Custom, Excise & Service Tax Tribunal
Triumph Internation India Private ... vs Commissioner Of Central Goods & Service ... on 3 July, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Excise Appeal No.40435 of 2023
(Arising out of Order in Appeal No.128/2023 dated 15 March 2023 passed by
Commissioner Central Excise, (Appeals), Chennai)
M/s. Triumph International (India) Pvt. Ltd. Appellant
240B, Sengundram Village
Singaperumal Koil
Kancheepuram Dt. - 603 204.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai Outer Commissionerate
Newry Towers, 12th Main Road
Anna Nagar, Chennai - 600 040.
APPEARANCE:
Shri Rajaram, Consultant for the Appellant
Shri M. Ambe, Authorized Representative for the Respondent
CORAM
Hon'ble Shri P. Dinesha, Member (Judicial)
Hon'ble Shri M. Ajit Kumar, Member (Technical)
Final Order No. 40795/2024
Date of Hearing : 30.05.2024
Date of Decision : 03.07.2024
Per M. Ajit Kumar,
Brief facts are that the appellant, M/s. Triumph International
(India) Pvt. Ltd. (TIPL) are a 100% Export Oriented Unit (EOU)
manufacturing readymade garments falling under Tariff Heading 6108
and 6212 of the Central Excise Tariff Act, 1985. They have a Domestic
Tariff Area (DTA) warehouse in their premises. Goods manufactured
in the EOU are exported directly outside India and also cleared to its
warehouse for domestic sales upon payment of applicable duties.
2. The appellant while determining the excise duty payable on
goods cleared from their EOU unit to the DTA, claimed exemption of
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excise duty equivalent to the CVD, vide Notification No. 30/2004-CE
dated 09.07.2004 as amended and Notification No. 01/2011-CE dated
01.03.2011 as amended. This claim was found ineligible by the
Department's Audit wing and intimated to the Appellant vide letter
dated 26/05/2016.
3. Appellant accordingly paid the differential excise duty of
Rs.7,72,90,743/- along with interest of Rs.56,06,660/- (total Rs
8,28,97,403/-) 'under protest' vide Challans dated 26/07/2016 and
25/08/2016.
4. Subsequently on 11.01.2017, they claimed a refund of the
differential excise duty and interest paid. The Assistant Commissioner,
Maraimalai Nagar Division rejected the refund claim, vide Order-in-
Original dated 29.11.2017, holding that the appellant was not entitled
for the exemption of excise duty equivalent to the CVD and also
vacated the protest. The Commissioner (Appeals II), Chennai vide
Order in Appeal dt 23.8.2018 allowed the appeal but directed the
Adjudicating Officer to verify the concept of unjust enrichment. After
filing a refund claim for Rs 8,28,97,403/- on 10.3.2021 with the
Department under Sec 11B of Central Excise Act 1944 (CEA 1944),
M/s TIIPL appealed against the said Order-in-Appeal before the
CESTAT regarding the verification of unjust enrichment. They
subsequently withdrew their appeal before CESTAT on 29.06.2021 so
as to pursue their refund claim.
5. During verification of the refund claim it appeared to the
Commissionerate that the differential excise duty equivalent to the
CVD of Rs.38,13,559/- was passed on to the buyer of such goods.
Accordingly, the appellants were issued Show Cause Notice dated
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6.7.2021 and the matter adjudicated in due course vide OIO dated
20/12/2021, sanctioning the differential excise duty of
Rs.7,34,77,184/- with interest of 53,30,025/- to their Bank account.
The differential excise duty equivalent to CVD of Rs.38,13,559/- and
the interest of Rs.2,76,635/- was sanctioned and credited to the
Consumer Welfare Fund.
6. Aggrieved by this order the appellant took the matter before the
Commissioner of GST and Central Excise (Appeals-II), who vide the
impugned order dated 15/03/2023 allowed the appeal and directed
that the amounts credited to the Consumer Welfare Fund be refunded
to the appellant. He further noted that the appellant had filed refund
claim with proof of unjust enrichment on 10/3/2021, even before
withdrawing their appeal before CESTAT on 29/6/2021. The appellant
was issued with a SCN dated 06/07/2021 with regard to the proof of
enrichment filed. The learned Commissioner Appeals held that this date
should be taken as a date of filing of complete refund claim. He held
that as per section 11BB, interest is payable for the already sanctioned
refund amount paid beyond a period of three months from the date of
filing of claim, i.e. 06/07/2021 and found the appellant eligible for a
refund of Rs 9,30,040/-. Aggrieved by the said order the appellant is
before us with a prayer to direct the department to grant interest at
the rate of 12% per annum instead of 6% per annum from the expiry
of 3 months of the date of receipt of the refund application up to the
date of receipt of the refund. During the oral hearing the appellant has
now altered his prayer as under;
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(a) The relevant date for computing interest ought to be from the
date of deposit of amounts under protest - 26-07-2016 and 25-08-
2016.
(b) The interest is to be granted at 12% instead of 6%.
7. The learned Consultant Shri Rajaraman appeared and argued for
the appellant. Revenue was represented by the learned Authorized
Representative Shri M Ambe.
7.1 The learned Consultant for the Appellant has stated that the
amounts paid 'under protest' are nothing but only a "deposit" and
provisions of Section 11B of Central Excise Act, 1944 will not apply.
Section 11BB lays down the mechanism of interest on delay in refund
of "duty". In the present case, the amounts paid are not duty but only
"deposits" and hence the interest should be calculated from the date
of deposit. He placed reliance on the following judicial precedents
wherein he stated the courts have ruled that the amounts paid during
investigation, under protest are only "deposits" and provisions of
Section11B of Central Excise Act, 1944 will not apply:
(i) The Commissioner Of Central Excise, Coimbatore Versus
M/s. Pricol Ltd., The Customs, Excise & Service Tax
Appellate Tribunal (2015 (3) TMI 735 Madras High Court)
(ii) Commissioner, Central Excise 7-A, Ashok Marg, Lucknow
Versus M/s Eveready Industries India Ltd (2017 (2) TMI
197 - Allahabad High Court)
(iii) Ebiz. Com Pvt. Ltd. Versus Commissioner of Central
Excise, Customs And Service Tax And Ors (2016 ((9) TMI
1405 - Allahabad High Court)
(iv) Universal Heat Exchangers Ltd. Vs. Commissioner of
Central Excise, Coimbatore (2015 (10) TMI 1678 - CESTAT
Chennai)
(v) Chambal Fertilizers & Chemicals Ltd. v. Commissioner of
CGST, Udaipur (2023 (71) G.S.T.L. 171 (CESTAT Delhi).
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(vi) M/s KG. Denim Ltd (FINAL ORDER Nos. 40411-40415/2024 -
Chennai CESTAT)
He further submitted that in lieu of various judicial precedents, the
interest due to them ought to be computed at 12% from the date of
deposit of amounts under protest. He referred to the judgment of a
Coordinate Bench of this Tribunal in M/s. Parle Agro Pvt. Ltd.
Versus Commissioner, Central Goods & Service Tax, Noida (2021
(5) TMI 870 - CESTAT Allahabad) which relying on the Hon'ble
Supreme Court's judgment in M/s Sandvik Asia Limited vs
Commissioner of Income Tax - 1 Pune [2006 (196) ELT 257 SC]
among other judgments, granted interest at 12% in a case where the
amount was 'deposited' during an investigation and later ordered to be
refunded. He also placed reliance on the following judgments.
(vii) M/s Green Valley Industries Limited, (2023 (7) TMI 1176 -
Meghalaya High Court upholding decision of the Kolkata Tribunal
(2022 (4) TMI 560 - CESTAT Kolkata))
(viii) Commissioner Of Central Excise, Panchkula Versus M/s
Riba Textiles Limited (Punjab & Haryana High Court [2022 (3)
TMI 693] ) upholding the decision of the Kolkata Tribunal [2020
(2) TMI 602 - CESTAT Chandigarh]
(ix) M/s. Indore Treasure Market City Pvt Ltd. Versus
Commissioner Of Central Goods And Service Tax And
Central Excise, Indore (2024 (2) TMI 372)
(x) Amba Bi Wheeler Pvt Limited vs Commissioner of CGST,
New Delhi [2022 (9) TMI 1278, CESTAT, New Delhi]
(xi) M/s. Raghuveer Metal Industries Limited, Shri Raj Kumar
Pokharna, Shri Sunil Kumar Pokharna And M/S. Rajasthan
Commercial House (2023 (12) TMI 371 New Delhi)
Without prejudice to the submissions made he stated that the interest
if computed as per provisions of Section 11BB, the relevant date would
be 3 months from the date of filing the refund application. The
Appellant had filed the refund claim on 11/01/2017 and therefore,
interest ought to be granted from 12/04/2017 till the date of sanction
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of refund. The date of SCN considered by the Commissioner (Appeals)
is not as per law and requires intervention. He placed reliance on the
decision of the Hon'ble Supreme Court of India in the case of Ranbaxy
Laboratories Limited versus Union of India [2011 (273) ELT 3],
where it is held that interest is payable on the amount refunded to the
assessee from the expiry of three months from the date receipt of
application till the date of payment. He also relied on the Tribunal's
own case in M/s. SRF Ltd vs Commissioner of GST and CE,
Chennai [2023 (6) TMI 993], where it was held that interest under
Section 11BB of the Central Excise Act, 1944 is automatic and the same
is to be computed from the expiry of 3 months from the date of filing
the refund claim. He prayed that their appeal may be allowed.
7.2 The learned AR on behalf of Revenue provided a time chart of
events as below, during the oral hearing.
Sl. EVENT DATE
No
1. Challan Payment Dates 26.07.2016 &
25.08.2016
2. Refund Claim Filed 11.01.2017
3. OIO Rejecting Refund 29.11.2017
4. OIA Allowing Refund and remanding for UJE 23.08.2018
5. Appeal preferred by party in CESTAT 27.11.2018
6. OIA accepted in review 05.02.2019
7. CESTAT Appeal Withdrawal Filed by party 29.06.2021
8. CESTAT Appeal Withdrawal Allowed 19.08.2021
9. Refund Claim Filed based on OIA 10.03.2021
(Proof of UJE* submitted as per impugned OIA)
10. Verification Report of Range Officer 03.06.2021
11. SCN against the refund claim 06.07.2021
(Date of filing of complete refund claim as per
impugned OIA)
12. Reply to SCN by TIPL 14.07.2021
13. First Personal Hearing 29.07.2021
14. Second Personal Hearing by Adjudicating Authority 24.08.2021
15. CA Certificate (Submitted only with FAA) 09.11.2021
16. OIO Allowing Refund after reducing UJE 20.12.2021
17. Appeal filed on with FAA (resulting in impugned OIA) 24.12.2021
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18. CA Certificate dated 09.11.2021 (Not submitted with 24.12.2021
Adjudicating Authority)
19. Personal Hearing with FAA (for the impugned OIA) 10.01.2023
20. Impugned Order-in-Appeal 15.03.2023
* Unjust Enrichment
He submitted that apart from the two grounds stated by the appellant
it was also critical to decide the following questions;
(a) Who is the Authority competent to decide the eligible rate of
interest for a delayed refund under the Act, and;
(b) What is the rate of interest that is liable to be fixed in such a
case.
He stated that it is an undisputed fact that an audit objection by the
department had sought to deny the Notification exemption from CVD
for the period from July 2015 to June 2017. The appellant TIPL paid
the duty and interest of Rs. 8,28,97,403/- voluntarily based on the
decision of audit, though "under Protest". The audit decision pertains
to a notification that conditionally exempts goods from the whole of
the duty of excise leviable under the CEA 1944. The taxability/
leviability of the said duty is well within the authority of law. Thus, the
amount paid by TIPL under protest is a duty and not a deposit. TIPL
has consciously paid the amount of duty under the head of the Excise
Duty and interest also under the respective accounting head. The audit
objection was confirmed vacating the protest by the Original Authority
vide his order dated 29/11/2017 and the grant of exemption setting
aside the duty confirmed, attained finality only by the Order in Appeal
dated 23.08.2018. He submitted that alternatively, the said payment
under protest by TIPL may at the best be considered as an excess
payment of duty which not being a mere deposit shall be refunded only
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in accordance with the provisions of the Central Excise Act or Rules
made thereunder. The refund application dated 10/03/2021 is thus
governed by the proviso to Section 11B of CEA 1944. The present
refund claim arose consequent to the allowing of notification benefit
and dropping of the audit objection by the first appellate authority vide
its order dated 23.08.2018. He stated that it is clear from section
11B(5)(B)(ec) of CEA 1944 that the amount which is paid prior to or
after the adjudication by the Original Authority will become refundable
only after the issue of order by Commissioner Appeals dated
23.08.2018. He further submitted that TIPL while making averments
that the payment under protest was a deposit outside the ambit of the
Section 11B has ironically relied on Section 11BB of the CEA 1944,
which in itself deals with the refunds sanctioned under Section 11B,
and the averment is hence contradictory in nature. Further the present
refund claim was filed by TIPL on 10.03.2021 though the appellate
order was passed as early as on 23.08.2018. The Ld. AR submitted
that the reason attributed to such delay on the part of TIPL was due to
the pendency of TIPL's excise appeal before CESTAT between
27.11.2018 to 19.08.2021. However, the Appellant has submitted that
interest is to be computed as per provisions of Section 11BB as per
which the relevant date would be three months from the date of filing
the first refund application on 11.01.2017 without UJE details. The
impugned order has categorically discussed the issue in Para 7.1 that
as per Section 11 B of the Central Excise Act,1944, a refund application
should be considered complete only when documents evidencing
unjust enrichment is submitted along with the refund application and
that in the instant case, the appellant had filed a refund claim with
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proof of unjust enrichment only on 10.03.2021 based on which Show
Cause Notice was issued on 06.07.2021. He submitted that it is
pertinent to mention that the ratio of the decision in the case of
Mafatlal Industries Ltd. Vs. Union of India reported in
1997(89)ELT 247(SC) is squarely applicable to the facts of the case in
which the Hon'ble Court held that all claims for refund except where
levy is held to be unconstitutional, is to be preferred and adjudicated
upon under Section 11B of the Central Excise Act, 1944 and subject to
claimant establishing that burden of duty has not been passed on to
third party. He further stated that the prayer pertaining to the rate of
interest by TIPL to be paid at the rate of 12% for delayed payment,
has no basis and attempts to travel beyond the provisions of law.
Notification 67/2003-CE(NT) dated 12.09.2003, sets the rate of
interest to be paid on the delayed refunds beyond the period of three
months from the date of claim of refund is 6%. He stated that TIPL
heavily relies on the ratio set by the Tribunal judgment in
Commissioner of CGST, Noida Vs M/s Parle Agro Pvt. Ltd
(2021(5) TMI 870 - CESTAT Allahabad), which has been appealed
against and has not attained finality. The said judgment mainly refers
to the Supreme Court judgment in Sandvik Asia Limited (supra)
rendered by a Bench of two judges pertaining to 'compensation' to be
paid for a delayed refund and to the Hon'ble Allahabad High Court
judgment in Pace Marketing Specialities vs. Commissioner of
Central Excise [2012 (27) S.T.R. 420 (All.)] - which again refers to
Sandvik Asia Limited. He stated that a three Judge Bench of the Hon'ble
Supreme Court in Commissioner of Income Tax, Gujarat vs.
Gujarat Fluoro Chemicals, [(2014) 1 SCC 126], had examined and
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explained the decision in Sandvick Asia case (supra). The Court therein
observed that the aforesaid judgment has been misquoted and
misinterpreted by the assessees and also by the Revenue, who felt that
the Apex Court had directed the Revenue to pay interest on the
statutory interest in case of delay in payment. In other words, the
interpretation placed is that the Revenue is obliged to pay an interest
on interest in the event of its failure to refund the interest payable
within the statutory period. The Hon'ble Court held that its only interest
provided for under the statute which may be claimed by an assessee
from the Revenue and no other interest on such statutory interest. The
learned AR submitted that the Tribunal's judgment in Parle Agro Pvt.
Ltd (supra) which has been appealed against, was not legal and proper
for the following reasons:
(i) The Hon'ble CESTAT is not a Constitutional Court but only a
creature of an Act and cannot travel beyond the provisions of the
Act;
(ii) The CESTAT cannot venture into the Executive's domain. In
short, CESTAT cannot legislate. The legislation (Central Excise
Act) in certain provisions has enabled the Central Government to
issued Notifications which is a function of the Executive.
Notifications are nothing but subordinate legislations delegated
by the legislature to the executive. It is pertinent to point out
that the separation of judiciary from the executive is ensured in
Article 50 of the Constitution, which states "the state shall
take steps to separate the judiciary from the executive in the
public services of the state";
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(iii) It assumes the payments made by the Appellant to be revenue
'deposits' and believes the rate of interest is not prescribed.
However, the same order takes into consideration the
Notifications prescribing the rate of interest 'on delayed payment
of duty', 'on delayed refunds u/s 11BB', 'in excess of duty', 'on
delayed payment of duty', and finds the rate of interest varies
in these notifications from 6 to 18% and without any rationale
nor any authority concludes it as appropriate to fix the rate of
interest at 12% for the 'deposit' made. The rate has thus been
fixed arbitrarily.
(iv) The Hon'ble Supreme Court in Northern Plastics Ltd., Vs.
Hindustan Photo Films Mfg. Co. Ltd., [1997 (91) ELT 502
(SC)] held at para 10 that CEGAT is a creature of the statute and
derives its jurisdiction and power only from the statute creating
it and not outside the statute.
He further relied on the following judgment in favour of Revenue.
Copies of judgment at sl no (iii), (v), (vi) and (vii) were supplied during
the oral hearing;
(i) Mafatlal Industries Ltd. Vs UOI [1997 (89) ELT 247(SC)]
(ii) Citizen Metalloys Ltd. Vs Commissioner CEx & ST,
Ahmedabad-III, [2022 (379) ELT 361 (Tri. - Ahmd.)],
(iii) UOI Vs Willowood Chemicals Pvt Ltd [C.A No 2995-2996 of
2022 in Hon'ble Supreme Court]
(iv) UOI Vs Saraf Natural Stone [C.A No 2997-2998 of 2022 in
Hon'le Supreme Court]
(v) CIT, Gujarat Vs Gujarat Fluoro Chemicals [2013 (296) ELT
(433) SC]
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(vi) Goldy Engineering Works vs Commissioner of Central
Excise [W.P.(C) 4332/ 2022 dated 14.07.2023 in High Court of
Delhi]
(vii) Bharat Hotels Ltd. Vs CCE, New Delhi [2017 (4) GSTL 69 (Tri.
- Del)]
He stated that the appeal filed by the appellant TIPL has no merit, and
prayed that the Hon'ble Tribunal may be pleased to reject the appeal.
8. We have heard the rival parties and carefully gone through the
appeal. We find that the following issues have been raised by the
appellant and Revenue, which are stated below;
APPELLANT
(A) The relevant date for computing interest on deposit of
amounts made against an audit objection ought to be from
the date of payment under protest - 26-07-2016 and 25-
08-2016 OR as per provisions of Section 11BB, whereby the
relevant date would be 3 months from the date of filing the
refund application.
(B) The interest is to be granted at 12% instead of 6%.
REVENUE
(C) Whether advance payments made against audit objections
are to be considered as payment of duty / interest or as
deposits?
(D) Whether it was proper on the part of CESTAT to fix a higher
rate of duty than that prescribed by a notification under
section 11BB of Central Excise Act, 1944, when it cannot
legislate?
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(E) Whether the judgment of the Hon'ble Supreme Court in
Sandvik Asia Ltd. (supra) was applicable to this case being
a judgment of a Constitutional Court dealing with
compensation or in other words interest on interest for the
delayed payment of refund in on income tax case,
especially in the light of the three Judge Bench decision in
Gujarat Fluroro Chemicals (supra).
The Issues are reframed as under;
(1) What is the relevant date for computing interest as per the facts
of this case?
(2) What is the appropriate rate of interest for a delayed refund, of
an advance payment made towards an audit objection?
(3) Whether the Tribunal is competent to decide the effective rate of
interest other than that notified under sec. 11BB, for a delayed refund
under the Act?
9. Before taking up the issues above, the point raised by the
Appellant that amounts paid 'under protest' are nothing but "deposit"
and provisions of Section11B of Central Excise Act, 1944 will not apply,
needs to be addressed.
9.1 The use of the word 'deposit' has many connotations. In common
parlance payment of duty is also referred to as deposit of duty. Section
35F of CEA 1944, includes mandatory pre-deposit provisions before
filing an appeal. The rate of interest payable on refund of such pre-
deposit is provided in section 35FF ibid. That is not the case here. In
this case it has to be understood correctly as an amount that has been
paid towards duty liability as per a decision communicated by audit. It
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is the appellants view that the amount collected cannot be treated as
duty until and unless the said amount is adjusted towards such duty
on finalisation thereof as per law. We note that as per section
11A(1)(b) of the CEA 1944 the person chargeable with duty may,
before service of notice, pay on the basis of the duty ascertained by
the Central Excise Officer, the amount of duty along with interest
payable thereon under Section 11-AA. Section 11A(2) provides that in
such a situation a notice shall not be served to the person. Since the
appellant had paid the amount under protest an order vacating the
protest was to be passed so as to facilitate an appeal.
9.2 It is not disputed by the rival parties that the payment of monies
by the Appellant was the result of an objection raised by the internal
Audit Wing of the department. The fact that the amount paid was Rs
8,28,97,403/- and was inclusive of an interest component, shows that
it was based on certain calculations by the department alleging short
payment of duty by the Appellant and was not an arbitrary amount
decided and paid. The payment hence satisfies section 11A(1)(b) of
the CEA 1944.
9.3 Further, on receipt of an audit decision an assessee can accept
the objection and pay the amount due or choose to contest the decision
and file his reply. They can also first choose to pay the amount and
then contest the decision by paying duty 'under protest'.
9.4 The issue of payment 'under protest' has a short history. The
procedure evolved under the Central Excise regime as per Rule 233B
of the erstwhile Central Excise Rules 1944. Subsequently Central
Excise Rules, 2001 was notified in supersession of the Central Excise
Rules, 1944, by Notification No. 30 /2001-Central Excise (N. T.), dated
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21/06/2001 and came into force from 01/07/2001. The new Rules did
not make any reference to the procedure for payment of duty under
protest. However, the procedure continues to remain in vogue as per
the erstwhile Rule 233B and has also been adopted under the Customs
Act 1962 and the Finance Act 1994, where there is no mention of such
a specific procedure either under the Act or Rules. In fact with the
Constitutional Courts having stated that appeals filed against an order
or decision are to be treated as payment of duty 'under protest', the
beneficial procedure has come to stay and be legally recognised under
indirect tax laws. This being so it may be helpful to reproduce the said
Rule for a better understanding of the current issue where advance
payment was made under protest;
"RULE 233B. Procedure to be followed in cases where duty is paid
under protest.-
Where an assessee desires to pay duty under protest he shall deliver
to the proper officer a letter to this effect and give grounds for
payment of the duty under protest.
(2) On receipt of the said letter, the proper officer shall give an
acknowledgement to it.
(3) The acknowledgement so given shall, subject to the provisions of
sub-rule (4), be the proof that the assessee has paid the duty under
protest from the day on which the letter of protest was delivered to
the proper officer.
(4) An endorsement "Duty paid under protest" shall be made on all
copies of the gate pass, the Application for Removal and Form
R.T.12 or Form R.T. 13, as the case may be.
(5) In cases where the remedy of an appeal or revision is not
available to the assessee against any order or decision which
necessitated him to deposit the duty under protest, he may, within
three months of the date of delivery of the letter of protest, give a
detailed representation to the Assistant Commissioner of Central
Excise or Deputy Commissioner of Central Excise.
(6) In cases where the remedy of an appeal or revision is available
to the assessee against an order or decision which necessitated him
to deposit the duty under protest, he may file an appeal or revision
within the period specified for filing such appeal or revision, as the
case may be.
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(7) On service of the decision on the representation referred to in
sub-rule (5) or of the appeal or revision referred to in sub-rule (6) the
assessee shall have no right to deposit the duty under protest:
Provided that an assessee shall be allowed to deposit the duty under
protest during the period available to him for filing an appeal or
revision, as the case may be, and during the pendency of such
appeal or revision, as the case may be.
(8) If any of the provisions of this rule has not been observed, it shall
be deemed that the assessee has paid the duty without protest."
9.5 We note that the Rule established a procedure to be followed in
cases where duty is paid under protest. Further the word 'duty' was
defined under Rule 2(7) to mean the duty as levied under section 3 or
3A of the CEA 1944. Hence the appellant who followed the 'protest'
procedure paid 'duty' under protest.
9.6 An assessee by paying the amount under protest, towards an
objection communicated to them after an audit and before the matter
was decided by issue of a formal adjudication order, gets statutory
advantage. The payment of duty, freezes the interest clock and saves
them from a larger interest payment burden at a much later date, if
the demand is confirmed; it would further help them close the matter
without issue of a notice as provided in law, if they so chooses; prove
their bona fides of being a compliant assessee and thus expect not be
visited by a penalty at a later date when the matter is adjudicated;
removed the disqualification of time bar as per the normal statutory
period, on claiming their legal rights and benefits later, among other
things.
9.7 The payment of monies by the Appellant in this case, is on his
own volition and in response to a objection raised by the department.
Such a payment, under protest, against a quantified short payment
cannot be stated to be a 'deposit', it has to be treated as a payment of
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duty. The amount has also been paid by the Appellant under the head
of Excise Duty and interest, under the respective accounting head. As
per the procedure where the remedy of an appeal or revision is not
available to the assessee against an order or decision which
necessitated him to pay duty under-protest he shall give a detailed
representation to the Assistant Commissioner of Central Excise for
obtaining an appealable order. The amount paid was accordingly
confirmed by the Original Authority as being correctly done when he
vacated the protest and rejected the refund claimed by the appellant.
A Bench of seven Judges of the Hon'ble Supreme Court in its
judgment in Smt. Ujjam Bai v. State of Uttar Pradesh, [1962 AIR
1621/ 1963 SCR (1) 778/ 1961 1 SCR 778], held as under;
"A taxing authority, which has the power to make a decision on
matters falling within the purview of the law under which it is
functioning is undoubtedly under an obligation to arrive at a right
decision. But the liability of a tribunal to err is an accepted
phenomenon. The binding force of a decision which is arrived at by
a taxing authority acting within the limits of the jurisdiction conferred
upon it by law cannot be made dependent upon the question whether
its decision is correct or erroneous. For, that would create an
impossible situation. Therefore, though erroneous, its decision must
bind the assessee. Further, if the taxing law is a valid restriction the
liability to be bound by the decision of the taxing authority is a burden
imposed upon a person's right to carry on trade or business. This
burden is not lessened or lifted merely because the decision
proceeds upon a misconstruction of a provision of the law, which the
taxing authority has to construe. Therefore, it makes no difference
whether the decision is right or wrong so long as the error does not
pertain to jurisdiction." (emphasis added)
This being so we find that the monies paid by the Appellant were
towards duty and cannot be held to be a deposit.
9.8 The other linked issue raised by the appellant is in the case of a
"deposit" the provisions of Section11B of Central Excise Act, 1944 will
not apply. This view does not appear to be in line with the law declared
by the Hon'ble Supreme Court. Although we have found that the
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monies paid by the Appellant are only duty, we however examine the
averment made. The issue has been dealt with elaborately under the
landmark nine Judge verdict of the Hon'ble Supreme Court in
Mafatlal industries Ltd (supra), referred to by Revenue and decided
by a majority of 8:1. Hon'ble Justice B.P. Jeevan Reddy, J. speaking
for himself and on behalf of four other judges delivered the majority
opinion. We find that the Apex Court in the said judgment permits only
the remedy of a writ or a civil suit in the case of an 'unconstitutional
levy'. All other claims for refund pertaining to a Central Excise assessee
will lie under section 11B of the CEA 1944. The passage relevant to the
issue under discussion is reproduced below;
"68. Re. : (I) : Herein before, we have referred to the provisions
relating to refund obtaining from time to time under the Central
Excises and Salt Act. Whether it is Rule 11 (as it stood from time to
time) or Section 11B (as it obtained before 1991 or subsequent
thereto), they invariably purported to be exhaustive on the question
of refund. Rule 11, as in force prior to August 6, 1977, stated that "no
duties and charges which have been paid or have been
adjusted....shall be refunded unless the claimant makes an
application for such refund under his signature and lodges it to the
proper officers within three months from the date of such payment or
adjustment, as the case may be". Rule 11, as in force between
August 6, 1977 and November 17, 1980 contained sub-rule (4) which
expressly declared: "(4) Save as otherwise provided by or under this
rule, no claim of refund of any duty shall be entertained". Section 11B,
as in force prior to April, 1991 contained sub-section (4) in identical
words. It said:
"(4) Save as otherwise provided by or under this Act, no claim for
refund of any duty of excise shall be entertained". Sub-section (5)
was more specific and emphatic. It said: "Notwithstanding anything
contained in any other law, the provisions of this section shall also
apply to a claim for refund of any amount collected as duty of excise
made on the ground that the goods in respect of which such amount
was collected were not excisable or were entitled to exemption from
duty and no court shall have any jurisdiction in respect of such claim."
It started with a non-obstante clause; it took in every kind of refund
and every claim for refund and it expressly barred the jurisdiction of
courts in respect of such claim. Sub-section (3) of Section 11B, as it
now stands, is to the same effect - indeed, more comprehensive and
all-encompassing. It says, "(3) Notwithstanding anything to the
contrary contained in any judgment, decree, order or direction of the
Appellate Tribunal or any court or in any other provision of this Act or
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the rules made thereunder or in any law for the time being in force,
no refund shall be made except as provided in sub-section".
The language could not have been more specific and emphatic. The
exclusivity of the provision relating to refund is not only express and
unambiguous but is in addition to the general bar arising from the fact
that the Act creates new rights and liabilities and also provides
forums and procedures for ascertaining and adjudicating those rights
and liabilities and all other incidental and ancillary matters, as will be
pointed out presently. This is a bar upon a bar - an aspect
emphasised in Para 14, and has to be respected so long as it stands.
The validity of these provisions has never been seriously doubted.
Even though in certain writ petitions now before us, validity of the
1991 (Amendment) Act including the amended Section 11B is
questioned, no specific reasons have been assigned why a provision
of the nature of sub-section (3) of Section 11B (amended) is
unconstitutional. Applying the propositions enunciated by a seven-
Judge Bench of this Court in Kamala Mills, it must be held that
Section 11B [both before and after amendment] is valid and
constitutional. In Kamala Mills, this Court upheld the constitutional
validity of Section 20 of the Bombay Sales Tax Act (set out
hereinbefore) on the ground that the Bombay Act contained
adequate provisions for refund, for appeal, revision, rectification of
mistake and for condonation of delay in filing appeal/revision. The
Court pointed out that had the Bombay Act not provided these
remedies and yet barred the resort to civil court, the constitutionality
of Section 20 may have been in serious doubt, but since it does
provide such remedies, its validity was beyond challenge. To repeat
- and it is necessary to do so - so long as Section 11B is
constitutionally valid, it has to be followed and given effect to. We can
see no reason on which the constitutionality of the said provision - or
a similar provision - can be doubted. It must also be remembered that
Central Excises and Salt Act is a special enactment creating new and
special obligations and rights, which at the same time prescribes the
procedure for levy, assessment, collection, refund and all other
incidental and ancillary provisions. As pointed out in the Statement
of Objects and Reasons appended to the Bill which became the Act,
the Act along with the Rules was intended to "form a complete central
excise code". The idea was "to consolidate in a single enactment all
the laws relating to central duties of excise". The Act is a self-
contained enactment. It contains provisions for collecting the taxes
which are due according to law but have not been collected and also
for refunding the taxes which have been collected contrary to law,
viz., Sections 11A and 11B and its allied provisions. Both provisions
contain a uniform rule of limitation, viz., six months, with an exception
in each case. Sections 11 and 11B are complimentary to each other.
To such a situation, Proposition No. 3 enunciated in Kamala Mills
becomes applicable, viz., where a statute creates a special right or a
liability and also provides the procedure for the determination of the
right or liability by the Tribunals constituted in that behalf and
provides further that all questions about the said right and liability
shall be determined by the Tribunals so constituted, the resort to civil
court is not available - except to the limited extent pointed out therein.
Central Excise Act specifically provides for refund. It expressly
declares that no refund shall be made except in accordance
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therewith. The Jurisdiction of a civil court is expressly barred - vide
sub-section (5) of Section 11B, prior to its amendment in 1991, and
sub-section (3) of Section 11B, as amended in 1991. It is relevant to
notice that the Act provides for more than one appeal against the
orders made under Section 11B/Rule 11. Since 1981, an appeal is
provided to this Court also from the orders of the Tribunal. While
Tribunal is not a departmental organ, this court is a civil court. In this
view of the matter and the express and additional bar and exclusivity
contained in Rule 11/Section 11B, at all points of time, it must be held
that any and every ground including the violation of the principles of
natural justice and infraction of fundamental principles of judicial
procedure can be urged in these appeals, obviating the necessity of
a suit or a writ petition in matters relating to refund. Once the
constitutionality of the provisions of the Act including the provisions
relating to refund is beyond question, they constitute "law" within the
meaning of Article 265 of the Constitution. lt follows that any action
taken under and in accordance with the said provisions would be an
action taken under the "authority of law", within the meaning of Article
265.
In the face of the express provision which expressly declares that no
claim for refund of any duty shall be entertained except in accordance
with the said provision, it is not permissible to resort to Section 72 of
the Contract Act to do precisely that which is expressly prohibited by
the said provisions. In other words, it is not permissible to claim
refund by invoking Section 72 as a separate and independent remedy
when such a course is expressly barred by the provisions in the Act,
viz., Rule 11 and Section 11B. For this reason, a suit for refund would
also not lie. Taking any other view would amount to nullifying the
provisions in Rule 11/Section 11B, which, it needs no emphasis,
cannot be done. It, therefore, follows that any and every claim for
refund of excise duty can be made only under and in accordance with
Rule 11 or Section 11B, as the case may be, in the forums provided
by the Act. No suit can be filed for refund of duty invoking Section 72
of the Contract Act. So far as the jurisdiction of the High Court under
Article 226 - or for that matter, the jurisdiction of this court under
Article 32 - is concerned, it is obvious that the provisions of the Act
cannot bar and curtail these remedies. It is, however, equally obvious
that while exercising the power under Article 226/Article 32, the Court
would certainly take note of the legislative intent manifested in the
provisions of the Act and would exercise their jurisdiction consistent
with the provisions of the enactment.
69. There is, however, one exception to the above proposition, i.e.,
where a provision of the Act whereunder the duty has been levied is
found to be unconstitutional for violation of any of the constitutional
limitations. This is a situation not contemplated by the Act. . . . . ."
*********
"PART - IV
99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference 21 E/40435/2023 must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by mis-interpreting or mis-
applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it. The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder. Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ
- but to this Court, which is a civil court.
ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. . . . ."
(emphasis added) 22 E/40435/2023 9.9 As per the majority decision of the Hon'ble Judges, the language of the statute could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters. The Hon'ble Court felt that taking any other view would amount to nullifying the provisions in Rule 11/ Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty (other than an unconstitutional levy) can be made only under and in accordance with Rule 11 or Section 11B (as it then stood), in the forums provided by the Act. The majority verdict has declared and clarified all the issues on the right to refund and the remedy for obtaining a refund of monies paid, which is binding. 9.10 It may also be mentioned that a Larger Bench of this Tribunal in Veer Overseas Ltd. v. CCE, Panchkula decided on 27 March, 2018, [2018 (4) TMI 910 - CESTAT Chandigarh] heard the following reference;
"(a) Whether in respect of the claim for refund of illegal levy of Service Tax or of Service Tax collected without authority of law, the statutory time limit prescribed in terms of Section 11B of Central Excise Act 1944 will be applicable or not?".
The majority held as under;
9. The Apex court in Mafatlal Industries Ltd. (supra) observed that the Central Excise Act and the Rules made thereunder including Section 11B too constitute "law" within the meaning of Article 265 and that in the face of the said provisions -- which are exclusive in their nature" no claim for refund is maintainable except and in accordance therewith. The Apex court emphasized that "the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant 23 E/40435/2023 to the said provisions is collection or retention under "the authority of law" within the meaning of the said Article".
10. Having examined various decided cases and the submissions of both the sides, we are of the considered view that a claim for refund of service tax is governed by the provision of Section 11B for period of limitation. The statutory time limit cannot be extended by any authority as held by the Apex court.
(emphasis added) Based on the decisions stated above the request of the appellant for interest on the refund which does not pertain to an unconstitutional levy, will have to be considered only in terms of Section 11B and 11BB of the CEA 1944 and in the manner as prescribed by the said sections. Hence this plea of the Appellant that refund of 'deposits' is not falling under section 11BB too does not have any substance being against the law declared by the Hon'ble Supreme Court as above. 9.11 We now examine the various judgments cited by the Appellant in support of their views discussed above. Although many judgments were cited, copies of only two judgments were provided. All cited judgments were however stated to support the view that the amounts paid during investigation under protest are only "deposits" and provisions of Section11B of Central Excise Act, 1944 will not apply. Deposits made at the time of filing an appeal are compulsory in nature being based on statutory provisions. It must be stated at the risk of repetition that monies paid during an investigation are not based on any letter issued by the department stating the issue involved and quantifying the amount payable. They are discretionary amounts paid by the assessee which are to be set off against any future demand that may be confirmed. We have examined the issue in the case of M/s. Pricol Ltd. and in Ebiz. Com Pvt. Ltd. (supra) copies of which were submitted. They, as stated, relate to payments made during an 24 E/40435/2023 ongoing investigation. The matter is distinguished as during investigations the duty does not crystalise and no letter / objection is issue by the department asking the assessee to pay a specific amount of duty. On the other hand audit checks are made and objections are raised as per a procedure established by law. Rule 22 of the Central Excise Rules, 2002 provides that the Commissioner may empower an Officer or depute an audit party for carrying out scrutiny or verification of records of the assessee. The rule also obliges an assessee to make available records for such scrutiny. The assessee is not obliged to deposit any money towards the objection raised by the audit team and can seek to settle the issue by following the detailed procedure prescribed for deciding the matter quasi judicially. If he so wants he may pay the dues involved as per the decision of the proper officer and close the matter without issue of a SCN, as provided in the Act. He can also pay the duty amount and file a 'protest letter' in terms of Rule 233B of the Central Excise Rules, 1944, so that he is given an Order vacating the protest, that states all the issues involved and can be appealed against. He can choose whichever procedure is advantageous to him as discussed earlier. A person in whose benefit a privilege is enacted has a right to waive it and pay the monies pointed out by audit, because the very concept of privilege inheres a right to waiver. However, whatever is once paid is done under the specific tax head and is towards the short-paid duty pointed out by audit is not a deposit. As emphasized by the Apex Court in Mafatlal industries Ltd (supra) "the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention 25 E/40435/2023 under "the authority of law" within the meaning of the said Article". Hence any payment of monies made due to an audit objection stand on a different footing from that during an investigation under different statutory provisions. The Hon'ble Supreme Court in Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd [2003(2) SCC 111] observed :
"It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision".
Again in Union of India & Anr. Vs Major Bahadur Singh [(2006) 1 SCC 368] the Apex Court cited Lord Denning with approval. The relevant portion is extracted below;
The following words of Lord Denning in the matter of applying precedents have become locus classicus:
"Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive."
"Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it."
As stated circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases and cannot be blindly relied upon. Hence payments made after the quantification of duty / interest on the completion of an audit can be refunded only as per the provisions of sec. 11B and 11BB and are governed by the law as declared by the Apex Court in Mafatlal 26 E/40435/2023 Industries Ltd. (supra). The judgments cited by the Appellant are not found relevant to the issues in this appeal.
10. Before evaluating the rival contentions, it would be necessary to extract the relevant portions of Sections 11B and Section 11BB of the CEA 1944, which deal with claims for refund of duty. Relevant portions are as under:
"11B.Claim for refund of duty.-(1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence including the documents referred to in section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty and interest if any, paid on such duty had not been passed on by him to any other person:
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of sub- section (2) as substituted by that Act:
Provided further that the limitation of one year shall not apply where any duty has been paid under protest.
(2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:
Provided that the amount of duty of excise and interest, if any, paid on such duty of excise as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub- section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to-----
(a) . . . . . . .
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal of any Court in any other provision of this Act or the rules made thereunder 27 E/40435/2023 or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).
(4) .................................................................
(5) For the removal of any notification issued under clause (f) of doubts, it is hereby declared that the first proviso to sub-section (2), including any such notification approved or modified under sub-
section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.] [Explanation. -- For the purposes of this section, - (A) "refund" includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (B) "relevant date" means, -
(a) . . . . .
(b) . . . . .
(c) . . . . .
........
(ec) in case where the duty becomes 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;]
(f) in any other case, the date of payment of duty.] (emphasis added) *****. *****. ***** "11BB. Interest on delayed refunds.- If any duty ordered to be refunded under sub- section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette, on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty:
Provided that where any duty ordered to be refunded under sub- section (2) of section 11B in respect of an application under sub- section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.28
E/40435/2023 Explanation : Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub- section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section."
(emphasis added)
11. We shall now examine the issues raised by the rival parties.
12. What is the relevant date for computing interest as per the facts of this case?
12.1 We have discussed above that monies paid towards audit objections are paid towards tax liabilities that have been determined and are not deposits. The Appellant in an alternate plea has requested for the relevant date for interest to be calculated in terms of the judgment of the Apex Court in M/S Ranbaxy Laboratories Ltd (supra). We find that the said judgment examined the question whether the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? They went on to answer the question as formulated, based on the issue of that case and stated that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. We find that the facts are different in this case.
12.2 As per the time chart given by Revenue the refund claim was filed by the Appellant on two dates. Firstly on 11/01/2017 i.e. after 29 E/40435/2023 payment of duty as per the audit objection, which was before the matter was decided by way of a quasi-judicial order i.e. OIO confirming the payment of duty and vacating the protest. At this stage the right to receive a refund had not crystalised nor had proof of UJE been submitted. The refund claim was filed the second time around on 10/03/2021 along with proof of UJE, after the issue of OIA dated 23/08/2018 which set aside the duty demand and allowed the refund of duty paid. This appears to be the more appropriate date, in terms of the M/S Ranbaxy Laboratories Ltd judgment, since as per section 11B(1) of CEA 1944, any person claiming refund of any duty of excise and interest, shall be accompanied by such documentary or other evidence to establish that the amount of duty of excise and interest, if any, paid on such duty had not been passed on by him to any other person.
12.3 The decision of the learned Commissioner (Appeals) to count the relevant period of three months from 06/07/2021 i.e. the date on which the appellant was issued with a show cause notice to show proof of unjust enrichment does not have sanction in law as it is not provided for either in section 11B or 11BB of CEA 1944 and merits to be disturbed.
12.4 However it is seen that this is a case where the duty has becomes refundable as a consequence of the judgment of an Appellate Authority. Explanation B to Clause (5) of Section 11B of the Act defines 'Relevant Date'. Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of a judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant 30 E/40435/2023 date. Explanation to section 11BB also states that where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub- section (2) for the purposes of this section. Hence the relevant date for calculating the interest rate in terms of section 11BB would be three months from the date immediately after the expiry of three months from 23.08.2018, the date of the order of the Commissioner (Appeals).
13. What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection?
13.1 The appellant has prayed to disregard the interest rate as prescribed by a notification under section 11BB and grant a higher interest @ 12% on the 'delayed payment of refund', based on the judgment of the Apex court in Sandvik Asia Limited (supra) and applied to indirect tax regime by the Tribunal relying on the said judgment in Parle Agro Pvt. Ltd, (supra) and other judgments. In response Revenue has strongly challenged the relevance of the judgment in Sandvik Asia Limited being one on the payment of compensation, and in the light of the subsequent judgment of the Hon'ble Supreme Court clarifying the position in Gujarat Fluro Chemicals (supra). They have also questioned the authority of this Tribunal, a creature of the statute, to determine the rate independent of the rate prescribed under the Act. The arguments have been set out at para 7.2 above and are not repeated.
31
E/40435/2023 13.2 We find that the rate of interest as prescribed in section 11BB of CEA 1944 is for delayed refund. If the refund is paid on time the question of paying interest would not arise. The language of the section is not ambiguous, or uncertain and must be given effect to. In Girdhari Lal & Sons Vs Balbir Nath Mathur [(1986) 2 SCC 237]. the position of law was affirmed by the Apex Court in the following terms:
"This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges." (emphasis added) It has been categorically held by the Hon'ble Supreme Court in Mafatlal industries Ltd (supra) and discussed elaborately above, that notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in Section 11B of CEA 1944. The Hon'ble Court went on to repeat that so long as Section 11B is constitutionally valid, it has to be followed and given effect to.
13.3 We have earlier discussed that the payment made by the Appellant was against the decision conveyed by the audit officer. The procedure to be followed in cases where duty is paid 'under protest' and is in vogue, was examined. The procedure for vacating the protest by the department and the successful challenge to it by the assessee paves the way for a refund under Sec. 11B and 11BB. Further the word 'duty' was defined under Rule 2 to mean the duty as levied under 32 E/40435/2023 section 3 or 3A of the CEA 1944. The Hon'ble Apex Court in case of Dipak Babaria & Anr [2014 (3) SCC 502] held as follows:
"53. It is well settled that where the statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. This proposition of law laid down in Taylor Vs. Taylor (1875) 1 Ch D 426,431 was first adopted by the Judicial Committee in Nazir Ahmed Vs. King Emperor reported in AIR 1936 PC 253 and then followed by a bench of three Judges of this Court in Rao Shiv Bahadur Singh Vs. State of Vindhya Pradesh reported in AIR 1954 SC 322. This proposition was further explained in paragraph 8 of State of U.P. Vs. Singhara Singh by a bench of three Judges reported in AIR 1964 SC 358 in the following words:-
"8. The rule adopted in Taylor v. Taylor is well recognised and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted...."
This proposition has been later on reiterated in Chandra Kishore Jha Vs. Mahavir Prasad reported in 1999 (8) SCC 266, Dhananjaya Reddy Vs. State of Karnataka reported in 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Limited vs. Essar Power Limited reported in 2008 (4) SCC 755." (emphasis added) In the circumstances, the appellant would only be eligible for interest at the effective rate as per the notification issued under section 11BB of Central Excise Act, 1944 and not at any higher rate. The judgments cited by the appellant in the case of Sandvik Asia Limited (supra) which deals with the payment of compensation in an Income Tax case and Parle Agro Pvt. Ltd, (supra) and other judgments cited, which relates to refund of advance payment made during an investigation, are not germane to the facts of this case.
13.4 Having come to a conclusion on both the issues raised by the appellant within the framework of sec. 11B and 11BB of the CEA 1944, we do not feel it necessary to attempt an answer to the third question as stated at para 8 above.
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E/40435/2023
14. In the light on the discussions, we partially modify the impugned order and direct as under:-
(a) The appellant will be eligible for interest on the delayed payment of duty calculated from the date immediately after the expiry of three months from the date of the Order-in-Appeal i.e. 23.8.2018, in terms of section 11B(5)(B)(ec) and the explanation to section 11BB of CEA 1944.
(b) The interest rate applicable on the delayed refund would be as per the relevant notification issued under sec. 11BB of CEA 1944.
The appellant is eligible for consequential relief as per law. The appeal is disposed of accordingly.
(Order pronounced in open court on 03.07.2024) (M. AJIT KUMAR) (P. DINESHA) Member (Technical) Member (Judicial) Rex