Custom, Excise & Service Tax Tribunal
Cce, Salem vs The Madras Aluminium Company Ltd on 25 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/921/2004 (By Revenue)
Appeal No. E/994/2004 (By Assessee)
(Arising out of Order-in-Appeal No. 209/2004-CE (SLM) dated 16.4.2004 passed by the Commissioner of Central Excise (Appeals), Salem)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
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 Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
CCE, Salem
The Madras Aluminium Company Ltd. Appellants
Vs.
The Madras Aluminium Company Ltd.
CCE, Chennai Respondents
Appearance Shri P. Arul, Superintendent (AR) for Revenue Shri Raghavan Ramabadran, Advocate for the Assessee CORAM Honble Shri P.K. Das, Judicial Member Date of Hearing: 25.10.2013 Date of Decision: 25.10.2013 Final Order No. 40545 & 40546/2013 Both the appeals are arising out of a common order and therefore both are taken up together. The issue involved in these appeals is the recovery of interest on the erroneous refund sanctioned and paid to the assessee consequent to the decision of Honble Madras High Court, which was subsequently set aside by the Honble Supreme Court on the appeal of the Revenue.
2. The relevant facts of the case in brief are that the assessee are manufacturers of aluminium and articles thereof classifiable under Chapter 76 of the Schedule to the CETA, 1985. They claimed benefit of Notification No. 53A/1971-CE dated 24.5.1971, which was denied by the Superintendent of Central Excise and enhanced the value. The Appellate Collector of Central Excise (as it stood during the relevant period) allowed the appeal filed by the Assessee. Revenue appealed before the Government of India, who set aside the order of the Appellate Collector. Then, the Assessee challenged the order of the Government of India before the Honble Madras High Court, which was allowed. Revenue paid the refund of Rs.22,06,396.60 in terms of the High Courts order. Revenue filed appeal before the Honble Supreme Court. By judgment dated 3.12.1996, in Civil Appeal Nos. 2896 to 2900/1984, the Honble Supreme Court allowed the appeal filed by the Revenue and the judgment of the Honble High Court was set aside. Thereafter, the assessee deposited the entire amount during the period 27.11.2001 to 26.4.2002. A show-cause notice dated 31.3.2003 was issued proposing demand of interest of Rs.34,25,275/- under Section 11AA(1) and Section 11AB(1) of Central Excise Act, 1944 along with penalty. The amount of interest was calculated from 26.8.1995 (i.e. after three months from the date of insertion of Section 11AA as on 24.5.1995) to 25.4.2002. The Adjudicating authority confirmed the demand of interest of Rs.34,25,275/- being payable on the erroneous refund amount of Rs.22,06,397/- for the period from 26.8.1995 to 25.4.2002 under Section 11AB(1) and no penalty was imposed. The assessee filed an appeal before the Commissioner (Appeals) against the Adjudication order. By the impugned order, the Commissioner (Appeals) modified the adjudication order insofar as the interest is chargeable only from 4.3.1997 (i.e. immediately after the expiry of three months from the order dated 3.12.1996 of Honble Supreme Court). The Commissioner (Appeals) revised the calculation for interest to be paid as Rs.18,29,053/-.
4. Revenue filed this appeal before the Tribunal to modify the order of the Commissioner (Appeals) insofar as interest is payable from 26.5.1995 (i.e. from the date of insertion of Section 11AA). Revenue in their appeal quantified the amount of interest as Rs.31,43,219/-. The assessee has also filed an appeal challenging the order of the Commissioner (Appeals).
5. The learned AR on behalf of the Revenue reiterates the grounds of appeal. It is submitted that interest is payable from the date of insertion of the interest clause in the Central Excise Act, 1944 till the date of completion of payment of the dues. It is also contended that the finding of the Commissioner (Appeals) that the payment of date of interest would be calculated after expiry of three months from the date of the order of the Honble Supreme Court is not correct in view of the insertion of Section 11AA/11AB in the Central Excise Act, 1944. He relies on the following case laws which held that interest is payable on the refund amount:-
(i) CCE, Shillong Vs. Woodcraft Products Ltd. 2002 (143) ELT 247 (SC)
(ii) Agricultural & Processed Food Products Vs. Oswal Agro Furane 1996 (85) ELT 3 (SC)
(iii) CCE, Pune Vs. SKF India Ltd. 2009 (239) ELT 385 (SC)
(iv) Dodsal Engineering & Construction P. Ltd. Vs. CCE, Bangalore 2010 (262) ELT 706 (Tri. Bang.)
6. On the other hand, the learned counsel on behalf of the Assessee submits that the payment of interest was confirmed by the adjudicating authority under Section 11AB of the Central Excise Act and no appeal was filed by the Revenue before the Commissioner (Appeals) and therefore they cannot raise demand of interest under Section 11AA before the Tribunal. He further submits that Section 11AB at the relevant period would apply in the case of erroneous refund by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act. In the present case, there is no allegation of fraud, collusion or any mis-statement or suppression of fact etc and therefore payment of interest under Section 11AB would not arise. He further submits that Section 11AB was amended with effect from 11.5.2001, which would apply in the case where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously paid, the person is liable to pay interest with the duty as determined under Section 11A of the Act.
6.1 It is also submitted that the payment of interest under Section 11AB would follow by the determination of duty under Section 11A(2) of the Act. In the present case, there is no determination of duty under Section 11A and therefore Section 11AB would not apply. It is also submitted that sub-section (2) of Section 11AB provides that provisions of sub-section (1) of Section 11AB shall not apply to case where the duty became payable before the date on which the Finance (No.2) Bill, 1996 receives the assent of the President. He submits that limitation prescribed under Section 11A of the Act would apply for payment of interest under Section 11AB. He relies on the following decisions:-
(i) CCE Vs. M/s. VAE VKN Industries Ltd. passed by the Honble High Court of Punjab & Haryana vide order dated 17.4.2012
(ii) Hindustan Insecticides Vs. CCE, LTU 2013-TIOL-631-HC-Del.
(iii) TTP Technologies Pvt. Ltd. Vs. CCE, Bangalore 2009 (240) ELT 724 (Tri. Bang.)
7. After hearing both sides and on perusal of the records, I find that Revenue paid the amount of Rs.22,06,397/- to the assessee on 26.3.1986 in terms of the order of the Honble Madras High Court. Subsequently, the Honble Supreme Court by judgment dated 3.12.1996 set aside the judgment of the Honble Madras High Court. Consequently, the assessee is liable to refund the amount paid to them in terms of the judgment of the Honble High Court. It is seen that the assessee paid the entire refund amount during the period from 27.11.2001 to 26.4.2002 in six installments. Thereafter, a show-cause notice dated 31.3.2003 was issued proposing demand of interest from 26.8.1995 to 25.4.2002. It is noted that Section 11AA was introduced only 26.5.1995.
7.1 Show Cause Notice proposed the demand of interest after three months from the date of insertion of Section 11AA of the Act. The adjudicating authority confirmed the demand of interest under Section 11AB which was introduced on 28.9.1996. Commissioner (Appeals) observed that the assessee is liable to refund the amount as soon as the judgment was pronounced by the Honble Supreme Court.
7.2 The learned counsel raises a question that Section 11AB of the Central Excise Act would not apply in this case. On the other hand, the learned AR submits that the Honble Supreme Court in the case of Woodcraft Products (supra) held that the assessee is liable to pay refund amount with interest. It is noted that the Honble Supreme Court in the case of CCE, Hyderabad Vs. ITC Ltd. 2005 (179) ELT 15 (SC) had held that in the case of interest on delayed refund of predeposit, payment of interest would arise after final disposal of the dispute between the parties ordered by Supreme Court.
7.3 In my considered view, in the present case, applicability of Section 11AB for deemed of interest as determined by the adjudicating authority is required to be examined and thereafter the case laws would be looked into, the matter requires to be examined on the provisions of demand of interest and in the light of the decision of the Honble Supreme Court. It is appropriate that the matter should be re-examined by the Commissioner (Appeals) in the light of the above observation.
7.4 Accordingly, both the appeals are allowed by way of remand to the Commissioner (Appeals).
(Dictated and pronounced in open court) (P.K. Das) Judicial Member Rex 2