th January, 1997 and fully allowed the Appeal of the Petitioner. On 1st December, 1999, the Petitioner called upon the third Respondent to return the pre-deposit amount of Rupees Twenty lakhs made under Section 35-F of the Act as the Petitioner had succeeded in its Appeal before the Supreme Court. On 24th July, 2000, the third Respondent issued a show cause notice to the Petitioner calling upon it to show cause why the claim for "refund" of the deposit of Rupees Twenty lakhs should not be rejected. Thereafter, correspondence took place between the parties during the course of which the Petitioner kept insisting for return of its money forthwith and the Department kept denying its liability to do so. Hence, this Writ Petition was filed on 24th August, 2000. In the meanwhile, wisdom, though late, dawned on the authorities, and by an order made on 15th September, 2000 (said to have been received by the Petitioner on 14th October, 2000), a sum of Rupees Twenty lakhs was directed to be paid to the Petitioner. Counsel for the Petitioner states that the amount has actually been received on 5th December, 2000. In the facts and circumstances, the Petitioner contends that the Department has unlawfully held back an amount of Rupees Twenty lakhs from 24th January, 1997 to 15th September, 2000 and, therefore, the Department must be directed to pay simple interest @ 24 per cent per annum or such other rate as the Court may find reasonable.
4. Mr. Jetley, learned Counsel for the Department, strenuously urged that the case of the Petitioner falls within Section 11-B of the Act and must be governed by the parameters applicable to the claim for refund of duty. In this regard he drew our attention to Section 35-F of the Act and contended that the amount which is liable to be deposited under Section 35-F is towards the order for duty and/or penalty and has the character of duty itself. This contention is no longer res Integra, atleast as far as this Court is concerned. (See in this connection the judgments of this Court in Suvidhe Ltd. v. Union of India, 1996 (82) E.L.T. 177 (Bom.) and in Philips (India) Ltd. v. Union of India and Ors. in Writ Petition No. 7162 of 1999). It has been clearly laid down by this Court that the amount deposited under Section 35-F of the Act, as a condition precedent for hearing an Appeal, does not bear the character of duty but bears the character only of a security deposit, being a statutory condition precedent for hearing of the Appeal. Hence, we are unable to accept the contention of Mr. Jetley that the case of the Petitioner would fall within the ambit of Section 11-B of the Act, or that the provisions of Section 11-BB with regard to interest on delayed refund would apply thereto. Barring these two sections, the learned Counsel is not able to show any other provision in law which deals with the point of time when the security deposit under Section 35-F is to be returned or the amount of interest payable in case of delay in return of such security deposit. In our judgment, therefore, this matter has to be dealt with on basic principles in the absence of any specific statutory provisions governing the issue.
5. We are, therefore, of the view that from 24th January, 1997 there was no justification for the Respondents to hold on to the amount of Rupees Twenty lakhs deposit under Section 35-F of the Act as this amount ought to have been returned to the Petitioner the day the Appeal was disposed of by the authority. In our judgment, a deposit made under Section 35-F of the Act is liable to be adjusted towards the claim for duty, in case the Appeal fails and it needs to be returned to the Appellant, in case the Appeal succeeds, whether fully or partly. In any event, looking at the facts and circumstances of the present case, it appears to us that the Respondents were wrong throughout. They proceeded to demand duty from the Petitioner in a clearly time barred case and because the Department took a wrong view of the matter; we see no reason why the Petitioner should be made to suffer loss of interest on the large amount of Rupees Twenty lakhs for a period of almost three years and more.
6. Mr. Jetley made an effort to persuade us that the consequence of the CEGAT's order was that the Petitioner would continue to be liable for the duty demanded initially and that the deposit was legitimately and rightfully withheld by the Respondents. We are unable to accept this contention. The CEGAT's order dated 24th January, 1997 remands the matter for re-adjudication by the adjudicating authority. In other words, the parties were put back to the situation of a show cause notice against the Petitioner being adjudicated by the authority. Mr. Jetley fairly conceded that there is no pro vision in the Act which requires deposit of any amount at the stage of adjudication and that the only provision which requires deposit is Section 35F of the Act after the adjudication has quantified the liability towards duty.
If these are the circumstances, then we see no reason how the Respondents were entitled to hold on to the money merely because the adjudication was proceeding on the original show cause notice, that too on demands which were hopelessly time barred, as subsequently pointed out by the Supreme Court.
7. In these circumstances, we are of the view that the Petitioner is entitled to interest at the rate of fifteen per cent per annum on Rupees Twenty lakhs between 24th January, 1997 to 15th September, 2000.
8. In the result, the writ Petition is allowed and it is directed as follows :-
(a) The Respondents shall pay simple interest at the rate of fifteen per cent per annum on the amount of Rupees Twenty lakhs for the period 24th January, 1997 to 15th September, 2000.
9. Rule accordingly made absolute. No order as to costs.
10. Parties to act on an ordinary copy of the order duly authenticated by the Sheristedar of this Court.
11. Issuance of certified copy expedited.