2007 (2) TMI 132 - AT - Central Excise

Refund of interest - Revenue contended that Commissioner(A) is erred to direct refund of the balance interest is covered by limitation as well as inadmissible - Revenue appeal failed and being dismissed

Summary

Issues:
- Whether interest recovered from the assessee, which was not recoverable as per a previous order, should meet scrutiny of Section 11B of the Central Excise Act, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Kolkata involved a dispute regarding the recovery of interest from the assessee, which the Revenue claimed was not recoverable based on a previous order. The Revenue contended that the ld. Commissioner (Appeals) had erred in directing the refund of a balance interest amount of Rs. 3,65,394, which was part of a total earlier interest amount of Rs. 4,32,789. The Revenue sought to reverse the first appellate order, arguing that the refund of the interest amount was covered by limitation and inadmissibility.

The Respondent, although not filing an appeal or Cross-Objection, challenged the Revenue's appeal on the grounds that there was a total disregard by the Revenue to the appellate order dated 28-1-2005. The Respondent argued that the interest amount levied was reversed in appeal by the ld. Commissioner (Appeals) on 28-1-2005, stating that interest was not required to be paid. The Respondent emphasized that the Revenue's denial of the refund was confiscatory in nature and against the settled position established by the appellate order.

The Tribunal noted that the Revenue had not challenged the first appellate order dated 28-1-2005, which had reached finality. The Respondent contended that the Revenue's action of denying the refund of part of the interest amount was in contravention of established legal principles and judicial sanctity. The Respondent argued that since no interest was payable based on the earlier order, the question of limitation did not arise, and the settled position should not have been unsettled by a subsequent order.

After considering the submissions, the Tribunal found merit in the Respondent's arguments. It held that the Revenue's failure to seek appeal against the appellate order dated 28-1-2005 and the withholding of a portion of the refundable interest amount were unjustified. Citing relevant legal precedents, the Tribunal ordered that the directions made by the ld. Commissioner (Appeals) on 28-1-2005 and 27-2-2006 should be complied with. Consequently, the Revenue's appeal was dismissed, and the first appellate order directing the refund was upheld.

In conclusion, the Tribunal emphasized the importance of following appellate orders and maintaining judicial discipline in tax matters to prevent undue harassment to assessees and ensure the proper administration of tax laws.