Jalan Castings Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Allahabad)
CESTAT Allahabad held that tribunal has no jurisdiction to prescribe the rate of interest which is prescribed by the Government of India in terms of Notification issue under Section 11BB of the Central Excise Act, 1944.
Facts- The appellant has opted to carry out his operations in terms of Section 3A of the Central Excise Act, 1944 as inserted by the Finance Act, 1997 read along with the Induction Furnace Capacity Determination Rules, 1997 and Rule 96 ZO of the Central Excise Rules, 1944.
Undisputedly in the present case the application for the refund has been made by the appellant. This application for the refund was rejected by the Assistant Commissioner of Central Excise. Commissioner (Appeals) upheld the order of the Assistant Commissioner.
The entire proceedings in the matter are in respect of Application for Refund filed by the appellant u/s. 11B of the Central Excise Act, 1944 on 06.09.2010. Revenue has throughout treated the application to be made in u/s. 11B and even the order dated 19.03.2019 allowed the refund in favour of appellant holding that the refund is to be sanctioned in favour of the appellant as per the section 11B of the Central Excise Act, 1944.
Conclusion- Supreme Court in the case of Northern Plastics held that the Appellate Tribunal CEGAT is a creature of statute and derives its jurisdiction and powers only from the statute creating it and not outside the same.
Held that tribunal has no jurisdiction to prescribe the rate of interest which is prescribed by the Government of India in terms of Notification issue under Section 11BB of the Central Excise Act, 1944.
Accordingly the appeal filed by the appellant is to be partly allowed to extent of interest due to them in terms of section 11BB taking the date of filing the application for refund as 06.09.2010.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
This appeal is directed against the order in appeal No 182/CE/Alld/2019, dated 21.06.2019 of the Commissioner (Appeal) CGST & Central Excise, Allahabad. By the impugned order following has been held:-
“4.1 I have gone through the records .. It is observed that the adjudicating authority, vide the impugned Order has allowed the refund, in favour of the appellant, in pursuance of aforesaid Final Order No A/71947/2018-EX (DB) dated 07.08.2018 of the Hon’ble CESTAT, Allahabad, wherein the appeal of the appellant was allowed with consequential benefit, holding that the compounded levy scheme is an independent scheme & general provisions are not applicable and excess duty paid under the compounded levy scheme is to be treated as excess deposit. It is further observed that the Hon’ble Supreme Court in the case of Shri Bhagwati Steel Rolling Mills vs Commissioner of C. Ex [2015 (326) ELT 209 (SC)], inter alia, held at para 30 to 31, as under.
30. On merits, the matter is no longer res integra. A Constitution Bench decision of this Court in VVS Sugars v. Government of A.P., 1999 (4) SCC 192, has held, following two earlier judgments of this Court, as follows :-
“This Court in India Carbon Ltd. v. State of Assam [(1997) 6 SCC 479] has held, after analysing the Constitution Bench judgment in J.K. Synthetics Ltd. v. CTO [(1994) 4 SCC 276] that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. There being no substantive provision in the Act for the levy of interest on arrears of tax that applied to purchases of sugarcane made subsequent to the date of commencement of the amending Act, no interest thereon could be so levied, based on the application of the said Rule 45 or otherwise.”
31. Applying the Constitution Bench decision stated above, it will have to be declared that since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96ZO, 96ZP and 96ZQ cannot do so and therefore, on this ground the appellant in Shree Bhagwati Steel Rolling Mills has to succeed. On this ground alone therefore, the impugned judgment is set aside. That none of the other provisions of the Central Excise Act can come to the aid of the Revenue in cases like these has been laid down by this Court in Hans Steel Rolling Mill v. CCE, (2011) 3 SCC 748 = 2011 (265) E.L.T. 321 (S.C.) as follows :
“13. On going through the records it is clearly established that the appellants are availing the facilities under the compound levy scheme, which they themselves opted for and filed declarations furnishing details about the annual capacity of production and duty payable on such capacity of production. It has to be taken into consideration that the compounded levy scheme for collection of duty based on annual capacity of production under Section 3 of the Act and the 1997 Rules is a separate scheme from the normal scheme for collection of Central excise duty on goods manufactured in the country. Under the same, Rule 96-ZP of the Central Excise Rules stipulate the method of payment and Rule 96-ZP contains detailed provision regarding time and manner of payment and it also contains provisions relating to payment of interest and penalty in event of delay in payment or non-payment of dues. Thus, this is a comprehensive scheme in itself and general provisions in the Act and the Rules are excluded.” (at page 751).
4.2 Thus, I find that the compounded levy scheme is a comprehensive scheme in itself and general provisions of the Central Excise Act, 1944 are excluded and also Section 3A of the Central Excise Act, 1944 does not either provide for levying of interest or paying of interest.
4.3 I also find that the Hon’ble Supreme Court in a number of judicial pronouncements {including the cases of Mafatlal Industries Ltd vs Union of India {1997 (89) ELT 247 (SC)], Collector of C Ex Chandigarh vs Doaba Cooperative Sugar Mills {1988 (37) ELT 478 (SC)], Union of India vs Kirloskar Pneumatics Company [1996 (84) ELT 401 (SC)] etc.}, inter also, held that the Officers & Authorities created & functioning under the Central Excise Act, 1944, cannot go beyond the Act and are bound its provisions.
4.4 Thus, when general provisions of the Central Excise Act, 19444 are not applicable and there is no provision for payment of interest on refund under compounded levy scheme, I find that the adjudicating Authority created & functioning under the Central Excise Act, 1944, could not have allowed interest on refund. Even otherwise, if the general provisions of the Central Excise Act, 1944 are applied, there is no delay in sanctioning the refund, as the refund has been allowed on 19.03.2019 which is within three months of the date of the letter dated 10.01.2019 of the appellant filed along with the aforesaid Final Order dated 07.08.2018 of the Hon’ble Tribunal.
4.5 I also find that the Hon’ble Supreme Court in the case of Commissioner of Income Tax, Gujarat vs Gujarat Fluoro Chemicals [2013 (296) ELT 433 (SC)], clarified their earlier decision in the case of Sandvik Asia Ltd. vs Commissioner [2006 (196) ELT 257 (SC)] as under:
Refund – Interest on delayed refund only when statute provides – Sandvik Asia Ltd. [2006 (196) E.L.T. 257 (S.C.)] – In this case, assessee who was made to wait for refund of interest for decades, was compensated for great prejudice caused to them due to inordinate delay in its payment after lapse of statutory period – It is misinterpretation of this case that Revenue is obliged to pay interest on interest on its failure to refund interest payable within statutory period – It is only interest provided under statute which can be claimed by assessee from Revenue and no other interest on such statutory interest.
4.6 Since in this case, it is not under dispute that there is no provision under the compounded levy scheme to pay interest on refund, the general provisions of the Central excise Act, 1944 are not applicable (even if applied there is no delay in allowing refund) and the Adjudicating Authority functioning under the Central Excise Act, 1944 was bound by the statute, I, thus find that the Adjudicating Authority has rightly not allowed interest on refund. I also find that that in view of the aforesaid judicial pronouncements, the case laws relied upon by the appellant in their appeal, cannot be applied to this case.
5. In view of the above, I reject the appeal of the appellant.”
2. I have heard Shri Ramji Khare & Shri S K Vishkarma, learned Advocates for the appellant and Shri Sandeep Pandey, learned Authorized Representative for the revenue. As directed both the sides have filed written submissions which have been taken on record.
3.1 I have considered the impugned order along with the submissions made in the appeal, during the course of arguments and in the written submissions filed.
3.2 Undisputed facts along with the date chart are stated in the table below:
