Custom, Excise & Service Tax Tribunal
Mahadev Manufacturers vs Rajkot on 26 April, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH - COURT NO. 03
Excise Appeal No. 11886 of 2019
[Arising out of OIA-RAJ-EXCUS-000-APP-097-2019 dated 06/05/2019 passedby
Commissioner (Appeals) Commissioner of Central Excise, Customs and Service Tax-
RAJKOT-I]
Mahadev Manufacturers .....Appellant
Survey No. 265/P2, Railway Crossing Road,
Village: Kothariya
Rajkot,Gujarat
VERSUS
C.C.E. & S.T.-Rajkot .....Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 APPEARANCE:
On Merit Shri Dinesh Prithiani AC (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR FINAL ORDER NO.A / 10398 /2022 DATE OF HEARING: 26.04.2022 DATE OF DECISION: 26.04.2022 RAMESH NAIR The brief facts of the case are that the appellant with reference to the audit objection paid an amount of Rs.2,90,409/- with interest of Rs.
37,666/-. Subsequently, on the basis of the audit objection a Show Cause Notice was issued for disallowance of the Cenvat Credit Rs. 2,90,409/-. By the adjudication order No. 34/D/AC/2016-17 dated 05.10.2016. The adjudicating Authority disallowed the Cenvat Credit of Rs. 2,90,409/-. Being aggrieved by the said order dated 05.10.2016. the appellant preferred an appeal before the Commissioner (Appeals) GST and Central Excise Rajkot who Vide OIA No. RAJ/EXCUS-000-APP- 130-2017-18 dated 01.12.2017 set aside the said OIO and allowed the appeal filled by the appellant. In view of the said OIA the appellant filed the refund claim which was sanctioned
2|Page E/11886/2019 refund of Rs. 3,28,075/- on 28.02.2018. The appellant with a view that they are entitled for interest on this sanctioned refund filed an appeal. The Learned Commissioner (Appeals) vide impugned dismissed the appeal holding that the appellant is not entitled for the interest as the refund claim was sanctioned within the stipulated time period from the date of filing of refund application. Therefore, the present appeal filed by the appellant.
The appellant's Chartered Accountant M/s Rushi Upadhyay & Company submitted a letter on 28 August, 2019 wherein the personal hearing was waived. Therefore, the appeal is taken for a dismissal.
2. Shri Dinesh Prithiani, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the revenue reiterates the findings of the impugned order. He submits that since the appellant's refund claim was sanctioned within 3 months from the date of filing of refund application no interest is payable. As regard the submission of the appellant that amount deposited is in the form of pre-deposit, therefore, they are entitled for interest, he submits that the similar issue has been considered by the Hon'ble Gujarat High Court wherein it was held that any amount paid during the proceeding of Show Cause Notice shall be treated as duty and not as pre- deposited. He placed reliance on the following judgments:
High Court of Gujarat in SCA No. 10435/18- Ajini Interiors Vs. Union of India Supreme Court of India in SLP (Civil) Diary No. 3952/2020-Ajjini Interiors Vs. Union of India
3. I have carefully considered the submissions made by both the sides and perused the records. I find that though the appellant have paid the duty on the audit objection the same was paid as a duty only thereafter the appellant has not objected on the payment made by them. The refund application was filed after the commissioner (Appeals) allowed the cenvat Credit. The refund was sanctioned within 2 months from the date of filing
3|Page E/11886/2019 application As per the Hon'ble Supreme Court in the judgment of Ranbaxy Laboratories Ltd. Vs.Union Of India- 2011(273) ELT 3(S.C), the interest is payable only when there is a delay beyond 3 months from the filing of application of refund. In the present case the refund was sanctioned within 3 months. I also note that the refund has arisen out of order of the commissioner (Appeals). In this regard it is pertinent to refer to the relevant provision under Section 11B, in particular Clause (ec) sub-clause of (B) of sub-Section 5(4) which reads as under:
"(ec) in case wherein the duty became refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate tribunal or any court the date of such judgment, decree order or direction."
From the above sub clause for the purpose of relevant date it is the order by which the amount became refundable must be considered. In the present case it is the order of the Commissioner (Appeals) by which the refund became payable to the appellant. Therefore, prior to the date of order of Commissioner (Appeals) there was no cause for granting any refund. Moreover, even the appellant also not sought for any refund prior to the order of the Commissioner(Appeals). This issue has also been considered by Hon'ble High Court as submitted by Shri Dinesh Prithiani Learned AR particularly in Para 14 which is reproduced as below:
"14. Considering the arguments advanced by learned advocates of the parties and scanning the material on record, it is clear that the case of the petitioner that payment towards Excise Duty is in the form of pre-deposit is misconceived. Considering the annexures annexed with the petition i.e. Challans for deposit of Central Excise Duty in Form No.TR-6, that too, without protest is the payment towards the Excise Duty and can never be considered as pre-deposit. If any payment is made as a pre-condition for exercising the statutory right it can be termed as pre-deposit. However, it cannot be equated with voluntary deposit of Excise Duty paid even during the course of investigation and prior to show cause notice or adjudication to assert that it is pre-deposit. The payment of duty was intended to prevent the incidence of interest and liability accruing from the non-payment of duty, and hence, it cannot be termed as deposit. Therefore, the payments made by the petitioner towards Excise Duty in Challans Form No. TR-6, can never partake characteristic of pre-deposit as mentioned in Section 35F of the Act, petitioner. as argued by learned advocate for the petitioner.
4|Page E/11886/2019 Under the circumstances, the contention that the amounts were paid involuntarily and, therefore, are deemed to be under protest and should be considered as deposits deserves to be rejected. Firstly as discussed hereinabove the payments made by the petitioner are in the nature of Central Excise Duty and hence, cannot be considered to be akin to or in the nature of pre-deposit as contemplated under Section 35-F of the Act; and secondly there is nothing on record to establish that the petitioner had paid the amount in question under protest, and hence the second proviso to sub-section (1) of Section 118 of the Act which provides that the limitation of one year shall not apply where duty and interest, if any, paid on such duty has been paid under protest would not be applicable. Once it is held that the payments made by the petitioner were in the nature of excise duty and were not deposits, the provisions of Section 118 of the Act would be attracted; and having regard to the fact that the amounts in question had not been deposited under protest, the petitioner would be liable to file the claim within the prescribed period of limitation and in themanner prescribed by the statute, viz. in the prescribed format. It is an admitted position that the petitioner has not filed the refund claim within the prescribed period of limitation and hence, the Tribunal was wholly justified in rejecting the claim as being time barred."
From the above observation of the Hon'ble Gujarat High Court the amount paid by the appellant must be considered as payment of duty not as a pre- deposit under Section 35F. Therefore, the interest is payable only after 3 months from the date of application of refund. In the present case admittedly the refund was sanctioned within 3 months from the date of application. Hence no interest is payable.
4. Accordingly, impugned order is upheld. Appeal is dismissed.
(Dictated & Pronounced in the open Court) RAMESH NAIR MEMBER (JUDICIAL) Palak