Customs, Excise and Gold Tribunal - Delhi
Sherwani Industrial Syndicate Ltd. vs Cce on 9 September, 2003
Equivalent citations: 2004(92)ECC440
ORDER
P.G. Chacko (J), Member
1. The appellants had made pre-deposits of Rs. 35 lakhs and Rs. 7 lakhs under Section 35F of the Central Excise Act in two appeals which they had preferred to this Tribunal against certain demands of duty affirmed by the Commissioner (Appeals). When those appeals succeeded, the appellants filed an application in July 2000 for refund of the above amounts totalling to Rs. 42 lacs. The jurisdictional Assistant Commissioner sanctioned the refund but ordered that the amount be adjusted, under Section 11 of the Central Excise Act, to0wards certain arreras of Central Excise duty recovery whereof was pending against the party. Against this direction for set-off of the refund claim against the demand of Central Excise duty, the party preferred an appeal to the Commissioner (Appeals) and the latter held in favour of the appellants and directed refund of the aforesaid amount (Rs. 42 lacs) to them. The Commissioner (Appeals) however, did not accede to the appellant's claim of interest on the amount.
2. Another refund claim dated 21.2.97 for an amount of Rs. 44,08,420/- had also been filed with the department by the same party. This claim had arisen from an order of the Hon'ble Supreme Court holding that the cost of secondary packing was not includible in the assessable value of the goods cleared by the party during the relevant period. The claim was rejected by the original authority on the ground on unjust enrichment. Against the order of that authority, the party filed an appeal with the Commissioner (Appeals) and the latter allowed cash refund of the amount to the appellants, holding that the incidence of duty had not been passed on to customer. However, in this case also, the assessee's claim for interest on the duty amount was not allowed.
3. The present appeal has been filed by the assessee, aggrieved only by the denial of interest.
4. The operative part of the impugned order reads as under : -
"As regards, interest, the lower adjudicating authority has rightly held that under Section 11BB of the Act, the interest is payable on duty ordered to be refunded not on pre-deposit which is not a payment of duty. Even the appellants have voluntarily declared vide their letter dated 26.4.2001 addressed to the Assistant Commissioner, Central Excise Division-II, Allahabad, that they may not claim any interest from the department for the period of delay in settlement of such refund claims. Therefore, the appellant's claim regarding interest is not tenable."
5. Heard both the sides. Ld. Counsel for the appellants submitted that the provisions of Section 11BB of the Central Excise Act were applicable to the subject refund claims and, therefore, interest was liable to be paid on the principal amounts in terms of the said provisions. Counsel relied on the Tribunal's decision in Sharda Synthetics Ltd. & Anr. Vs. CCE, Mumbai [2003 (57) RLT 626], wherein it was held that the provisions of Sections 11B and 11BB were applicable to refund of a pre-deposit made under Section 35F and hence interest was liable to be paid for the period after expiry of three months from the date of receipt of the Tribunal's order out of which the refund claim arose as consequential relief. Counsel also relied on the Tribunal's Larger Bench decision in Garlon Poly Fab Industries Ltd. Vs. CCE, Kanpur [2003 (56) RLT 853], wherein interest was allowed for the period after expiry of three months from the date of application for refund of pre-deposit. He also contended that the Tribunal had inherent power in the matter. He also challenged the reliance placed by the lower appellant authority on the appellant's letter dated 26.4.2001 and submitted that the right to claim interest under Section 11BB was not relinquishable. On the other hand, the DR argued that this Tribunal had no inherent powers to grant the relief of interest where the law did not expressly provide for interest. he relied on the Orissa High court's decision in Collector Vs. Golden Hind Shipping (India) Pvt. Ltd. [1993 (68) ELT 739 (Ori.)]
6. We have carefully examined the submissions. The short question which has arised in this case is whether the denial of interest to the appellants by the lower authorities is sustainable or not. Section 11BB of the Central Excise Act allows interest on delayed refunds of duty. This provision of law has also been made applicable to refunds of pre-deposits made under Section 35F of the Act vide Tribunal's Larger bench decision in Garlon Poly Fab Industries (supra). The contra view taken by the lower appellate authority cannot be accepted and we overrule the same. Now the question which immediately arises before us is whether, in the particular facts of this case, the appellant's claim for interest can be allowed. In their letter dated 26.4.2001, the appellant categorically stated that they would not claim any interest. We reproduce the full text of this letter below : -
SHERVANI INDUSTRIAL SYNDICATE LIMITED April 26, 2001 The Assistant Commissioner, Central Excise Deptt.
Division-II Allahabad.
Dear Sir, Re : Settlement of refund claims due from the Department With regard to our various claims for refund of excise duty pending with the department, it is stated that we may not claim any interest from the department for the period of delay in settlement of such refund claims. We shall be grateful to you for an expeditious settlement of our claims.
Thanking you, Your sincerely, For Shervani Industrial Syndicate Limited.
Sd/ (RAJU VERGHESE) DY. GENERAL MANAGER In the above letter, the appellants relinquished their right to claim interest on the amounts sanctioned for refund. The Right to interest under Section 11BB is a statutory right, which is capable of being waived. We have noticed a ruling of the Hon'ble Supreme Court on the point. In the case of Motilal Padampat Sugar Mils Co. Ltd. Vs. State of Uttar Pradesh & Others [(1979) 44 STC 42 (SC)] their lordships cited authorities with approval and held as under :-
"Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an international act with knowledge": per Lord Chelmsford, L.C., in Earl of Darnley v. London, Chatham and Dover Rly. Co. There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it. It is pointed out in Halsbury's Laws of England (4th Ed.), Valume 16, in paragraph 1472, at page 994, that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J., delivering the judgment of the High court of Australia in Craine v. Colonial Mutual Fire Insurance Co. Ltd., has also emphasized that waiver "must be with knowledge, an essential supported by may authorities".
The court found, on the fact of that case, that there was no evidence of the appellants having intentionally abandoned their right to exemption from sales Tax. In the instant case, the refund claims were filed under Rule 173-S of the Central Excise Rules, 1944 read with Section 11-B of the Central Excise Act. The provision for interest on delayed refunds was available at that time under Section 11B of the Act. But no claim for interest was staked by them before the original authority. However, before the Commissioner (Appeals), they prayed for grant of interest also. But, as correctly noted by the learned Commissioner, the appellants had already abandoned their right to claim interest vide letter dated 26.4.2001 (supra) which was never repudiated. Their letter ex facie showed that they were conscious of their right to claim interest. It was issued to the department for the specific purpose of dis-claiming interest on the principal amounts covered by the refund applications. The epistolary text testified the international abandonment of a right by the appellants. We therefore cannot help recording a finding that the appellants, in this case, had, both expressly and by conduct, waived the right to claim interest and therefore they can have no bona fide grievance against the denial of interest. The view taken on this aspect by the learned Commissioner is sustained. The appeal is dismissed.