2009 (4) TMI 717 - Commissioner - Central Excise

Exemption - Area based exemption - Notification No. 32/99-C.E. - Additional Duty of Excise - Refund - Interest for delay

Summary

Issues Involved:
1. Interest on delayed refund.
2. Refund of Additional Excise Duty/Education Cess paid in cash.
3. Refund of Duty paid in cash equivalent to unutilized Cenvat Credit available on the last day of the month under consideration.

Detailed Analysis:

1. Interest on Delayed Refund:
The appellant claimed interest on the delayed refund based on Section 11BB of the Central Excise Act. The lower authority denied this claim, stating that the refund was not due to excess payment but to operationalize an exemption, thus Section 11B and consequently Section 11BB did not apply. The appellant cited various case laws supporting their claim for interest from the date of application. However, the judgment referenced the Supreme Court ruling in CCE, Hyderabad v. I.T.C. Ltd., which established that interest on delayed refunds is payable three months after the final dispute resolution. Therefore, the appeal for interest on delayed refund was disallowed.

2. Refund of Additional Excise Duty/Education Cess Paid in Cash:
The lower authority rejected the refund of Additional Excise Duty (AED) and Education Cess, stating they were outside the purview of Notification No. 32/99-C.E. The appellant argued that AED and Education Cess are duties of excise, supported by various legal precedents and CBEC circulars. The judgment differentiated between 'duty of excise' and 'additional duty of excise,' noting that the notification used 'or,' implying only one could be refunded. The judgment upheld the rejection of AED refund but allowed the refund of Education Cess, citing Section 93(1) and (3) of the Finance Act, 2005, and various CESTAT decisions that recognized Education Cess as a duty of excise eligible for refund under the notification.

3. Refund of Duty Paid in Cash Equivalent to Unutilized Cenvat Credit:
The lower authority deducted unutilized Cenvat credit from the refund, as per the notification's condition to first utilize available Cenvat credit. The appellant contended that it was impractical to exhaust all Cenvat credit monthly, and the credit was utilized in subsequent months, making the situation revenue neutral. The judgment agreed with the appellant, noting the policy's purpose to refund duty paid in cash and the practical difficulties in utilizing all Cenvat credit monthly. It referenced the CESTAT decision in CCE, Jammu v. M/s. New India Wire and Cable Industries, which supported a lenient interpretation to avoid defeating the notification's purpose. Thus, the refund of Rs. 1,55,202/- was allowed.

Conclusion:
- The appeal for interest on delayed refund was disallowed.
- The appeal for refund of Additional Excise Duty was disallowed.
- The appeal for refund of Education Cess amounting to Rs. 11,39,911/- was allowed.
- The appeal for refund of Duty paid in cash equivalent to unutilized Cenvat Credit amounting to Rs. 1,55,202/- was allowed.