2011 (3) TMI 1136 - AT - Central Excise

Eligibility of exemption Notification No.4/97-CE dated 01.03.1997 and Notification No.19/97-CE dated 11.04.1997 amending Notification No.4/97-CE - matter was remanded to the original authority by Tribunal to re-determine the duty liability after examining their claim for MODVAT Credit & in pursuance of the remand order, the duty demand was confirmed and amount of ₹ 5,00,000/- deposited was appropriated - Held that - In the context of prolonged litigation in stages the refund became due to the party only after final order of the Tribunal dated 20.01.2005 categorically holding that the decision in the case of Albert David 2002 (11) TMI 144 - CEGAT, COURT NO. III, NEW DELHI was not applicable to the facts of the party s case. The instruction dated 08.12.2004 of the Board relied upon by the Commissioner(Appeals) also refers to payment of interest only when the claim was not settled within a period of 3 (three) months of the disposal of the Appeal in the assessee s favour. The Commissioner(Appeals) has proceeded in as if the order dated 06.12.2000 has been passed finally in favour of the assessee, whereas it was not true. As formal application has been not made for refund of the pre-deposit & his submissions made at the time of personal hearing before original authority that they were entitled to refund can not be equated as a refund claim filed under Section 11B of the Central Excise Act - set aside the impugned order of the Commissioner(Appeals) and restore the order dt.12.05.2005 of the original authority stating that no further demand is due from the party.

Summary

Issues:
Dispute over eligibility of exemption under Notification No.4/97-CE and Notification No.19/97-CE, refund claim, payment of interest on pre-deposit, application of Sections 11B and 11BB of the Central Excise Act.

Analysis:
1. The appeal arose from a dispute regarding the eligibility of exemption under Notification No.4/97-CE and Notification No.19/97-CE. The Tribunal initially held that the party was not eligible for the exemption claimed but allowed the MODVAT Credit claim and remanded the matter to re-determine the duty liability after examining the MODVAT claim based on documents to be produced.

2. The Respondents deposited a sum of Rs. 5,00,000 in September 2010 in pursuance of a stay order. The original authority confirmed a demand of Rs. 11,63,450 and rejected the refund claim against the pre-deposit. Various orders and remands followed, leading to a final order in May 2005, where no further demand was held due, and the pre-deposit was ordered to be returned.

3. The Department appealed seeking to set aside the order granting interest to the Respondents. The Department argued that the Tribunal's order in 2000 was not final in favor of the party, as the main issue of exemption was decided against them, and the matter of MODVAT claim was settled only in 2005.

4. The Respondents argued that despite the initial denial of exemption, subsequent orders and remands led to the original authority finally holding no further duty payable and returning the pre-deposit. They contended that interest should also be paid as per relevant Circulars and legal precedents.

5. The Tribunal noted the prolonged litigation and held that the refund became due only after the final order in 2005, which clarified the inapplicability of certain judgments to the party's case. The Tribunal set aside the Commissioner(Appeals) order and restored the original authority's decision of May 2005, denying the interest claim.

6. The Tribunal emphasized that no formal application for refund was made under Section 11B, and the submissions made by the Respondents did not equate to a valid refund claim. Therefore, the grant of interest under Section 11BB was deemed not applicable in this case.

7. The Tribunal distinguished the cited legal precedents and held that the final order in favor of the Respondents was only passed in 2005. The decision to set aside the Commissioner(Appeals) order and uphold the original authority's decision was based on the lack of a valid refund claim under Section 11B and the absence of grounds for interest payment under Section 11BB.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner(Appeals) order and reinstating the original authority's decision of May 2005, denying the payment of interest on the pre-deposit.