2014 (4) TMI 1093 - HC - Central Excise

Refund of amount paid under threat and duress in the course of an investigation and interrogation undertaken - manufacturer of stainless steel castings and non-alloy steel castings - recovery of duty without demand - Held that - In the case on hand, there was nothing except an inspection and verification. It was never the case of the respondents that they found out duty evasion in the course of investigation and that when they were ready to serve a notice under sub-section (5), the appellant made payment in terms of sub-section (6). Had this been their contention, the respondents ought to have shown the break-up of the amount of ₹ 7.53 crores into (i) duty; (2) interest; and (iii) penalty. In the absence of any of these details, the respondents cannot contend that the payment was in terms of sub-section (6). As a matter of fact, sub-section (7) is somewhat similar to sub-section (2) and it prohibits the Central Excise Officer from serving any notice in respect of the amount paid. But, in the case on hand, a notice has been served after the learned Single Judge disposed of the writ petition, with liberty to the respondents. Therefore, it is clear that the amount of ₹ 7.53 crores paid by the appellant, will not fall either under Section 11A(1)(b) or under Section 11A(6). If it will not fall under any of these two provisions, it cannot be taken to be a payment made in relation to any statutory provision. Therefore, irrespective of whether the amount was paid under coercion or voluntarily, the respondents have no business to retain the same. - Refund allowed with 6% interest - Decided in favor of assessee.

Summary

Issues Involved:
1. Legality of the amount collected by the respondents.
2. Authority of law in collecting the said amount.
3. Applicability of Section 11A of the Central Excise Act, 1944.
4. Refund of the amount collected.

Detailed Analysis:

1. Legality of the Amount Collected by the Respondents:
The appellant, a manufacturer of stainless steel castings and non-alloy steel castings, alleged that an amount of Rs. 7.53 crores was collected unlawfully by the respondents. The respondents, during an inspection and investigation, claimed that the appellant voluntarily paid this amount towards ineligible Cenvat credit availed. The learned Judge initially ruled that the investigation should be completed, and the issue adjudicated before any refund could be considered.

2. Authority of Law in Collecting the Said Amount:
The appellant contended that no tax can be collected without the authority of law, citing several judicial precedents. The court noted that the respondents cannot collect any duty, either voluntarily or under coercion, except by and under the authority of law. The respondents did not dispute this fundamental legal principle.

3. Applicability of Section 11A of the Central Excise Act, 1944:
The respondents argued that the payment was made in terms of Section 11A(1)(b) read with Section 11A(6) of the Central Excise Act, 1944. The court analyzed sub-sections (1), (2), (3), (6), and (7) of Section 11A in detail. It was noted that for a payment to qualify under Section 11A(1)(b), there must be an ascertainment of duty either by the assessee or the Central Excise Officer. In this case, there was no such ascertainment, and hence, the payment of Rs. 7.53 crores did not qualify under Section 11A(1)(b). Similarly, the payment did not fall under Section 11A(6) as there was no evidence of duty evasion or a break-up of the amount into duty, interest, and penalty.

4. Refund of the Amount Collected:
The court concluded that since the payment did not fall under any statutory provision, the respondents had no authority to retain the amount, irrespective of whether it was paid under coercion or voluntarily. The writ appeal was allowed, and the respondents were directed to refund the amount of Rs. 7.53 crores to the appellant within four weeks from the date of receipt of the order. Failure to comply would result in the respondents being liable to pay interest at 6% per annum on the said amount from the date of expiry of the stipulated time for payment.

Conclusion:
The court set aside the order of the learned Judge, allowed the writ petition filed by the appellant, and directed the respondents to refund the amount collected. The respondents were given a timeframe of four weeks to make the payment, failing which they would incur interest at 6% per annum. No costs were awarded, and the connected miscellaneous petition was closed.