Custom, Excise & Service Tax Tribunal
Nj Indiainvest Private Limited vs Cgst & Central Excise Surat on 1 July, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH - COURT NO. 3
SERVICE TAX Appeal No. 11239 of 2018-SM
[Arising out of Order-in-Original/Appeal No CCESA-SRT-APPEALS-PS-342-2017-18 dated
11.12.2017 passed by Commissioner (Appeals) Commissioner of Central Excise, Customs
and Service Tax-SURAT-I]
NJ India Invest Private Limited .... Appellant
Block No. 901 & 902, 6th Floor, B Tower, Udhna
Udyog Nagar Sangh Commercial Complex, Central
Road No.10, Udhna, SURAT, GUJARAT-394210
VERSUS
Commissioner of CGST & Central Excise .... Respondent
Surat Commissionerate, New Central Excise Building, Opp. Gandhi Baugh, Chowk Bazar, Surat - 395001 APPEARANCE :
Mrs. Puloma Dalal, Chartered Accountant for the Appellant Shri Anand Kumar, Superintendent (AR) for the Revenue.
CORAM:
HON'BLE DR. AJAYA KRISHNA VISHVESHA, MEMBER (JUDICIAL) DATE OF HEARING : 06.03.2025 DATE OF DECISION : 01.07.2025 FINAL ORDER NO. 10516/2025 DR. AJAYA KRISHNA VISHVESHA :
This appeal is directed against the Order-in-Appeal dated 11.12.2017 passed by learned Commissioner (Appeals), Central Excise & CGST, Surat through which the learned Commissioner rejected the appeal of the appellant and upheld the Order-in-Original passed by Deputy Commissioner, Service Tax, Surat dated 08.11.2016.
2. The facts of the case, in brief, are that the appellant is registered under the category of Business Auxiliary Service and holding service tax registration. The appellant filed a refund claim for Rs. 35,51,943/- along with interest on 10.11.2004 in Form R under section 11B of the Central excise Act,1944. This amount included the amount of Service Tax of Rs. 2
Service Tax Appeal No. 11239 of 2018-SM 34,19,071/-on the commission earned on the activities of marketing and distribution of mutual funds, paid under protest, for the period from August 2003 to March 2004, and the amount of Rs.1,32,872/-which was also paid as interest on delayed payment of service tax.
2.1. The appellant paid the service tax along with interest under protest in view of Circular No. 66/15/2003. Later, the appellant applied for refund as the said Circular was struck down by the Hon'ble High Court of Andhra Pradesh in case of Karvy Securities Limited vs. Union of India, coming to the conclusion that the assessee is eligible for the refund claim. The said refund claim was rejected by Additional Commissioner vide order dated 13.12.2005 relying upon the clarification given by the Board under CBEC Circular No. 66/15/2003 dated 05.11.2003. Aggrieved by the said order, the noticee preferred appeal before the Commissioner (Appeals) The Commissioner (Appeals) came to the conclusion that the assessee is eligible for refund claim and set aside the impugned order and remanded the matter for de novo adjudication.
2.2. Being aggrieved by the said order-in-appeal, the department preferred appeal before the CESTAT. The Tribunal vide order dated 17.10.2013 rejected the appeal of the Revenue, granted the refund on merits and upheld the decision of remanding back the case by the first Appellate Authority to the Adjudicating Authority subject to examination of "doctrine of unjust enrichment". In view of the order of this Tribunal, the Assistant Commissioner, Division IV, Surat-1 Commissionerate vide order dated 28.10.2015 granted the said refund to the appellant. The noticee demanded interest on delayed refund under section 11BB of the Central Excise Act, 1944 from the end of three months from the date of filing the application i.e. 15.01.2016 for refund. The adjudicating authority in the light of provisions of Section 11BB of the Central Excise Act, 1944 and the judgement of Larger Bench of CESTAT, Delhi in Case of Coronation Spinning India vs Commissioner of Customs Kolkata- 2004 (170) ELT 143 (Tr. LB), according to which the interest cannot be allowed for the period earlier than the date allowed by the appellate authority. Thus, the adjudicating authority ordered to pay the interest from the date of expiry of three months from the date of Tribunal's order. The interest of Rs.3,97,039/- under Section 11BB of Central Excise Act, 1944 for the period starting from 16.01.2014 to 26.11.2015 was granted as per order of Tribunal passed on 17.10.2013. 3
Service Tax Appeal No. 11239 of 2018-SM
3. Being aggrieved by the order passed by the Adjudicating Authority the appellant preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) by going through the provisions of Section 11BB of the Central Excise Act, 1944 and explanation No. B(ec) of Section 11B of the Act and judgment of Larger Bench of the CESTAT in Indian Thermoplastics Limited vs. Commissioner of Customs, Kolkata - 2004 (164) EKT 156 (Tri. LB) and the judgment of CESTAT in case of Coronation Spinning India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB) came to the conclusion that the relevant date for computation of interest on the tax to be refunded to the assessee shall be the date immediately after expiry of three months from the date of receipt of refund final order of the Tribunal and interest cannot be allowed for the period earlier than the date allowed by the appellate authority. The learned Commissioner (Appeals) held that the order in this case is passed by Tribunal on 17.10.2013 hence the interest will be paid from the date 16.01.2014 and he rejected the appeal and confirmed the order passed by the Adjudicating Authority.
3.1 Feeling aggrieved from the impugned order dated 11.12.2017, the present appeal has been filed by the appellant before this Tribunal.
4. Learned Counsel for the appellant argued that the issue of interest on refund involved in this case is covered by the benchmark decision of the Hon'ble Supreme Court in the case of Ranbaxy Laboratories Limited vs. Union of India - 2011-TIOL-105-SC-CX. The learned Counsel for the appellant submitted that the issue of payment of interest on delayed refund of service tax is no more res-integra in view of the judgment in Ranbaxy case. In Ranbaxy case the Hon'ble Supreme Court has held that it is manifest from the afore extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of 4 Service Tax Appeal No. 11239 of 2018-SM three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section, the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. 4.1 The learned Counsel for the appellant also argued that the Revenue relied upon the Larger Bench decision in the case of Indian Thermoplastics Limited vs. Commissioner of Customs, Kolkata - 2004 (164) ELT 156 (Tri. LB) and the decision in case of Coronation Spinning India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB) and merely reproduced the provisions of Section 11BB of Central Excise Act, 1944 without discussing or interpreting the said provisions or the ratio 5 Service Tax Appeal No. 11239 of 2018-SM in the cited decisions as to why the Appellants were not eligible to claim the interest as claimed from the expiry of three months from the date of receipt the application of the refund claim on 10.11.2004. The Revenue has averred in the impugned order that umpteen number of judgments were gone through by him. Despite this, the Revenue failed to deliver a speaking order as to why the Apex Court's decision in the case of Ranbaxy Laboratories Limited (supra) which became the law of the land was not considered by it. 4.2 The learned Counsel for the Appellant also argued that the ratio of judgment in Ranbaxy Laboratories Limited case squarely applies to the facts of the present case as the application for payment of service tax made under protest was made on 10.11.2004. This was held to be not liable to be paid by the Tribunal. Hence, the refund granted vide Tribunal's order dated 22.10.2013 ought to have been paid with applicable interest. 4.3 The Appellants also argued that in Commissioner of Central Excise & ST, Hyderabad-I vs. Eveready Industries India Limited- 2016 (343) ELT 567 (Tri-Bang) the Tribunal in no ambiguous terms, distinguished both the decisions relied upon by department in the present case i.e. Coronation Spinning India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB) and Indian Thermoplastics Pvt. Limited vs. Commissioner 2004 (164) ELT 156 (Tri-LB) and the Tribunal followed Hon'ble Supreme Court's dictum in Ranbaxy Laboratories Limited case (supra). Learned Counsel for the appellant also argued that Hon'ble Gujarat High Court and Ahmedabad bench of Tribunal has relied upon the judgment of Hon'ble Supreme Court in Ranbaxy Laboratories Limited and held that interest is payable from the date of application of refund claim.
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Service Tax Appeal No. 11239 of 2018-SM 4.4 Learned Counsel for the appellant prays that the impugned order passed by learned Commissioner (Appeals) may be set-aside and the appeal may be allowed.
5. The learned AR for the department reiterated the impugned order passed by learned Commissioner (Appeals) and argued that impugned order is based on Section 11BB of the Central Excise Act, 1944 and the judgment of Larger Bench in the case of Indian Thermoplastics Limited vs. Commissioner of Customs, Kolkata - 2004 (164) ELT 156 (Tri. LB) and the decision in case of Coronation Spinning India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB). He has argued that in the light of the provisions of Section 11BB of Central Excise Act, 1944 and the principle of law laid down in Indian Thermoplastics Limited case as cited above, it is established that interest shall be payable from the date of expiry of three months from the date of Tribunal's order. In the instant case, the appellant is not eligible to get interest from the date of application of refund as the order in this case was passed by Tribunal on 17.10.2013 and the interest will be paid from 16.01.2014 and hence there is no error or illegality in the order passed by learned Commissioner. He prayed that the appeal may be rejected.
6. I have heard the arguments of learned Counsel for the appellant and the learned AR for the department and perused the record.
7. After hearing both the parties, I am of the view that the learned Commissioner (Appeals) has erred in passing the impugned order by following the judgment of Larger Bench in the case of Indian Thermoplastics Limited vs. Commissioner of Customs, Kolkata - 2004 (164) ELT 156 (Tri. LB) and the decision in case of Coronation Spinning 7 Service Tax Appeal No. 11239 of 2018-SM India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB). When there is a judgment of Hon'ble Supreme Court in this field delivered in the case of Ranbaxy Laboratories Limited vs. Union of India - 2011-TIOL-105-SC-CX, the Commissioner should have followed the ruling in Ranbaxy case and not the orders passed by Tribunal in the case Indian Thermoplastics Limited vs. Commissioner of Customs, Kolkata
- 2004 (164) ELT 156 (Tri. LB) and in case of Coronation Spinning India vs. Commissioner of Customs, Kolkata - 2004 (170) ELT 143 (Tri. LB) because the order of Larger Bench is against the ratio decidendi of Ranbaxy case Under article 141 of the India Constitution, the law declared by Hon'ble Supreme Court of India is the law of land and it is in force and applicable throughout the territory of India and it cannot be ignored on the pretext that the Larger Bench of the Tribunal has given the ruling otherwise. 7.1 In Ranbaxy case (supra), the Hon'ble Supreme Court has clearly held that it is manifest from the afore extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section, the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made 8 Service Tax Appeal No. 11239 of 2018-SM under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable.
7.2 Therefore, in view of the law laid down by Hon'ble Supreme Court in Ranbaxy case (supra), I am of the considered view that the order passed by the Adjudicating Authority and the Commissioner (Appeals) is not sustainable and are liable to be set-aside. Consequently, the appeal is allowed. The impugned orders passed by the Commissioner (Appeals) and the Adjudicating Authority are set-aside. The case is remanded back to the first Adjudicating Authority with direction to decide the refund application of the appellant in the light of the law laid down by Hon'ble Supreme Court in Ranbaxy Laboratories Limited vs. Union of India - 2011-TIOL-105-SC- CX.
(Order pronounced in the open court on 01.07.2025) (Dr. Ajaya Krishna Vishvesha) Member (Technical) KL