Case Law Details

Case Name : Astrazeneca India Pvt. Ltd. Vs Commissioner Of Central Tax (CESTAT Bangalore)
Appeal Number : Service Tax No. 20147 of 2021
Date of Judgement/Order : 16/08/2021
Related Assessment Year :

Astrazeneca India Pvt. Ltd. Vs Commissioner Of Central Tax (CESTAT Bangalore)

Since the issue of interest on delayed refund has been settled by the apex court in the case of Ranbaxy Laboratories Ltd. (supra) wherein Hon’ble Supreme Court has held that interest on delayed refund under Section 11BB is payable on expiry of three months from the date of receipt of application under Section 11B(1) and not from the date of the order of refund or appellate order allowing such refund. Hence, I hold that appellant is entitled for interest as per the apex court decision in the case of Ranbaxy Laboratories Ltd. (supra).

INTEREST written in 3d wooden alphabet letters with a percentage sign

FULL TEXT OF THE CESTAT BANGALORE ORDER

The present appeal is directed against impugned order dated 8.12.2020 passed by the Commissioner of Central Tax (Appeals), Bangalore whereby the Commissioner(A) has rejected the refund claim on the grounds of limitation as interpreted in Section 11B of the Central Excise Act, 1944.

2. Briefly the facts of the present case are that the appellant are registered with the Service Tax department. They filed an application on 17.7.2007 for claiming refund in terms of Rule 5 of CENVAT Credit Rules, 2004 for the year 2006-2007. Thereafter, a show-cause notice dated 27.2.2008 was issued to the appellant proposing to deny the refund. Appellant filed reply to the show-cause notice and the Deputy Commissioner vide Order-in-Original dated 7.7.2008 allowed the refund claim to the extent of Rs.3,85,681/- and rejected the balance refund claim. Aggrieved by the said Order-in-Original, appellant preferred an appeal before the Commissioner of Central Excise (Appeals) and the Commissioner (A) vide order dated 22.12.2008 partially allowed the refund claims towards the credit availed on the ‘Security Services’ and ‘Clearing and Forwarding charges’ and rejected the balance claim. Aggrieved by the Order-in-Appeal, appellant filed appeal before CESTAT and CESTAT vide Final Order No.21260/2016 dated 16.7.2014 allowed the appeal and set aside the order rejecting the refund claim. Further, the said order was communicated on 25.11.2016. Thereafter, consequent to the order of CESTAT, appellant submitted a letter dated 21.2.2017 requesting for grant of refund. Thereafter, vide letter dated 16.3.2017 Assistant Commissioner requested for additional set of refund application along with enclosure for processing the refund claim. Thereafter, on 19.3.2019 appellant submitted letter along with a copy of the refund claim dated 7.8.2017 and also documents. Vide order dated 15.7.2019 CESTAT dismissed the appeal filed by the Department against the order of the Commissioner (A). Appellant also submitted sample copy of invoices along with letter and the original authority vide order dated 23.11.2019 rejected the refund claim on the ground of limitation as the refund application was not filed within one year from the date of receipt of the order of the CESTAT. Aggrieved by the said order, appellant filed appeal before the Commissioner (A) and the Commissioner (A) upheld the order of the original authority and rejected the refund claim. Hence, the present appeal.

3. Heard both the parties and perused the records.

4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the application for refund need not be made at each stage of adjudication process of an original refund claim and there is no express provision in CENVAT Credit Rules, 2004 for filing of subsequent application. He also submitted that the relevant date as envisaged in Section 11B of the Central Excise Act, 1944 applies only to the first application of refund claim made to Assistant/Deputy Commissioner. It was his further submission that the refund, in the present case, has not accrued on account of any order or judgment but the refund was originally claimed based on the statutory provisions read with the Notification which grants refund of credit of input / input services used for export of services as per Rule 5 of CENVAT Credit Rules, 2004. He also submitted that the application for refund claim was not time barred but was well within the period of limitation. For this submission, he relied upon the following decisions:

4.1 He also submitted that it is clear from conjoint reading of provisions of Section 11B(2) and Section 11BB(2) of the Central Excise Act, 1944 as made applicable to the Service Tax provisions in terms of Section 83 of the Finance Act, 1994 that there is no requirement of making application for refund at every stage of the adjudication / appellate proceedings. He further submitted that order of the Tribunal dated 16.7.2014 has attained finality and there is no power or jurisdiction to the lower authority to re-adjudicate the same matter again. Department has not filed an appeal against the decision of the Tribunal. For this submission, he relied upon the following decisions:

  • CCE, Chennai-I vs. Manali Petrochemicals Ltd.: 2011 (264) ELT 39 (Mad.)
  • Waters India Pvt. Ltd. vs. Commissioner of Central Excise and Service Tax and Customs: 2018-TIOL-950-CESTAT-BANG.
  • Hero Motors Ltd. vs. Commissioner of Central Excise, Delhi: 2017 (357) ELT 377 (Tri. – Del.)
  • Jaya Diagnostic & Research Centre Ltd. vs. Commissioner of Customs, Hyderabad: 2020 (374) ELT 273 (Tri. – Hyd.)
  • Toyota Kirloskar Motor Ltd. vs. CCE: 2007 (219) ELT 241 (Tri. – Bang.)

4.2 Learned counsel also submitted that rejection of refund claim based on the CBEC Circulars is erroneous for the reason that the original refund claim was filed with all relevant documents and was already adjudicated and attained finality and there is no requirement of filing additional refund claims at every stage of proceedings. He also submitted that the Circulars and clarifications cannot be contrary to the statutory provisions. For this, he relied upon the following decisions:

  • Commissioner of Central Excise, Bolapur vs. Ratan Melting & Wire Industries: 2008 (231) ELT 22 (SC)
  • Commissioner of Service Tax, Mumbai vs. Reliance Communication Ltd.: 2008 (11) STR 258 (Tri.-Mumbai)

4.3 Learned counsel further submitted that the Commissioner has erroneously relied upon the GST Circular to reject the refund of CENVAT credit under erstwhile Service Tax Regime read with CENVAT Credit Rules, 2004. He has also claimed interest on delayed refund in their grounds of appeal as per law laid down in the following judgments.

  • Ranbaxy Laboratories Ltd. vs. UOI: 2011 (273) ELT 3 (SC)
  • UOI vs. Hamdard (WAKF) Laboratories: 2016 (333) ELT 193 (SC)
  • Surajbhan Synthetics (P) Ltd. vs. CCE: 2017 (49) STR 98 (Tri.-Bang.)
  • Om Refoils Ltd. vs. UOI: 2018 (361) ELT 98 (P & H)

5. On the other hand, the learned AR reiterated the finings of the impugned order.

6. After considering the submissions of both the parties and perusal of the material on record, I find that originally refund application was filed on 17.7.2007 which was partially allowed by the Deputy Commissioner to the extent of Rs.3,85,681/- and thereafter, the Commissioner (A) has allowed refund claim on certain input services viz., ‘Security Services’ and ‘Clearing and Forwarding Charges’. Thereafter, CESTAT vide Final Order No.21260/2016 dated 16.7.2014 received on 25.11.2016 has allowed the appeal and set aside the order rejecting the refund claim. Thereafter, this decision of the Tribunal was not challenged by the Department and it has attained finality. After the decision of the Tribunal, it was incumbent upon the department to refund the CENVAT credit as per the decision of the Tribunal. After three months of the decision of the Tribunal, the appellant filed a letter dated 21.2.2017 requesting the department to grant refund as per the order of CESTAT but instead of granting the refund, the Assistant Commissioner asked the appellant to file fresh refund application along with documents which was not required at all because it is a settled law that application for refund need not be made at every stage of adjudication process of an original refund claim and there is no express provision in the CENVAT Credit Rules, 2004 for filing of subsequent application and further, the relevant date as per Section 11B(2) of the Central Excise Act, 1944 applies only to the first application of refund claim and this issue has been considered by this Tribunal in the case of BASF India Ltd. vs. CCE, Bangalore: 2021-TIOL-172 wherein on an identical issue, this Tribunal in para 5 and 5.1 has held as under:

5. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant filed the refund claim on 20/03/2013 in respect of the duty paid on the goods exported. The Assistant Commissioner sanctioned the refund but appropriated an amount of Rs. 16,04,530/- (Rupees Sixteen Lakhs Central Excise Appeal No. 20035 of 2020 6 Four Thousand Five Hundred and Thirty only) towards arrears pending in another case and the said appropriation was set aside by the Commissioner (Appeals) and thereafter it was incumbent on the Department to refund the said amount of Rs. 16,04,530/- (Rupees Sixteen Lakhs Four Thousand Five Hundred and Thirty only). When the Department did not refund the said amount, the appellant after waiting about four years wrote a letter dated 14/01/2019 requesting the Assistant Commissioner to release the amount in view of the judgment of the Commissioner (Appeals) dated 27/07/2015 but the Department wrongly issued a show-cause notice proposing to deny the refund claim on time-bar and subsequently denied the refund claim by Order-in-Original dated 29/04/2019 on time-bar and the same was upheld by the Commissioner (Appeals) by the impugned order. Further, I find that the Commissioner (Appeals) has wrongly invoked the provision of Clause (ec) for denying the refund on the ground that the refund has arisen on account of the order passed by the Commissioner in appeal whereas in fact the refund has arisen on account of export of goods and the Department having accepted the order of the Commissioner (Appeals) dated 27/07/2015 should have refunded the amount in cash to the appellant. This issue has been considered by the Tribunal in the case of SPIC Ltd. Vs. CCE, Chennai (cited supra) wherein on identical facts, the Chennai Bench of the CESTAT has held that there is no need to file any refund application under the provisions of the Act. The relevant findings are recorded in para 9 and 10:

“9. I have carefully considered the submissions made by both the parties. There is no dispute that the importer had paid amounts in excess of the duty legitimately due to be paid by them and that they had filed their initial refund claims as per Section 27 of the Customs Act, 1962 within the statutory limit. Their claims had been rejected by the Assistant Commissioner (Refunds) and they had filed appeals before the lower appellate authority which had been allowed. However, they had not filed refund claims subsequent to receipt of such favourable orders from Commissioner (Appeals), as a Central Excise Appeal No. 20035 of 2020 7 decision in their favour on the claims already filed by them had been rendered by the Appellate Commissioner. Their claims had remained unsettled at the time when the Constitution Bench of the Hon’ble Supreme Court had examined the question of unjust enrichment and refund under Section 11B of the Central Excise Act/Section 27 of the Customs Act in the Mafatlal Industries Ltd. case (supra).

10. In Para 100 of the Mafatlal Industries Ltd. judgment, the Supreme Court had directed that in respect of claims which had been pending in suits/writ appeals, the concerned petitioners should file refund claims within 60 days of pronouncement of the judgment in that case. In the instant case, the appellants had received favourable orders vide Orders-in-Appeal dated 14-6-93 and 30-10-96. Subject claims had not been pending in any proceeding before any court at the time when the Hon’ble Supreme Court pronounced the judgment. What the Hon’ble Supreme Court ordered in Para 100 extracted above is in respect of claims involved in pending Writ petitions/Writ appeals/suits. Therefore, it cannot be said that the subject claims are governed by the directions of the Apex Court referred to above. In the Kerala State Electricity Boards case, the Kerala High Court dismissed the petition filed by the Kerala State Electricity Board for the reason that they had not complied with this direction of the Hon’ble Supreme Court and ordered that their only recourse was to approach the Hon’ble Supreme Court. In both the cases relied on in the impugned order, the appellants had not filed claims as per Section 11B of the Central Excise Act. In case of the present appellants they had filed refund claims in accordance with law. Section 11B, either before the amendment or after the amendment does not envisage that the assessee should file fresh refund application following a successful appeal/revision proceedings by the parties. Once a refund claim is filed, before the concerned authority, as has been done by the appellants in the present case, statutory requirement in this regard has been complied with by the claimant seeking refund under the Act. Refund application need not be made at each stage if the initial claim before the Assistant/Deputy Commissioner is not successful. The law laid down by the Apex Court in the Mafatlal Industries Ltd. is that all refund claims including those made pursuant to an Order-in-appeal/revision were subject to provisions of Section 11B of the Central Excise Act/Section 27 of the Customs Act. I am therefore, of the considered view that the appellants are eligible for the refund amounts claimed. Their claims shall be allowed after scrutiny also from the angle of unjust enrichment as ordered by the Commissioner (Appeals). Accordingly, I allow both the appeals.”

5.1. Further this decision of the CESTAT has been upheld by the Madras High Court which is reported in 2015 (318) E.L.T. A178. Further in the case of VVF Ltd. (cited supra), the Ahmedabad Bench of the CESTAT also held that second refund claim need not be filed again for claiming the refund arisen from the Order-in-Appeal. Further in the case of GIL Shared Services Pvt. Ltd., Hon’ble Madras High Court by relying upon its earlier decision in the case of SPIC Ltd. has allowed the claim of the assessee”.

Further, I find that the Tribunal’s decision dated 16.7.2014 communicated on 25.11.2016 has attained finality, then there is no power or jurisdiction to the lower authority to re-adjudicate the matter again in view of the various decisions cited supra. Further, the department has erroneously relied upon the GST Circular to reject the refund of CENVAT credit and the said Circular is contrary to the provisions of erstwhile Service Tax Regime and are not binding on the Court. In view of the various decisions cited supra, I am of the view that the ratio of the said decisions is squarely applicable to the facts of the present case and I set aside the impugned order by allowing refund claims to the appellant.

6.1 As far as demand of interest for delayed refund is concerned, the issue is squarely covered by the decision of the apex court in the case of Ranbaxy Laboratories Ltd. reported in 2011 (273) ELT 3 wherein the Hon’ble Supreme Court has held in para 9 and 10 as under:

9.   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 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.

10. It is a well settled proposition of law that a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied and there is no room for any intendment. [See: Cape Brandy Syndicate v. Inland Revenue Commissioners, [1921] 1 K.B. 64 and Ajmera Housing Corporation & Anr. v. Commissioner of Income Tax, (2010) 8 SCC 739].”

Since the issue of interest on delayed refund has been settled by the apex court in the case of Ranbaxy Laboratories Ltd. (supra) wherein Hon’ble Supreme Court has held that interest on delayed refund under Section 11BB is payable on expiry of three months from the date of receipt of application under Section 11B(1) and not from the date of the order of refund or appellate order allowing such refund. Hence, I hold that appellant is entitled for interest as per the apex court decision in the case of Ranbaxy Laboratories Ltd. (supra).

7. In the result, I set aside the impugned order and allow the appeal on above terms.

(Order was pronounced in Open Court on 16/08/2021.)

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