Case Law Details
Green Valley Industries Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
The brief facts related to the case at hand are that the Appellant had succeeded in its appeal before this Tribunal vide FO 75527/2020 dated 22/10/2020 which had resulted in refund of Rs.78,16,265/-which was deposited by the Appellant during the investigation proceedings before the issuance of the Show Cause Notice on various dates i.e. 04/03/2012, 30/06/2012 and 02/02/2012.
Post the above order dated 22/10/2020, the Appellant filed a letter seeking refund of the amount along with interest from the date of making payment of amount till the date of refund. The Adjudicating authority vide Order-in-Original (OIO) dated 24/03/2021 allowed the refund of the amount, however no interest was paid by the Adjudicating authority on the ground that the payment of interest under section 35FF is applicable to delayed refund of amount deposited under proviso to section 35F of the Central Excise Act, 1944.
Being aggrieved by the said OIO dated 24/03/2021, the Appellant preferred an Appeal before the First Appellate Authority. The Ld.Commissioner (Appeals) vide Order dated 02/09/2021 allowed payment of interest for 35 days of delay but not from the date of payment as sought by the Appellant. Hence the present appeal.
From the facts of the case that it is not in dispute that the Appellant had deposited the amounts as refunded during investigation proceedings which was later on set aside by this Tribunal in part leading to the captioned refund of duty.
CESTAT, Kolkata bench, find that in similarly placed situation, the Coordinate Bench of the Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. The Commissioner, Central Goods & Service Tax, Noida in EXCISE APPEAL NO. 70628 OF 2019 vide Final Order 70180-70181 / 2021 dated 25/05/2021 has passed a detailed order after analyzing various provisions in this regard.
Thus in light of the view taken by this Tribunal in Parle Agro (supra), it is my considered view that the Appellant is entitled to interest @ 12% from the date of deposit till the date of receipt of such refund. The order of the First Appellate Authority is modified to the above extent. The lower authorities are directed to compute the eligible interest as above and pay the same within four weeks from the date of communication of this order.
FULL TEXT OF THE CESTAT KOLKATA ORDER
This is an appeal filed by the Appellant against the Order-in-Appeal Number 08/SH/CE(A)/GHY/2021 dated 02/09/2021 passed by the Ld.Commissioner of CGST & C. Ex. (Appeals), Guwahati by which he has allowed the interest on delayed refund of excise duty for a period of 35 days i.e. period after expiry of three months from the date of communication of the order of the Tribunal dated 22.10.2020, till the date of refund i.e. 24.03.2021 and not from the date of making deposit as was claimed by the Appellant throughout the adjudication as well the appellate proceedings. It is also the grievance of the Appellant that the interest is payable @ 12% p.a. and not @ 6% p.a.
2. The brief facts related to the case at hand are that the Appellant had succeeded in its appeal before this Tribunal vide FO 75527/2020 dated 22/10/2020 which had resulted in refund of Rs.78,16,265/-which was deposited by the Appellant during the investigation proceedings before the issuance of the Show Cause Notice on various dates i.e. 04/03/2012, 30/06/2012 and 02/02/2012.
3. Post the above order dated 22/10/2020, the Appellant filed a letter seeking refund of the amount along with interest from the date of making payment of amount till the date of refund. The Adjudicating authority vide Order-in-Original (OIO) dated 24/03/2021 allowed the refund of the amount, however no interest was paid by the Adjudicating authority on the ground that the payment of interest under section 35FF is applicable to delayed refund of amount deposited under proviso to section 35F of the Central Excise Act, 1944.
4. Being aggrieved by the said OIO dated 24/03/2021, the Appellant preferred an Appeal before the First Appellate Authority. The Ld. Commissioner (Appeals) vide Order dated 02/09/2021 allowed payment of interest for 35 days of delay but not from the date of payment as sought by the Appellant. Hence the present appeal.
5. Shri Ankit Kanodia, Ld. Advocate appearing for the Appellant produced catena of judgments of the Tribunal holding that payment of interest should be calculated from the date of deposit in such cases. He relied on the following judgments in his favour:
M/s J K CEMENT WORKS vs. COMMISSIONER, CENTRAL EXCISE, CENTRAL GOODS AND SERVICE TAX, UDAIPUR 2021-TIOL-208-CESTAT-DEL
M/s GLOSSY COLOUR AND PAINTSVs COMMISSIONER OF CENTRAL TAX2021-TIOL-414-CESTAT-DEL
M/s HITESH INDUSTRIES vs. CCE, New Delhi 2021-TIOL-05-CESTAT-DEL
RIBA TEXTILES LTD vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, PANCHKULA, 2020-TIOL-932-CESTAT-CHD
M/s Marshall Foundry &Engg. Pvt. Ltd. in Appeal No. E/6091660920/2019
M/s. Parle Agro Pvt. Ltd. Vs. The Commissioner, Central Goods & Service Tax, Noida in EXCISE APPEAL NO. 70628 OF 2019 vide Final Order 70180-70181 / 2021 dated 25/05/2021
Gautam Industries- FINAL ORDER NO. 60014-60015/2022 dated 13/01/2022 – Tri. Chandigarh
M/s BATRA HENLAY CABLES- FINAL ORDER NO. 52118/2021 dated 05/01/2022- Tri.Del
M/s TEHRI PULP AND PAPER LTD- FINAL ORDER NO. 70003/2022 dated 04/01/2022-Tri.All
M/s Jovex International- FINAL ORDER NO. 52002/2021 dated 25/11/2021- Tri.Del
6. Shri K. Chowdhury, Ld. Authorized Representative for the Department reiterated the findings of the lower authorities. He also stated that all the above case laws relied upon by the Appellant does not lay the correct position of law. He emphasized on the judgment of the Hon’ble Supreme Court in the case of Gujarat Fluro Chemicals [2013 (296) ELT 433 SC] which as per the Ld. Authorized Representative has distinguished the judgment of the Hon’ble Supreme Court relied upon in the above judgments of the Tribunal i.e. 2006-TIOL-07-SC-IT.
7. Heard both sides through video conferencing and perused the appeal records.
8. I find from the facts of the case that it is not in dispute that the Appellant had deposited the amounts as refunded during investigation proceedings which was later on set aside by this Tribunal in part leading to the captioned refund of duty.
9. I find that in similarly placed situation, the Coordinate Bench of the Tribunal in the case of M/s. Parle Agro Pvt. Ltd. Vs. The Commissioner, Central Goods & Service Tax, Noida in EXCISE APPEAL NO. 70628 OF 2019 vide Final Order 70180-70181 / 2021 dated 25/05/2021 has passed a detailed order after analyzing various provisions in this regard. To quote:
“24. Excise Appeal No. 70628 of 2019 has been filed by the appellant for a relief that interest at the rate of 12% should be granted to the appellant from the date of deposit of the amount instead of 6%, as ordered by the Commissioner (Appeals). In this connection, learned counsel for the appellant has placed reliance upon the following decisions:
(i) Sandvik Asia Ltd. Commissioner of Income Tax-I, Pune5.
(ii) Pace Marketing Specialities Commissioner of Central Excise6.
(iii) Ebiz Com Pvt. Ltd. vs. Commissioner of Central Excise, Customs & S.T.7
(iv) Riba Textiles Ltd Village Chidana, Tehsil GohanaDistSonepat, Haryana Commissioner of Central Excise and Service Tax Panchkula8.
25. Before adverting to the aforesaid decisions relied upon by the learned counsel for the appellant, it would be appropriate to refer to the provisions contained in the Central Excise Act 1944,relating to refund.
26. Section 11A of the Excise Act relates to recovery of duties not levied or not paid or short levied or short paid. It provides that in such cases, the central excise officer shall serve a notice on the person chargeable with duty requiring him to show cause why he should not pay the amount of duty alongwith interest payable thereon under section 11AA.
27. Section 11AA deals with interest on delayed payment of duty. It provides that the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in subsection (2). The interest rate that has been specified in sub-section (2) is not below 10% and not exceeding 36% per annum as the Central Government, by notification in the Official Gazette fix.
28. Section 11B of the Excise Act deals with claim for refund of duty and interest, if any, paid on such duty. It provides that any person claiming refund of any duty of excise and interest may make an application for such refund of duty and interest.
29. Section 11BB provides for interest on delayed refund. It states that if any duty ordered to be refunded under sub-section (2) of section 11B is not refunded within three months from the date of receipt of the application, than the applicant shall be entitled to interest after the expiry of three months from the date of receipt of the application at such rate not below 5% and not exceeding 30% as may be notified by the Central Government in the Official Gazette.
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.
34. To be able to have some guidance regarding the rate of interest in case revenue deposit has to be refunded, the aid of the interest provisions under section 11AA (which deals with interest on delayed payment of duty), section 11BB (which deals with interest on delayed refunds under section 11B(2) and section 11DD (which deals with interest on the amount collected in excess of the duty) can be taken.
35. The Notification issued under section 11AA of the Excise Act provides interest at the rate of fifteen per annum. The notification is reproduced below:
Notification No. 15/2016-C.E. (N.T.), dated 1-3-2016
Notification Under Section 11AA
Rate of interest on delayed payment of duty (w.e.f. 1-4-2016). – In exercise of the powers conferred by section 11AA of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 5/2011 – Central Excise (N.T.), dated the 1st March, 2011 published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide, number GSR 136(E), dated the 1st March, 2011, except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at fifteen per cent per annum the purpose of the said section.
2. This notification shall come into force from the 1st day of April, 2016.
36. The Notification issued for under section 11BB provides interest at the rate of six per cent per annum. It is reproduced below:
Notification No. 67/2003-C.E. (N.T.), dated 12-9-2003
Notification Under Section 11BB
Interest @ 6% per annum on delayed refunds. – In exercise of the powers conferred by section 11BB of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 17/2002-Central Excise (N.T.), dated the 13th May, 2002 [GSR 353(E), dated the 13th May, 2002], except as respect things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at six per cent per annum for the purpose of the said section.
37. The Notification issued under section 11DD provides interest @ of 15% per annum on the amount collected in excess of duty. It is reproduced below:
M.F. (D.R.) Notification No. 68/2003-C.E. (N.T.), dated 12-9-2003
Notification Under Section 11DD
Interest @ 15% per annum on amounts collected in excess of duty. – In exercise of the powers conferred by section 11DD of the Central Excise Act, 1944 (1 of 1944) the Central Government hereby fixes the rate of interest at Fifteen percent per annum for the purpose of the said section.
38. It would also be to pertain to refer to the Notification issued under section 11AB of the Excise Act, as it existed prior to 08.04.2011. It provides interest @18% per annum. The said Notification is reproduced below:
“Notification No. 6/2011-C.E. (N.T.), dated 1-3-2011
Notification Under Section 11AB
Rate of interest on delayed payment of duty. – In exercise of the powers conferred by section 11AB of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 66/2003-Central Excise (N.T.), dated the 12th September, 2003 [GSR (E), dated the 12th September, 2003], except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at eighteen percent per annum for the purpose of the said section.
This notification shall come into force from the 1st day of April, 2011.”
39. In this connection reference can also made to the decisions of the Allahabad High Court in Pace Marketing Specialities and Com Private Limited, wherein after making reference to the decision of the Supreme Court in Sandvik Asia Ltd., the High Court granted interest at the rate of 12% per annum in matters relating to refund of amount deposited during investigation and adjudication.
40. In Riba Textiles, the Tribunal also granted interest at the rate of 12% on refund of amount deposited during investigation and at the time of entertaining the stay application.
41. In view for the aforesaid decisions, and the fact that the rate of interest varies from 6% to 18% in the aforesaid Notifications issued under sections 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant of interest @12% per annum seems to be appropriate.
42. Thus, for the reason stated above, Excise Appeal No. 70628 of 2019 is allowed and the order dated 28.05.2019, passed by the Commissioner (Appeals) is modified to the extent that interest shall be granted to the appellant @12% instead of @6% from the date of deposit till the date of payment. Excise Appeal No. 70674 of 2019 filed by the Principal Commissioner for setting aside the order dated 28.05.2019, passed by the Commissioner (Appeals) is dismissed.”
10. As regards the reliance of the Ld. Authorized Representative for the Department on the judgment of the Hon’ble Supreme Court in Gujarat Fluro Chemicals [2013 (296) ELT 433 SC], I am of the view that the said judgment distinguishes the judgment in Sandvik Asia (supra) only to the extent of payment of interest on delayed payment of interest, which is not the subject matter of dispute at all. Hence the said judgment is not applicable to the case at hand.
11. Thus in light of the view taken by this Tribunal in Parle Agro (supra), it is my considered view that the Appellant is entitled to interest @ 12% from the date of deposit till the date of receipt of such refund. The order of the First Appellate Authority is modified to the above extent. The lower authorities are directed to compute the eligible interest as above and pay the same within four weeks from the date of communication of this order.
Thus the appeal is allowed with consequential relief as above.
(Order pronounced in the open court on …11th April,2022.)
