2013 (8) TMI 130 - AT - Central Excise

Interest on interest under excise Act - JAC granted the refund and the amount was granted by the JAC vide his order No. ANK-III/BCP/195 dated 27.02.08 without any interest under Section 11B and as per Board s circular No.670/61/2002-C.EX dated 01.10.02. The appellant requested the JAC on 13.10.08, for grant of interest and the JAC vide his order No. ANK/BCP/271/REFUND/2008 dated 22.01.09 sanctioned the interest amounting to Rs.28,120/from the date of final order i.e. 12.02.08 to 05.10.08. The appellant was paid remaining amount of interest amounting to Rs.8,78,293/- - Aggrieved by such an order, the assessee preferred an appeal before the first appellate tribunal. The first appellate authority after following the due process of law, set aside the impugned order and directed the lower authorities to pay interest on belated payment of interest to the assessee Held that - The ratio of Larger Bench judgment in the case of Sun Pharmaceuticals Industries Ltd. 2005 (5) TMI 90 - CESTAT, NEW DELHI - the legislature thought it fit not to provide for any interest on interest even in case of delay in payment of interest on refund amount. To read the liability to pay interest on interest in the provisions of law contained in Section 11BB of the Act, would virtually amount to legislate upon the Act and that is not the function of the Tribunal which is creation under the said Act itself and has to exercise power conferred upon it under the Act. It may also be added that before the introduction of Section 11BB, the Tribunal had no power to award interest by exercising inherent power, on the amount of refund of duty even if paid late. In this context, reference may be made to the judgment of the Hon ble Allahabad High Court in the case of Prestige Engineering (India) Pvt. Ltd. v. Union of India 1990 (7) TMI 118 - HIGH COURT OF JUDICATURE AT ALLAHABAD) ruled that When the Act (Central Excise) and the Rules made thereunder did not provide for payment of interest in case of refund of duty, It is to be presumed that the Parliament advisedly did not provide for the same, while enacting Section 11B in 1978. The authorities under the Act have to operate within the four corners of the Act and the Rules made thereunder. Since the Act or the Rules did not provide for grant of interest, the authorities under the Act, including the CEGAT, had no power to award interest - interest on delayed payment of interest, cannot be held to be permissible under the Central Excise Act and the Rules made thereunder Decided in favor of Assessee.

Summary

Issues:
1. Claim of refund under SSI exemption and concessional rate of duty.
2. Rejection of refund claim by JAC and subsequent appeals.
3. Payment of interest on belated payment of interest in indirect taxation.

Analysis:

Issue 1: Claim of refund under SSI exemption and concessional rate of duty
The appellant opted for SSI exemption and paid concessional duty under Notification No.1/93-CE. The department objected to the mid-year opt-in and demanded differential duty of Rs.7,21,793. The refund claim was initially rejected by JAC, leading to multiple appeals and re-adjudications. Eventually, the CESTAT remanded the case back to the Commissioner (Appeals) based on a High Court ruling, resulting in the appellant's refund claim being allowed.

Issue 2: Rejection of refund claim by JAC and subsequent appeals
The JAC initially rejected the refund claim, leading to a series of appeals and re-adjudications. The Commissioner (Appeals) directed re-determination, but subsequent appeals were also rejected. The CESTAT remanded the case based on a High Court ruling, ultimately resulting in the appellant's refund claim being allowed by the Commissioner (Appeals).

Issue 3: Payment of interest on belated payment of interest in indirect taxation
The first appellate authority directed lower authorities to pay interest on belated payment of interest to the assessee. The matter was further discussed in absence of the respondent, with the ld. D.R. citing judgments to argue against payment of interest on belated payment of interest in indirect taxation. The Tribunal, based on judicial pronouncements, held that there are no provisions in the Central Excise Act, 1944 to grant interest on belated payment of interest, ultimately setting aside the impugned order and allowing the appeal.

In conclusion, the judgment addresses the issues of refund under SSI exemption, rejection of refund claims, and the payment of interest on belated payment of interest in the context of indirect taxation, providing a detailed analysis and legal interpretation based on relevant case laws and statutory provisions.