2011 (9) TMI 903 - HC - Central Excise

Interest on refund claim - Held that - Limitation contained in Section 11B of the Central Excise Act is not applicable to the case of the first respondent since the amount in question was not paid towards excise duty but only by way of deposit during investigation. Moreover, as per Section 11BB of the Central Excise Act, this Court can order payment of interest at a very reasonable rate and accordingly, learned single Judge directed the appellants to refund a sum of ₹ 13,20,578/- relating to the final order No. 471 of 2007, dated 30-4-2007 to the first respondent with interest @ 6% per annum from the date of deposit till the date of payment to the first respondent. - Decided against Revenue.

Summary

Issues:
1. Assessment of assessable value under Section 4 of the Central Excise Act, 1944 for technology transfer fees.
2. Refund of deposit paid during investigation under Central Excise Act.
3. Applicability of limitation under Section 11B of the Central Excise Act.
4. Order for payment of interest under Section 11BB of the Central Excise Act.

Analysis:

1. The case involved a company engaged in manufacturing carburetors under a Technical Assistance Agreement with Japanese corporations. The question arose whether the technology fees paid for the transfer of technology should be included in the assessable value under the Central Excise Act.

2. The company had paid a deposit during investigation, and a dispute arose regarding the refund of a portion of the deposit. The company filed a writ petition seeking a refund of the deposited amount along with interest.

3. The learned single Judge allowed the writ petition, directing the refund of the deposited amount with interest. The Judge held that the limitation under Section 11B of the Central Excise Act did not apply since the amount was a deposit and not excise duty.

4. The High Court, in agreement with the single Judge, emphasized that interest could be ordered under Section 11BB of the Central Excise Act at a reasonable rate. The Court upheld the direction for the refund with interest and dismissed the writ appeal, stating no interference was necessary.

In conclusion, the High Court affirmed the order for the refund of the deposited amount along with interest, highlighting the non-applicability of the limitation under Section 11B and the authority to order interest under Section 11BB of the Central Excise Act.