Case Law Details

Case Name : Capital Ispat Ltd. Vs Commissioner (CESTAT Delhi)
Appeal Number : Excise Appeal No. 51698 of 2022
Date of Judgement/Order : 17/11/2022
Related Assessment Year :

Capital Ispat Ltd. Vs Commissioner (CESTAT Delhi)

CESTAT Delhi held that amount deposited prior to adjudication but not held as payable under SVLDR Scheme is liable to be refunded back to the appellant.

Facts- During the course of adjudication proceedings, the appellant had deposited INR 17,38,023/- towards interest. However, post introduction of ‘Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019’ the interest of INR 17,38,023/- was not required to be paid and hence it was ordered that the said amount cannot be considered towards duty payment.

Accordingly, the appellant filed the refund claim of the said amount. However, the same was rejected by the Adjudicating Authority.
Being aggrieved, the appellant is before the Tribunal.

Conclusion- In the case of M/s. Tarkeshwar Das Construction Company vs CCE & CGST, Jodhpur (Rajasthan) it was held that if the amount deposited prior to adjudication have not been adjusted at the adjudication stage nor at the stage of settlement under SVLDR Scheme, the said amount is the amount lying with the Department as Revenue deposit. The same has to be refunded. It was also held in this decision that the limitation as provided under section 11 B of Central Excise Act, 1944 is also not applicable to such Revenue deposit.

In the light of entire discussion, it is held that the amount in question is eligible for refund on merits as well as on account of limitation. The same is held to have been wrongly rejected. Order under challenge is accordingly hereby set aside. Appeal stands allowed.

FULL TEXT OF THE CESTAT DELHI ORDER

The appellant herein is engaged in the manufacture of MS Angle, channel, flats. A refund claim was filed by the appellant for Rs.17,38,023/- in respect of interest deposited vide challan No. 00064 dated 11.07.2018. The appellant was earlier issued a show cause notice No. 121/2013 dated 4.09.2015 vide which the duty amounting to Rs.6,51,66,787/- was demanded from the appellant alleging the evasion of Central Excise duty by way of suppression of receipt of raw material, of actual production leading to clandestine clearance of their final product. Pursuant thereto the appellant deposited Rs. 56,75,000/- voluntarily (Rs.15,00,000/- from Cenvat Credit account and Rs. 41,75,000/-as cash). Being aggrieved of the said show cause notice dated 4.09.2015 the application before Settlement Commission New Delhi was filed in terms of Section 32 E of Central Excise Act, 1944. The said application was rejected vide Final Order No. 3509-3510/CE/2019-R dated 30.04.2019 and the matter was sent back to the Adjudicating Authority. The appellant also deposited Rs. 35,72,230/- inclusive of amount of interest of Rs.17,38,023/- on 11.7.2018. Thus, the duty liability of Rs. 75,09,206/- (Rs.56,75,5000/- + Rs.18,34,207) was voluntarily accepted and deposited by the appellant. The interest amounting to Rs.17,38,023/- was also voluntarily deposited by the appellant against their anticipated liability towards the demand of duty for Rs.6,51,66,787/- in the said show cause notice.

2. On 21.08.2019 Central Government introduced the “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.” (hereinafter referred as SVLDRS). The appellant filed application against the order under said Scheme on 24.12.2019 for resolution of dispute initiated vide show cause notice dated 04.09.2015. SVLDR Scheme Form No. 3 dated 19.3.2020 was issued in favour of the appellant with the remarks:-

“only an amount of Rs. 75,09,207/- has been verified in this case The amount of Rs.17,38,023/- has not been paid towards duty and the same has been deposited as interest as verified from the application filed in the Settlement Commissioner by the declarant. As such, the said amount cannot be considered towards duty payment.”

Pursuant thereto that the appellant filed a refund claim of the said amount of Rs.17,38,023/- contending that the said amount was not considered as the duty liability of the appellant. However, department vide Show Cause notice No. 7477 dated 21.08.2020 has proposed the rejection of the said refund claim. The said proposal has initially been confirmed and the refund claim has been rejected by the Original Adjudicating Authority vide Order-in-Original No. 11/2020-21 dated 24.09.2020. The appeal thereof has been rejected vide Order-in-Appeal No. 146/2021 dated 22.12.2021. Being aggrieved, the appellant is before this Tribunal.

3. I have heard Shri B L Yadav, learned Counsel for the Appellant and Shri Ishwar Charan, learned Authorised Representative for the Department.

4. Learned Counsel for the appellant submitted that refund claim has wrongly been held to be barred by time. Reliance has been placed on the decisions of Hon’ble High Court of Punjab and Haryana in the case of Schlumberger Solutions Pvt. Ltd. reported as [2021 (12) TMI 184 (P&H)] wherein it was held that where the whole amount has been paid as tax and not as tax, interest etc. the department would have allowed deductions of the whole amount and interest would have been waived. Learned Counsel also relied upon the ratio of decision of this Tribunal in the case of M/s. M B Construction reported as [2022 (1) TMI 132 CESTAT-NEW DELHI] wherein it was held that amount deposited under wrong head was deductible from the amount specified by the Designated Committee. It was held that where such amount has not been deducted under SVLDR Scheme, same has to be treated as deposit and be refunded with interest from the date of deposit to the date of refund.

4.2 It is submitted that the amount of pre-deposit under section 124(2) of SVLDR Scheme includes any amount paid at any stage during the appellate proceedings or during the inquiry / investigation/audit and the same should have been deducted when issuing the statement indicating the amount payable by the declarant under SVLDR Scheme. It is submitted that as per SVLDR Scheme Form No. 3, generated on 19.3.2020 only an amount of Rs. 75,09,207/- out of their total pre deposit of Rs.92,47,230/- (Rs. 75,09,207/- duty + Rs. 17,38,023/- as interest) under SVLDR Scheme was adjusted while showing an amount of Rs.2,50,74,186/- as estimated amount payable. Thus it is clear that the amount of Rs. 17,38,023/- deposited by the appellant was not adjusted. The said amount of pre-deposit is against no liability of the appellant and as such, is nothing but illegal deposit with the Government. Same is liable to be refunded to the appellant.   The refund therefore, has wrongly been rejected. Learned Counsel has prayed that the order of Commissioner (Appeals) be set aside and the appeal be allowed.

5. While rebutting these submissions, learned authorised representative has mentioned that the appellant had applied under SVLDR Scheme, one time measure for recalculation of pending dispute of Excise and Service tax. The SVLDR Scheme Form No. 3 was issued to the appellant pursuant to provision of section 124(2) read with section 130 (2) of Finance Act, 2019. The amount in question is not at all refundable. In addition, the refund was to be claimed within one year from the date of deposit. Application for refund has been filed beyond the statutory period of one year. Hence, there is no infirmity when the Commissioner (Appeals) has rejected the refund not only on merits but also on the ground of limitation. Appeal is accordingly prayed to be dismissed.

6. Having heard the rival contentions and perusing the entire record, I observe that following are the admitted facts:-

(i) An amount of Rs.6,51,66,787/- was proposed to be recovered from the appellant as his duty liability vide a show cause notice dated 4.9.2015.

(ii) The appellant himself assessed his duty liability for Rs.75,09,207/- and deposited Rs.56,75,5000/- initially and later on deposited Rs.35,72,230/- (Rs.18,34,207 plus Rs.17,38,023/-as interest).

(iii) The appellant moved an application before Settlement Commission which was rejected on 30.4.2019 and the matter was sent back to the Adjudicating Authority.

(iv) Prior the matter could be taken up by the Adjudicating Authority, the appellant applied under SVLDR Scheme on 24.12.2019.

(v) Form SVLDR-1 as issued against the duty amount of 6,51,66,787/- after adjusting pre-deposit/ other deposit of duty of Rs.92,47,230/- already deposited by appellant indicated an amount as Rs.2,33,36,163.50 as estimated amount payable.

(vi) In SVLDR Scheme Form No. 3 dated 19.3.2019 after deducting only Rs. 75,09,207/- out of total pre-deposit of Rs.92,47,230/- an amount of Rs.2,50,74,186/- was shown as estimated amount payable. It was specifically mentioned therein that amount of Rs. 17,38,023/- is not verified as duty but as interest.

(vii) The aforesaid amount of Rs.2,50,74,186/- stand deposited by the appellant on 30.6.2020.

7. The aforesaid observations and undisputed facts reveal that the amount of Rs.17,38,023/- deposited by the appellant as interest continued to be deposited with the Department over and above the final estimation of his duty liability under SVLDR Scheme. I further observe that the Adjudicating Authority have rejected the refund claim on the ground that the amount of interest cannot be called as tax dues in terms of section 123 of SVLDR Scheme / Finance Act, 2019 and same is otherwise not refundable in terms of proviso to section 124(2) and section 130 of the said Scheme/ Act. I also observe that the appellant has mentioned that while estimating the duty liability under SVLDR Scheme, it was not merely the tax dues but any amount deposited by the appellant that should have been deducted. The amount of Rs.17,38,023/- is mentioned to be such amount as was paid along with the amount of self assessed duty as pre deposit.

8. The department also has acknowledged that Rs.17,38,023/-is the amount of interest in addition to amount of duty estimated under SVLDR Scheme. But still the refund thereof has been rejected in terms of Section 124 (2) of the Finance Act, 2019.

9. Section 124 sub section 2 reads as follows:

(2) The relief calculated under sub-section (l) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant:

10. A bare perusal makes it clear that provision is not talking about tax dues only as defined under section 123 of the Finance Act, 2019 to be deducted while estimating duty amount to be deposited. But it is talking about any such amount which has already been deposited by the assessee which includes definitely the amount paid as interest. Hence, I am of the opinion that the impugned amount was mandatorily to be deducted from the amount of duty calculated to arrive at estimated amount payable. As apparent from the SVLDR Scheme Form No.3, admittedly the amount of impugned refund has not been deducted while calculating the estimated amount payable by the appellant. It is well settled principle well enshrined under Constitution of India itself Article 362 that no tax can be collected without validity of law. Since the appellant has paid the entire estimated amount payable amount of Rs.17,38,023/- becomes such a deposit with the department for which the Department of Revenue had not authority to retain. The Adjudicating Authority below have relied upon the proviso (B) to section 124(2), of Finance Act, 2019 which is as follows:-

“(B) Provided that if the amount of pre deposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund.”

11. A bare perusal makes it clear that such an amount as is not required if deposited and amount is found in excess to the amount payable by the declarant, same shall not be refunded. The amount payable by the declarant has to be calculated in terms of Section 124(2) i.e. by making a deduction of any amount deposited at any stage prior. From the entire above discussion, it becomes abundantly clear that amount in question of Rs.17,38,023/- was to be deducted till the stage of SVLDRS Form No. 2 but was not deducted even at the stage of SVLDRS Form No. 3. Hence, the said amount cannot be covered under proviso to Section 124(2). Thus the said provision is held to have wrongly been applied while rejecting the impugned refund. Similarly, any amount paid under section 130 of Finance Act, 2019 is the amount towards the tax dues as defined under section 123 of the Finance Act, 2019. Hence, it is held that same section 130 has also been wrongly invoked while rejecting the impugned refund.

12. I draw my support from the decision of this Tribunal in the case of M/s. Tarkeshwar Das Construction Company vs CCE & CGST, Jodhpur (Rajasthan) reported as [2022 (5) TMI 10 – CESTAT New Delhi] wherein it was held that if the amount deposited prior to adjudication have not been adjusted at the adjudication stage nor at the stage of settlement under SVLDR Scheme, the said amount is the amount lying with the Department as Revenue deposit. The same has to be refunded. It was also held in this decision that the limitation as provided under section 11 B of Central Excise Act, 1944 is also not applicable to such Revenue deposit. The issue of time bar in the case of Revenue deposits has also been considered by Hon’ble Apex Court in the case of Sandvik Asia Ltd. reported as [2006 (196) ELT 257 (SC)] holding the assessee entitled for interest along with the refund of the amount which he was not liable to pay to the Department.

13. I also draw support from the decision in the case of M/s. Parle Agro Pvt. Ltd. vs CGST, NOIDA reported as (2021-TIOL-306- CESTAT-ALL) which entitles the assessee for getting the refund along with the interest that too from the date of deposit of said amount. I also endorse the following findings:

“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 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 of interest has not been prescribed, when revenue deposit is required to be refunded.”

14. In the light of entire discussion, it is held that the amount in question is eligible for refund on merits as well as on account of limitation. The same is held to have been wrongly rejected. Order under challenge is accordingly hereby set aside. Appeal stands allowed.

(Pronounced in the open court on 17-11- 2022 )

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