2010 (12) TMI 1259 - HC - Central Excise

Refund of the pre-deposit amount before CESTAT - rejection on the ground that the claim was belated under Section 11B of the Central Excise Act 1944 - contention of the petitioner herein is that being in the nature of pre-deposit Section 11B of the Act could not be invoked and the return of deposit should be made in terms of Section 35F of the Act. HELD THAT - In terms of the circular dated 8-12-2004 and in the light of the decision of the Apex Court in U.O.I. VERSUS SUVIDHE LTD. 1996 (8) TMI 521 - SC ORDER confirming the view of the Bombay High Court in SUVIDHE LTD. VERSUS UNION OF INDIA 1996 (2) TMI 136 - BOMBAY HIGH COURT the pre-deposit to maintain the appeal is not to be equated to the payment of duty to invite the provisions of Section 11B of the Act. Learned counsel for the petitioner submits that the order now passed invoking Section 11B of the Act is unsustainable. Going by the admitted fact that the pre-deposit was made in terms of Section 35F of the Act the question of invoking Section 11B of the Act to reject the claim of the petitioner as time-barred does not arise. As pointed out in the circular dated 2-1-2002 when the claim can be made even by a simple letter along with attested xerox copy of the order in appeal the question of the Department further adjudicating the matter invoking Section 11A of the Act hence does not arise. The Circulars of the Board are binding on the respondents who have the responsibility of respecting the same. More so in the context of the decision of the Apex Court the question of re-agitating the issue now does not arise. In the circumstances accepting the case of the petitioner the writ petitions are allowed. The respondents are directed to refund the amount within a period of eight weeks from the date of order along with interest at 6% per annum from the date of receipt of the order till the date of payment - Petition allowed.

Summary

Issues:
1. Writ of Mandamus for payment of balance due and interest
2. Writ of Prohibition against Show Cause Notice
3. Claim for refund of pre-deposit amount
4. Rejection of refund claim under Section 11B of the Central Excise Act, 1944
5. Applicability of Section 35F over Section 11B for refund
6. Interpretation of circulars and judicial decisions on refund of pre-deposit amounts

Writ of Mandamus for Payment and Interest:
The petitioner sought a Writ of Mandamus directing the third respondent to pay a balance due of Rs. 2,49,965/- and interest of Rs. 55,945.725 from 14-11-2006 till the date of the writ petition. This was in relation to a claim for refund of pre-deposit amount made in an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, following an order that remanded the matter back for fresh consideration.

Writ of Prohibition against Show Cause Notice:
In another petition, the petitioner sought a writ of prohibition against the third respondent officer from proceeding with an impugned Show Cause Notice dated 9-6-2010. The petitioner contested the rejection of the refund claim on the grounds of belated submission under Section 11B of the Central Excise Act, 1944.

Claim for Refund of Pre-deposit Amount:
The petitioner had complied with a pre-deposit condition of Rs. 50,000/- for admitting the appeal under Section 35 of the Central Excise Act, 1944. After a subsequent order granting relief to the petitioner, a refund of the pre-deposit amount was sought. The second respondent passed a fresh order, and despite the demand being remitted, the refund claim was rejected as belated under Section 11B.

Rejection of Refund Claim under Section 11B:
The rejection of the refund claim was based on the contention that Section 11B of the Act could be invoked, contrary to the petitioner's argument that the return of the deposit should be made under Section 35F. The petitioner highlighted judicial decisions and circulars supporting the refund of pre-deposit amounts under Section 35F.

Applicability of Section 35F over Section 11B for Refund:
The petitioner argued that the pre-deposit condition for maintaining an appeal should not be equated to the payment of duty under Section 11B. The circulars and judicial decisions cited emphasized the distinction between pre-deposit for appeal rights and duty payment, supporting the refund under Section 35F.

Interpretation of Circulars and Judicial Decisions on Refund:
The court considered circulars and judicial decisions, including those from the Apex Court, confirming the view that Section 11B cannot be invoked for cases of pre-deposit under Section 35F. The court held that the Department's rejection of the claim based on Section 11B was unsustainable, and directed the respondents to refund the amount with interest, citing the binding nature of circulars and the responsibility to respect them.