Custom, Excise & Service Tax Tribunal
Vikas Sabharwal vs Commissioner, Cgst-Delhi West on 5 December, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. IV
EXCISE APPEAL No. 51736 of 2022
(Arising out of Order in Appeal No. Comm (A) CGST/2021/02 dated 15.07.2021
passed by Commissioner (Appeals), Central Tax (Appeal-II) of Central Tax,
New Delhi)
M/s. Vikas Sabharwal, Proprietor ...Appellant
M/s. AVI Plast
102 Ground Floor,
State Bank Nagar,
New Delhi -110063
Versus
The Commissioner of ....Respondent
Central Tax & GST, Delhi West, EIL Building, Bhikaji Cama Place, R.K. Puram, New Delhi - 110066 APPEARANCE:
Mr. Naveen Mullick, Advocate for the appellant Mr. Iswar Charan, Authorized Representative for the Respondent CORAM : HON'BLE DR.RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing/ Decision: 05/12/2022 FINAL ORDER No. 51203/2022 DR.RACHNA GUPTA The present appeal has been filed to assail the Order-in-
Appeal No.02/2021 dated 05.07.2021 vide which the interest on the amount of refund has been granted from the date of appeal till the date of payment. The facts in brief for adjudication are as follows :
That initially a demand was proposed against the appellant pursuant to search in his premises on 30th September, 2008. On 2 E/51736 /2022 the said date itself the appellant was made to deposit certain amount. Consequently, an amount of Rs.10.00 Lakhs by way of two cheques was got deposited by the appellant.
2. The demand of Rs.2,42,77,294/- was proposed vide Show Cause Notice dated 12.05.2009 alleging the clandestine removal by the appellant. The said proposal was initially confirmed vide Order in Original No.20/2010 dated 30th August, 2010. The said order was challenged before this Tribunal. Vide Stay Order No.816 & 817/2011 dated 13.05.2011 read with Final Order No.729 & 730/2011 dated 12.08.2011, the matter was remanded back for de-novo adjudication, however, directing the appellant to make a deposit of Rs.40.00 Lakhs. The entire amount was paid in three different instalments i.e. Rs.18,00,000/- on 22.07.2011, Rs. 20,50,000/- on 28.07.2011 and Rs.1,50,000/- on 01.08.2011. Post remand also the proposed demand was confirmed vide Order-in- Original No.28/2015 dated 31.07.2015. However, the appeal against the said order was allowed by this Tribunal vide Final Order No.50711-50731/2019 dated 20th May, 2019.
3. Consequent to the said decision that the appellant moved an application dated 28.05.2020 claiming refund of the amount of Rs.50,00,000/- (Rs.10,00,000/- + Rs.40,00,000/-). The said application was adjudicated vide Order in Original No.02/2020-21 dated 7th August, 2020 vide which the refund of Rs.50,00,000/- was sanctioned. However, interest of just Rs.3,39,287/- was awarded to the appellant. Being aggrieved, an appeal was 3 E/51736 /2022 preferred by the appellant which has been rejected by the order under challenge.
4. I have heard Mr. Naveen Mullick, ld. Counsel for the appellant and Mr. Iswar Charan, ld. Authorised Representative for the Revenue.
5. Ld. Counsel for the appellant has mentioned that the amount in question stands deposited for last more than 10 years. Rs. 10,00,000/- Lakhs was deposited on the date of search itself i.e. on 30th September, 2008 and remaining Rs.40.00 Lakhs was deposited pursuant to the directions of this Tribunal vide order dated 13 th May /12th August, 2011. It is submitted that the amount was otherwise neither the amount of duty nor the amount of pre- deposit. It has been retained by the Department for long number of years. Thus, the appellant is entitled to claim the interest there upon from the date of deposit itself. It is therefore, submitted that the findings of adjudicating authorities below for awarding the interest just from the date of appeal before the Tribunal are unreasonable, unjustified and are against the settled case law on this issue. Ld. Counsel has relied upon the decision of this Tribunal in Excise Appeal No.50773 of 2022 in the case of M/s. Design Dialogues India Pvt. Ltd. Vs. Commissioner of Central Tax and CGST as was decided vide Final Order No. 51514/ 2022 dated 3rd June, 2022. The decision of this Tribunal in the case of Parle Agro Pvt. Ltd. Vs. Commissioner of CGST, NOIDA reported in 2022 (380) ELT 219 (Tri.-All.) has also been relied 4 E/51736 /2022 upon to pray for the award of interest on the amount of refund at the rate of 12% per annum from the date of deposit thereof. Order under challenge is accordingly prayed to be set aside and appeal is prayed to be allowed.
6. Per contra ld. DR while relying upon the order under challenge has submitted that the amount deposited was in lieu of the duty proposed and subsequently confirmed against the appellant. Hence, the interest could have been granted in terms of Section 11 B of Central Excise Act as has rightly been awarded by Commissioner (Appeals). Impressing upon no infirmity in the order, appeal is prayed to be dismissed.
7. Having heard the rival contentions, it is observed and held as follows:-
There is no denial to the fact that the amount of Rs.50.00 Lakhs was deposited by the appellant at the very initial stage of this litigation. Rs.10.00 Lakh was deposited on the date of search itself and Rs.40.00 Lakhs were deposited pursuant to the directions of this Tribunal in order dated 13th May, 2011/ 12th August, 2011.
Paragraph 7 of the said order reads as follows:-
"7. So we are of the view that the Appellant need to make pre-deposit and the case should be sent back for a denovo consideration. At this stage the Counsel for the Appellant suggests that an order for pre-deposit of an amount of 40 lakhs will be reasonable and Appellants are willing to pre- deposit this amount. So we order, accordingly." 5
E/51736 /2022
8. Perusal thereof makes it abundantly clear that the amount of Rs.40.00 Lakh is an amount of pre-deposit i.e. an amount paid under section 35 F of Central Excise Act. The refund thereof is permissible in terms of Section 35FF which reads as follows:-
"Section 35FF. Interest on delayed refund of amount deposited under Section 35F. -
Where an amount deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent. and not exceeding thirty- six per cent. per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of the amount till, the date of refund of such amount.
Provided that the amount deposited under section 35F, prior to the commencement of the Finance (No. 2) Act, 2014, shall continue to be governed by the provisions of Section 35FF as it stood before the commencement of the said Act."
9. The bare reading makes it clear that the amount of pre- deposit has to be refunded alongwith the interest from the date of the payment of the amount till the date of refund of the said amount. Thus, it is clear that the entire amount of Rs. 50.00 Lakhs was not an amount of duty as has been held by the adjudicating authority below. It was merely a revenue deposit. The issue is no more res-integra and these observations have attained finality vide several decisions including the decision of Hon'ble Apex Court in Sandvik Asia Ltd. vs. Commissioner of Income Tax-I, Pune reported in 2006 (196) ELT 257 (S.C.) = 2007 (8) S.T.R. 193 (S.C.), Hon'ble High Court of Allahabad also in the case of Pace Marketing Specialities v. Commissioner of Central Excise reported 6 E/51736 /2022 in 2012 (27) S.T.R. 420 (All.) = 2011 (274) E.L.T. 13 and Ebiz.Com Pvt. Ltd. V. Commissioner of Central Excise, Customs & Service Tax reported in 2017 (49) S.T.R. 389 (All.), this Tribunal also in the case of Riba Textiles Ltd. Village Chidana, Tehsil Gohana Distt. Sonepat, Haryana v. Commissioner of Central Excise and Service Tax, Panchkula reported in 2020-TIOL-932-CESTAT-CHD] and recently in the case of Parle Agro (P) Ltd. (supra) this Tribunal has clarified as follows:-
"Once finding recorded by Tribunal that amount deposited by appellant during investigation as also that deposited pursuant to interim order passed by Tribunal was revenue deposit and not Excise duty deposit and there was no challenge to this finding of Tribunal, Department, after Commissioner (Appeals) allowed appeal allowing interest on refunded such deposit, cannot raise this issue by filing present appeal before Tribunal, especially when earlier order passed by Tribunal was already accepted by Revenue Furthermore, when Assistant Commissioner, also ordered for refund of amount, said order was also not assailed by Department - Section 35C of Central Excise Act, 1944."
10. Department's own Notification No.6/2011-CE dated 01.03.2011 reads as follows:-
"Notification No. 6/2011-CE (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 per cent per annum for the purpose of the said section.7
E/51736 /2022 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 Section 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant o interest @ 12% per annum seems to be appropriate."
11. In the light of entire above discussion and decisions as mentioned above, it becomes clear that the amount deposited by the assessee during the investigation is not an amount of duty hence section 11B/ 11BB cannot be invoked. Commissioner (Appeals) has not considered any of those decisions. Thus, he is observed to have violated the judicial protocol. It is observed from the order under challenge that the amount has been acknowledged to have been deposited during the course of investigation, still holding the same to be an amount of duty specially when this Tribunal has set aside the confirmation of duty demand vide the Final Order dated 20th May, 2019 is highly unreasonable. 8
E/51736 /2022
12. In the light of discussion above, it is held that order under challenge has wrongly restricted the entitlement of appellant for the interest on the refunded amount to the date w.e.f. the date of filing of appeal. The appellant in view of settled principles (as discussed above) is held entitled for the interest on the refunded amount of Rs.50.00 Lakhs from the date of the respective deposit i.e. for Rs.10.00 Lakhs w.e.f. 30th September, 2008 and for Rs. 40.00 Lakhs w.e.f. 1st August, 2011 that too at the rate of 12 % till the sanction thereof. With these findings, the order under challenge is set aside and the appeal stands allowed.
[Order dictated & pronounced in the open Court] (DR.RACHNA GUPTA) MEMBER (JUDICIAL) Anita