2014 (11) TMI 961 - CGOVT - Central Excise

Denial of rebate claim - Non following of the procedure for self removal and the conditions of Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004 - goods are not directly exported from the factory of manufacturer - Date of approval of interest - Held that - Regarding sanction of rebate clams applicant department has raised the same objection which were decided in the Revision Order No. 198/2011-CX dated 24-2-2011. Department has challenged the said order dated 24-2-2011 before High Court. As per available record said order is neither stayed or set aside by Hon ble High Court. In such a situation there is no infirmity in the sanction of rebate claims as upheld by Commissioner (Appeals). The revision application filed in second round is thus not maintainable in the eyes of law. Moreover this authority has become functus officio after passing the order and no pleadings against said order can be entertained. As such Commissioner (Appeals) has rightly rejected the appeal of department. Government do not find any infirmity in the said Order-in-Appeal No. 142/2011 dated 4-8-2011 and therefore upholds the same. Whether interest liability under Section 11BB of Central Excise Act arise after three months of the order passed by Commissioner of Central Excise or after 3 months of the date of filing refund application - Held that - once the rebate claim is held admissible under Section 11B of the Central Excise Act 1944 interest liability starts after the expiry of three months of the date of receipt of application for rebate in the Divisional Office in terms of Section 11BB - as per Explanation to Section 11BB where the refund/rebate claim is allowed consequent to the order of appellate authority or any Court against the order of the Asstt./Dy. Commissioner Central Excise the order of the appellate authority/Court shall be deemed as an order passed under sub-section (2) for the purposes of this Section - Following decision of of M/s. Ranbaxy Laboratories Ltd. v. UOI reported on 2011 (10) TMI 16 - Supreme Court of India - Decided against Revenue.

Summary

Issues Involved:
1. Eligibility of rebate claims under the Compounded Levy Scheme.
2. Entitlement to interest on delayed payment of rebate claims.

Issue-wise Detailed Analysis:

1. Eligibility of Rebate Claims under the Compounded Levy Scheme:
The first issue revolves around the eligibility of the assessee for rebate claims amounting to Rs. 6,62,22,485/- paid on exports made in November 2009 and January 2010. The Deputy Commissioner initially rejected these claims, which were subsequently upheld by the Commissioner (Appeals). However, the Joint Secretary (Revision Application) allowed the claims, leading to a partial sanction of Rs. 6,46,70,545/- with Rs. 15,51,940/- being rejected. The sanctioned amount was adjusted against the default duty amount due for February and March 2010.

The department filed an appeal against this adjustment, arguing that the Joint Secretary's order was flawed because it treated non-compliance with procedural requirements as condonable, whereas these were substantive conditions to ensure the nexus between the goods cleared and exported. The Commissioner (Appeals) upheld the Joint Secretary's order, noting that it was neither stayed nor set aside by any court, thus making it operative.

The Government, upon review, found no infirmity in the Commissioner (Appeals)' decision, emphasizing that the department's objections had already been addressed in the earlier revision order, which remained unchallenged by any higher court. Consequently, the appeal by the department was deemed not maintainable, and the Commissioner (Appeals)' order was upheld.

2. Entitlement to Interest on Delayed Payment of Rebate Claims:
The second issue pertains to the assessee's request for interest on the delayed payment of the sanctioned rebate amount. The Deputy Commissioner rejected this claim, citing that the rebate was sanctioned within three months from the date of the Government of India's order. The Commissioner (Appeals) overturned this decision, granting the assessee's appeal for interest.

The department contested this, arguing that the interest should not apply as the rebate was sanctioned within three months of the revision order. They referenced the case of Samarth Engineering Co. P. Ltd., which supported their stance that interest is not due if the refund is made within three months of the relevant order.

The Government, however, referred to the Supreme Court's ruling in M/s. Ranbaxy Laboratories Ltd. v. UOI, which clarified that the interest liability under Section 11BB of the Central Excise Act commences from the date of expiry of three months from the date of receipt of the refund application, not from the date of the refund order. This interpretation was upheld, confirming that the assessee was entitled to interest from three months after the original refund application date.

Conclusion:
The Government upheld the Commissioner (Appeals)' decisions on both counts. The rebate claims were found to be valid, and the assessee was entitled to interest on the delayed payment of these claims. The revision applications filed by the department were rejected as devoid of merits.