Custom, Excise & Service Tax Tribunal
Raghuveer Metal Industries Limited vs Commissioner, Cgst -Jaipur I on 7 December, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Excise Appeal No. 50138 of 2020 [DB]
[Arising out of Order-in-Appeal No. 279 to 282 (CRM)/CE/JPR/2019 dated
15.10.2019 passed by the Commissioner of Central Excise & CGST (Appeals),
Japur]
M/s. Raghuveer Metal Industries
Limited ...Appellant
Village-Bidikchiyawas, Near Mangaliyawas,
Nasirabad Road, Ajmer,
Rajasthan-305601
VERSUS
Commissioner of C.G.ST., Jaipur-I ...Respondent
NCR Building, Statue Circle, C-Scheme, Jaipur, Rajasthan - 302005 WITH Excise Appeal No. 50139 of 2020 [DB] [Arising out of Order-in-Appeal No. 279 to 282 (CRM)/CE/JPR/2019 dated 15.10.2019 passed by the Commissioner of Central Excise & CGST (Appeals), Jaipur] Shri Raj Kumar Pokharna ...Appellant M/s. Raghuveer Metal Industries Limited, Village-Bidikchiyawas, Near Mangaliyawas, Nasirabad Road, Ajmer, Rajasthan-305601 VERSUS Commissioner of C.G.ST., Jaipur-I ...Respondent NCR Building, Statue Circle, C-Scheme, Jaipur, Rajasthan - 302005 WITH Excise Appeal No. 50140 of 2020 [DB] [Arising out of Order-in-Appeal No. 279 to 282 (CRM)/CE/JPR/2019 dated 15.10.2019 passed by the Commissioner of Central Excise & CGST (Appeals), Jaipur] Shri Sunil Kumar Pokharna ...Appellant M/s. Raghuveer Metal Industries Limited, Village-Bidikchiyawas, Near Mangaliyawas, Nasirabad Road, Ajmer, Rajasthan-305601 VERSUS 2 Excise Appeal No. 50138-50141 of 2020 Commissioner of C.G.ST., Jaipur-I ...Respondent NCR Building, Statue Circle, C-Scheme, Jaipur, Rajasthan - 302005 AND Excise Appeal No. 50141 of 2020 [DB] [Arising out of Order-in-Appeal No. 279 to 282 (CRM)/CE/JPR/2019 dated 15.10.2019 passed by the Commissioner of Central Excise & CGST (Appeals), Jaipur] M/s. Rajasthan Commercial House, ...Appellant Inside Railway Line, Opp. Dalda Mill, FCI Road, Bilwara VERSUS Commissioner of C.G.ST., Jaipur-I ...Respondent NCR Building, Statue Circle, C-Scheme, Jaipur, Rajasthan - 302005 APPEARANCE:
Ms. Sukriti Das, Advocate for the Appellant Shri Rakesh Agarwal, Authorized Representative for the Respondent CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MRS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) DATE OF HEARING: 24.08.2023 DATE OF DECISION: 07.12.2023 FINAL ORDER No. 51621-51624/2023 DR. RACHNA GUPTA Present is a common order with respect to four appeals as mentioned above, the order under challenge being common to four of these appeals. The facts relevant for the present adjudication are as follows:
1.1 A search operation was conducted on 14/15.09.2010 by the officers of DGCEI at the factory and related premises of the appellants. Noticing discrepancies as that of shortage of finished goods and raw material and also the excess stock of finished goods 3 Excise Appeal No. 50138-50141 of 2020 and raw material, two show cause notices dated 11.03.2011 and 25.11.2011 were served upon the appellants proposing recovery of short levy of duty amounting to Rs. 23,85,67,946/- along with the interest and penalty and confiscation of excess TMT seized and confiscation of Indian currency of Rs.6,30,000/-, Rs.60,00,000/-
and Rs.23,00,000/- as were seized from the various premises during the searches, respectively. Penalties were proposed to be imposed upon the remaining appellants.
1.2 During the investigation, Appellant No. 1 deposited Rs.13,50,000/- in their RG-23A on 15.09.2010 and also deposited cash amounting to Rs.2,00,00,000/- on 29.11.2010. The said amount totalling to Rs.2,13,50,500/- was proposed to be appropriated against the aforesaid demand. The said proposal was confirmed vide Order-in-Original No. 80-81/2012 dated 31.12.2012. The order was appealed before this Tribunal. Vide the Stay Order no. 59296-59309/2013 dated 23.09.2013, directions to deposit Rs. 4 crores in addition to the amount already deposited was given. However, the Tribunal did not consider any merit about the currency seized totaling to Rs. 89 lakhs. Resultantly, a writ petition was filed before Hon'ble High Court of Rajasthan. Vide the order dated 20.12.2013, the said amount of Rs. 89 lakhs (the seized currency) was allowed to be adjusted in the payment of Rs. 4 crores as directed. Accordingly, an amount of Rs.3,11,00,000/- was deposited by the appellant on 28.01.2014. 1.3 The appeal against the aforesaid Order-in-Original was finally decided by this Tribunal vide Final Order No. 57285-57299/2017 dated 20.10.2017 setting aside the entire demand, the order of 4 Excise Appeal No. 50138-50141 of 2020 confiscation of cash and goods and also the order of imposition of penalties. However, the demand of Rs.16,00,60,335/-, after being set aside, was remanded to the Commissioner for de novo adjudication as per the directions in Para 44 of the aforesaid final order. Pursuant to the said final order, the appellants filed refund claims on 21.12.2017 for the amount as was deposited by the appellant and for the cash amount as was seized during searches. The refund claim was sanctioned vide Order-in-Original No. 19/2017 dated 13.02.2018, however without any interest. Being aggrieved the said order was challenged. The appeal has been rejected vide the impugned Order-in-Appeal No. 279 to 282/2019 dated 15.10.2019 holding that the amount in question is treated as pre deposit under Section 35F of the Act. Hence it shall attract payment of interest on the refund amount after expiry of three months from the date of communication of order of the appellate authority till the date of refund for such amount. Being aggrieved the appellant is before this Tribunal.
2. We have heard Ms. Sukriti Das, learned Advocate for the appellant and Shri Rakesh Agarwal, learned Authorized Representative for the department.
3. Learned counsel for the appellant has mentioned that the refund claim of the appellant has been sanctioned but the entitlement of interest on the said amount has been declined for the reason that no interest is payable on the amount deposited prior to the commencement of Finance Act, 2014 as per amended Section 35FF of the Central Excise Act. This order of original adjudicating authority when was challenged before Commissioner (Appeals), a 5 Excise Appeal No. 50138-50141 of 2020 show cause notice dated 12.06.2019 under proviso to Section 35A (3) of Central Excise Act on the aspect of unjust enrichment was served upon the appellant. The said show cause notice has been adjudicated vide the order under challenge. The Commissioner (Appeals) though has held that it is not the case of unjust enrichment, still has upheld the Order-in-Original on the aspect of interest. It is submitted that Revenue has withheld the pre deposit amount of Rs.6,13,80,500/- (Rs.5,24,50,000 + Rs.60,00,000 + Rs.6,30,000 + Rs.23,00,000) without any authority of law as the demand in question has been set aside by this Tribunal vide their order dated 20.10.2017. It is impressed upon that since the appellants remained deprived of the money which remained with the department for a long period, hence the appellant need to be compensated. The interest should have been paid suo moto by the department.
3.1 Learned counsel has impressed upon that the amount in question was in the nature of pre deposit, hence the time bar of Section 11B has wrongly been invoked by Commissioner (Appeals). It is impressed upon that as per department's own circular dated 08.12.2004, the amount which is treated as pre deposit is liable to be refunded along with the interest at the rate of 12%. The Commissioner (Appeals) is alleged to have ignored the relevant decision of the superior courts. To support her submissions, learned counsel has relied upon the following decisions:
(i) Parle Agro Pvt. Ltd. Vs. Commissioner, Central Goods & Service Tax, Noida (vice-Versa) reported as 2021 (5) TMI 870 - CESTAT ALLHABAD 6 Excise Appeal No. 50138-50141 of 2020
(ii) Riba Textiles Ltd. Vs. Commissioner of CE & ST, Panchkula reported as 2020 (2) TMI 602 - CESTAT CHANDIGARH affirmed by Punjab & Haryana High Court in the case of Commissioner of Central Excise, Panchkula Vs. Riba Textiles Ltd. reported as 2022 (62) GSTL 136 (P&H)
(iii) Sandvik Asia Ltd. Vs. Commissioner of Income Tax & Others reported as 2006 (1) TMI 55 - Supreme Court
(iv) Matta Paints and Hardware Store Vs. Commissioner Central Tax, New Delhi reported as 2022 (12) TMI 93 -
CESTAT NEW DELHI
(v) Continental Engines Ltd. Vs. Commissioner (Appeals), Central Excise & CGST, Jaipur - I reported as 2022 (5) TMI 903 - CESTAT NEW DELHI
(vi) Vikas Sabharwal, Proprietor Vs. Commissioner of Central Tax & GST, NEW DELHI reported as 2023 (4) TMI 5 - CESTAT NEW DELHI
(vii) Prem Jain Ispat Udyog Pvt. Ltd. Vs. Commissioner of Central Goods and Service Tax, Excise & Customs, Udaipur reported as 2022 (5) TMI 645 - CESTAT NEW DELHI Accordingly, the order under challenge is prayed to be set aside and appeals are prayed to be allowed.
4. Learned DR while rebutting the above submissions has mentioned that there is no provision in law for the grant of interest except Section 11B and 35FF of the Central Excise Act. No statutory provision has been mentioned by the appellant to claim the rate of interest at the rate of 12%. The appeals are not maintainable for want of the said explanation. It is further submitted that with respect to the amount of duty of Rs.16,00,60,335/-, the matter is still sub judice being remanded back to the Commissioner. Also, once it is held to be an amount of 7 Excise Appeal No. 50138-50141 of 2020 pre deposit, the interest is payable under Section 35FF only after three months of the date of communication of the order sanctioning refund. Hence neither under Section 11B nor under Section 35FF, the interest can be granted from the date of deposit till the date of payment thereof as is claimed by the appellant. It is also submitted that interest cannot be granted in favour of Appellant No. 1 on the amount as was deposited against the bail order (Rs.2 Crore). Learned DR has relied upon the following decisions:
(i) HEG Ltd. Vs. Commissioner, CGST, Final Order No. 51187/2022 dated 15.12.2022, CESTAT NEW DELHI
(ii) Sky Airways Vs. Commissioner, CGST, Final Order No. 51187/2022 dated 15.12.2022, CESTAT NEW DELHI
(iii) Sun Pharmaceuticals Industries Ltd. Vs. Commissioner of C.Ex., Chennai, reported as 2005 (185) E.L.T. 253 (Tri.-LB)
(iv) Commissioner of Central Excise, Hyderabad Vs. I.T.C. Ltd., reported as 2005 (179) E.L.T. 15 (S.C.)
(v) Union of India Vs. Tata SSL Ltd., reported as 2007 (218) E.L.T 493 (S.C.)
(vi) Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals, reported as 2017 (51) S.T.R. 236 (S.C.) Impressing upon no infirmity in the order, the appeal is prayed to be dismissed.
5. Having heard the rival contentions and perusing the entire records, we observe and hold as follows:
8
Excise Appeal No. 50138-50141 of 2020 5.1 The order of Commissioner (Appeals) has been challenged on the ground that the appellants were entitled to be paid interest at the rate of 12% per annum on the total amount of the refund from the date of its deposit till the date of its actual payment. To adjudicate the same foremost we need to look into the relevant provisions which entitle assessee for the interest to be paid on the amount deposited by them which specifically can be called as revenue deposits.
5.2 We observe:
(a) Section 11AA deals with the interest on delayed payment of duty. It provides that the person who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2) of the said section, wherein the interest rate has been specified to be not below 10% and not exceeding 36% per annum as the Central Government, by notification in the Official Gazette fix.
(b) Section 11BB of Central Excise Act deals with the interest on delayed refunds under Section 11B (2). We observe that Section 11BB of the Central Excise Act states that if any duty orderd to be refunded under sub-section (2) of Section 11B is not refunded within three months from the date of receipt of the application then the applicant shall be entitled to interest after the expiry of three months from the date of receipt of the application at such rate not below 5% and not exceeding 30% as may be notified by the Central Government in the Official Gazette.9
Excise Appeal No. 50138-50141 of 2020
(c) Perusal of Section 11DD provides that where an amount has been collected in excess of duty from the buyer of such goods, the person who is liable to pay such amount shall, in addition to the amount, be liable to pay interest at such rate not below 10% and not exceeding 36% per annum as is for the time being fixed by the Central Excise, by notification in the Official Gazette.
(d) Section 35FF of Central Excise Act also talks about the interest on delayed refund of amount deposited under Section 35F. According to this section where the amount deposited under Section 35F i.e. the amount of pre-deposit is required to be refunded consequent to the order of appellate authority, there shall be paid to the appellant interest at such rate, not below 5% and not exceeding 36% 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.
5.3 Prior adjudging the applicability of the precise provision among the above, facts and circumstances of the present case are observed to be as follows:
Sl. Title of M/s Raghuveer Metal Rajkumar Sunil Kumar Rajasthan No. the Industries Vs. CCE, Jaipur Pokharna Pokharna Vs. Commercial appeal Vs. CCE, CCE, Jaipur - I House Vs Jaipur - I CCE, Jaipur
1. Appeal E/50138/2020 E/50139/ E/50140/2020 E/50141/2 Number/s 2020 020
2. Refund 21.12.2017 Applicatio n 10 Excise Appeal No. 50138-50141 of 2020
3. OIO 13.02.2018
4. OIA 15.10.2019 (Refund)
5. Amount Rs. 5,24,50,000/- Rs. Rs. 6,30,000/- Rs.
deposited 60,00,000 Cash seized 23,00,000/ /- -
Cash Cash seized
seized
6. Date of 29.11.2011 2,00,00, 14.09.201 14.09.2010 17.09.2010
payment 000/- 0
of these 30.01.2014 3,11,00,
amounts 000/-
pursuant
to bail
order
15.09.2010 13,50,50
0/-
During
investig
ation
from
CENVAT
A/c
7. Tribunal No. 57285-57299/2017 dated 20.10.2017
Final Total Demand Rs.23,34,20,556/-: Demand Rs. 7,33,57,221/- set aside;
Order Demand Rs. 16,00,60,335/- set aside and remanded to Commissioner
entitling (Department has appealed this order before the Rajasthan High Court)
the
impugned
refund
claim
5.4 We observe that the amount of seized currency in the
impugned refund claim was not a deposit towards duty. We
observe from the order under challenge that the entire amount in 11 Excise Appeal No. 50138-50141 of 2020 question is held to be an amount of pre deposit and Commissioner (Appeals) has gone a step ahead of original adjudicating authority by holding that present is not the case of unjust enrichment. The amount of cash seized is an amount of revenue deposit as has been held by this Tribunal in the case of Matta Paints (supra). The amount deposited pursuant to the court order as a condition for the grant of stay or bail, though in strict sense is not a pre deposit but it is akin to the one as it has been held by Hon'ble High Court of Madras in the case of Kaleesuwari Refinery Pvt. Ltd. Vs. Assistant Commissioner of Central Excise, Chennai, reported as 2016 (341) E.L.T 584 (Mad.). This Tribunal also in another earlier decision in the case of Ghaziabad Ship Breakers Pvt Ltd Vs. Commissioner of Customs, Jamnagar, reported as 2010 (260) E.L.T 274 (Tri. - Ahmd.) has held that any amount deposited pursuant to the court orders has to be treated as the amount of pre deposit. Law with respect to the amount deposited during investigation is also clear that the said amount acquires the nature of the amount of pre deposit.
5.5 These observations when seen in the light of above quoted legal provisions, it is clear that Section 11B/11BB of Central Excise Act is not applicable to the given set of circumstances. We draw our support from the decision of this Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. Commissioner, GST, reported as 2021-TIOL-306-CESTAT-ALL, wherein following findings have been endorsed:
"30. In the present case, the provisions of section 11B of the Excise Act would not be applicable. This is for the reason that the 12 Excise Appeal No. 50138-50141 of 2020 appellant was not claiming refund of duty. The applicant, as noticed above, had claimed refund of the revenue deposit. Such a finding has also been clearly recorded by the Tribunal in the order dated 31.01.2017, which order has attained finality.
31. Section 11D of the Excise Act deals with duties of excise collected from the buyer to be deposited with Central Government. It provides that every person who is liable to pay duty and has collected any amount in excess of the duty assessed from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government.
32. Section 11DD of the Excise Act deals with interest on the amount collected in excess of the duty. It provides that where an amount has been collected in excess of the duty from the buyer of such goods, the person who is liable to pay such amount shall, in addition to the amount, be liable to pay interest at such rate not below ten 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.
33. There is no provision in the Excise Act, which deals with refund of revenue deposit and so rate interest has not been prescribed, when revenue deposit is required to be refunded."
The Tribunal in the said case had allowed the interest on the refund amount from the date of deposit till the date of payment thereof.
5.6 We further observe that Hon'ble Supreme Court also in the case of Commissioner of Customs (Import), Raigad vs M/s. Finacord Chemicals (P) Ltd. in Civil Appeal no. 1633-1638 of 2004 as decided on 08.04.2015 reported as 2015 (319) E.L.T. 616 (S.C.) while discussing the liability of the department to pay the interest has referred to Departments' own circular dated 02.01.2002 wherein the Board clarified that the matters of refund 13 Excise Appeal No. 50138-50141 of 2020 other than the amount of duty would not be covered under the provisions of Section 11B of Customs Act or Section 35FF of Central Excise Act. It was held by the Hon'ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Learned Apex Court has relied upon its decision in SLP titled as Union of India vs Suvidhe Ltd. in which decision of Bombay High Court in Suvidhe Ltd. vs Union of India reported as 1996 (82) ELT 177 has been upheld. The Bombay High Court has observed that in case of deposits which were not in the form of duty, provisions of 11B of Customs Act will have no applicability. The deposits made under Section 35FF since is not the payment of duty, Section 11B will not be applicable.
5.7 Another circular of department bearing No. 802/35/2004 CX dated 08.12.2004 was also being considered by the Apex Court in the above mentioned judgment dated 08.04 2015. In that circular the Board emphasised that the amounts other than the amount of duty if deposited it should be refunded immediately as non- returning of deposits attract interest that has been granted by the Courts in number of cases. One similar case of Hon'ble Apex Court is the decision of Sandvik Asia Ltd. reported as 2006 (196) ELT 257 (SC) wherein it was held that the amount deposited under Section 35FF of Central Excise Act as far as the payment of interest is concerned shall be applicable only in the cases for such deposits as have been made under Section 35F of the Act. As already observed in the present case, the amount in question is neither the amount of duty nor is the amount of pre deposit, the amount in question is merely a deposit with the Revenue which the Revenue 14 Excise Appeal No. 50138-50141 of 2020 had no authority to retain as the appellant was the owner thereof. The following para of the above circular are quoted in this decision.
"5. Refund of pre-deposit:
5.1 Where the appeal is decided in favour of the party / assessee, he shall be entitled to refund of the amount deposited along with the interest at the prescribed rate from the date of making the deposit to the date of refund in terms of Section 35FF of the Central Excise Act, 1944 or Section 129EE of the Customs Act, 1962.
5.2 Pre-deposit for filing appeal is not payment of duty. Hence, refund of pre- deposit need not be subjected to the process of refund of duty under Section 11B of the Central Excise Act, 1944 or Section 27 of the Customs Act, 1962. Therefore, in all cases where the appellate authority has decided the matter in favour of the appellant, refund with interest should be paid to the appellant within 15 days of the receipt of the letter of the appellant seeking refund, irrespective of whether order of the appellate authority is proposed to be challenged by the Department or not.
5.3 If the Department contemplates appeal against the order of the Commissioner (A) or the order of CESTAT, which is in favour of the appellant, refund along with interest would still be payable unless such order is stayed by a competent Appellate Authority.
5.4 In the event of a remand, refund of the pre-deposit shall be payable along with interest.
5.5 In case of partial remand where a portion of the duty is confirmed, it may be ensured that the duty due to the Government on the portion of order in favour of the revenue is collected by adjusting the deposited amount along with interest.
5.6. It is reiterated that refund of pre-deposit made should not be withheld on the ground that Department is proposing to file an appeal or has filed an appeal against the order granting relief to the party. Jurisdictional Commissioner should ensure that 15 Excise Appeal No. 50138-50141 of 2020 refund of deposit made for hearing the appeal should be paid within the stipulated time of 15 days as per para 5.2 supra.
7. Procedure for refund:
7.1 A simple letter from the person who has made such deposit, requesting for return of the said amount, along with a self attested Xerox copy of the order in appeal or the CESTAT order consequent to which the deposit becomes returnable and attested Xerox copy of the document evidencing payment of such deposit, addressed to Jurisdictional Assistant/Deputy Commissioner of Central Excise and Service Tax or the Assistant/Deputy Commissioner of Customs, as the case may be, would suffice for refund of the amount deposited along with interest at the rate specified.
7.2 Record of deposits made under Section 35F of the Central Excise Act, 1944 or section 129E of the Customs Act, 1962 should be maintained by the Commissionerate so as to facilitate seamless verification of the deposits at the time of processing the refund claims made in case of favourable order from the Appellate Authority."
5.8 From the above discussion, once it is clear that Section 11B and 11BB of Central Excise Act will not be applicable to the amount in question, the denial of the interest on the appellant's amount is held to be unjustified. As per the Article 300A of Constitution of India also, no person shall be deprived of his property, save by authority of law. Once confiscation order about impugned currency is set aside, it becomes clear that the seized currency continues to be the appellant's property. He cannot be deprived of the same and is entitled for benefits arising out of said property. Hence interest accrued on the amount in question during the period it was in fixed deposit is the property of the owner of the amount i.e. the appellant herein. We draw our support from the decision of Hon'ble 16 Excise Appeal No. 50138-50141 of 2020 High Court of Allahabad in the case of RHL Profiles Ltd. Vs. Commissioner of Customs, Ex. and Service Tax, Kanpur reported as 2017 (352) ELT 349 (All) has held that once the confiscation has been set aside, confiscation of seized currency has been set aside and the fact is that the Department has earned interest during the period the currency was retained by it, it was held that payment of interest could not be denied merely for the reason that there is no express statutory provision. Bombay High Court also in the case of Union of India Vs. M P Desal reported as 2019 (366) ELT 251 (Bom) has held that amount seized in cash by the authorities is to be refunded along with the interest. Though in this case the rate of interest was held to be simple at the rate of 8%. However, there already has been decisions of Kerala High Court in the case of Sony Pictures Networks India Pvt. Ltd. Vs. UOI reported as 2017 (353) ELT 179 (Ker) wherein the decision of Hon'ble Apex Court in the case of Kuil Fireworks Inds. Vs. Collector reported as 1997 (95) ELT 3 (SC) is relied and it was held that rate of interest while refunding the amounts has to be 12% of the amount refunded.
5.9 We also draw our support from the decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd. which is now the law of land in terms of Article 141 of the Constitution of India. The Hon'ble Apex Court, in the said case, has observed as follows:
"45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the 17 Excise Appeal No. 50138-50141 of 2020 Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law.
COMPENSATION:
46. The word 'Compensation' has been defined in P. RamanathaAiyar's Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:18
Excise Appeal No. 50138-50141 of 2020 "An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer."
The Hon'ble Apex Court thus held that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refund.
5.10 Following the said law of land, we hold that the appellants are entitled to claim the interest on the amount as has been refunded in their favour that too to be paid from the date of payment of initial amount till the date of its refund.
5.11 Now comes the question about the rate at which the such interest has to be awarded. From the several provisions of Central Excise Act, as quoted above, it is observed that the rate of interest has to be notified by the Central Government from time to time.
We take note of following notifications:
(i) The Notification No. 15/2016-CE dated 01.03.2016 issued under Section 11AA of Central Excise Act vide which the Central 19 Excise Appeal No. 50138-50141 of 2020 Government has fixed the rate of interest at 15% per annum for the purpose of said section.
(ii) The Notification No. 67/2003-CE dated 12.09.2003 issued under Section 11BB vide which the Central Government has fixed the rate of interest at 6% per annum for the purpose of said section.
(iii) The Notification No. 68/2003-CE dated 12.09.2003 issued under Section 11DD vide which the rate of interest fixed by the Central Government is at 15% per annum for the purpose of the said section.
(iv) The Notification No. 6/2011 dated 01.03.0211 under Section 11AB wherein Central Government has fixed the rate of interest at 18% per annum for the purpose of the said section.
From the above notifications, issued under the respective sections of the Act, it becomes clear that the rate of interest varies from 6% to 18%.
5.12 This Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. Commissioner, Central Goods & Service Tax, Noida (vice- Versa) reported as 2021 (5) TMI 870 - CESTAT ALLHABAD has held that in the light of the above discussed notifications the grant of interest at the rate of 12% per annum seems to be appropriate. The decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd. (supra) has also been relied upon. Hon'ble High Court of Kerala also in the case of Sony Pictures Networks India Pvt. Ltd. (supra) has held that the interest on the refund shall be payable at the rate of 12% per annum. The previous judgment of Hon'ble Apex Court in the case of I.T.C. Ltd. (supra) has been 20 Excise Appeal No. 50138-50141 of 2020 relied upon, where the Apex court confined the rate of interest to 12% and further held that any judgment or decision of any high court taking a contrary view will be no longer a good law. The case law as relied upon by the appellant has been discussed by this Tribunal in the case of Riba Textiles Ltd. (supra) holding that those decisions are not applicable for the refund of the amount of pre deposit.
5.13 The above entire discussion makes it clear that the amount in question was an amount in the form of pre-deposit. Hence, it is the refund in terms of Section 35FF. However, the interest on sanctioned amount of refund has been denied on the ground that refund has been sanctioned within three months from the date of communication of the order of appellate authority in terms of the pre amended Section 35FF of Central Excise Act, 1944. We observe that Section 35FF stands amended w.e.f. 06.08.2014 read 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, 21 Excise Appeal No. 50138-50141 of 2020 shall continue to be governed by the provisions of Section 35FF as it stood before the commencement of the said Act."
The bare perusal makes it clear that the proviso is applicable to such amounts which were deposited under Section 35F.
6. From the entire above discussion, it is clear that the amount in question was not deposited under Section 35F, however is akin to predeposit for the reasons as discussed above. Resultantly, we hold that the said proviso is not applicable to the given set of circumstances. Irrespective that the amount in question except for Rs.3,11,00,000/- was deposited prior 06.01.2014. We therefore hold that the findings are liable to be set aside. Section 35FF itself prescribes the rate of interest in the range of 5% to 36% when these provisions is read in the light of the above provisions and the decisions with respect to the rate of interest. We hold that the appellant is entitled to receive interest at the rate of 12%. Though the department has impressed upon that the demand with respect to Rs.16,00,60,335/- has been remanded for de novo adjudication but apparently and admittedly as on date the said demand also stands set aside vide the final order of this Tribunal dated 20.10.2017. Consequent to the entire above discussions, the findings of the order under challenge are hereby set aside. The appellant is held entitled to have interest on the amount of refund sanctioned at the rate of 12% per annum from the date of the deposit of the amount till the date of refund thereof. Except that for an amount of Rs.13,50,500/- which was deposited during investigation but towards the duty liability that too from the Cenvat account. The appellant shall be entitled for the interest on the said 22 Excise Appeal No. 50138-50141 of 2020 amount from the date of the final order of the Tribunal dated 20.10.2017 (vide which the duty demand was set aside) till the date of payment thereof. Resultantly, all the appeal are hereby allowed.
[Order pronounced in the open court on 07.12.2023 ] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) HK