2008 (12) TMI 675 - HC - Central Excise

Interest on refund - Held that - The interest which can be allowed to be paid to the petitioners is only from the final adjudication in the matter (as the decision of the High Court was not carried further in appeal), i.e. from 18-7-2005, whereas the department has already paid the amount of refund to the petitioners on 26-6-2005 and therefore, there is no question of passing any order of payment of interest to the petitioners. Otherwise also, for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department. In the result, the petition fails. The petitioners are not entitled to receive any interest amount on the refund amount, as after the High Court dismissed the appeal of the department s appeal on 18-7-2005, the finality was achieved by the controversy, whereas the department had already refunded the amount on 26-6-2005 and therefore, no relief can be granted to the petitioners.

Summary

Issues Involved:
1. Classification of goods under the Central Excise Tariff Act.
2. Entitlement to refund of excise duty paid.
3. Entitlement to interest on delayed refund.
4. Unjust enrichment.
5. Maintainability of writ petition under Article 226 of the Constitution.

Detailed Analysis:

1. Classification of Goods:
The petitioner-company classified "Nycil" prickly heat powder under Tariff Heading No. 30.03, which was contested by the Central Excise Department, classifying it under Chapter Heading No. 33.04. The Delhi High Court ruled in favor of the petitioner, classifying the goods under Heading No. 30.03, which was upheld by the Supreme Court.

2. Entitlement to Refund:
Following the Delhi High Court's decision, the petitioner filed a refund claim for Rs. 4,78,45,990.30. The Assistant Commissioner of Central Excise initially rejected the claim on grounds of unjust enrichment, but the Commissioner (Appeals) reversed this decision, which was upheld by the CESTAT and the Gujarat High Court.

3. Entitlement to Interest on Delayed Refund:
The petitioner claimed interest on the delayed refund under Section 11BB of the Central Excise Act, 1944. The CESTAT and the Gujarat High Court ruled that no specific order for interest was made by the adjudicating authority, Commissioner (Appeals), or the Tribunal, and thus, no interest was payable. The court held that the petitioner finally became entitled to the refund on 18-7-2005, and since the department refunded the amount on 26-6-2005, no interest was due.

4. Unjust Enrichment:
The petitioner demonstrated that the burden of excise duty was not passed on to its customer, Heinz India Limited, and thus, there was no unjust enrichment. The Commissioner (Appeals) and CESTAT accepted this argument, allowing the refund.

5. Maintainability of Writ Petition:
The court addressed the maintainability of the petition under Article 226, especially concerning the challenge to CESTAT orders dated 22-8-2005 and 5-10-2006. The court held that these orders could not be challenged in a writ petition due to delay, latches, and acquiescence, and emphasized the statutory period for filing an appeal under Section 35G of the Central Excise Act.

Conclusion:
The court concluded that the petitioner was not entitled to any interest on the refund amount since the refund was made before the final adjudication date. The challenges to the CESTAT orders were dismissed due to procedural delays and the statutory appeal period. The petition was thus dismissed, and no costs were awarded.