2017 (6) TMI 680 - AT - Central Excise

Refund of excess amount of interest paid - Held that - the Commissioner (A) has allowed the appeal of the Department only on the ground that while granting refund claim, the original authority has not properly examined whether the duty was paid by the appellant before the due date as per the Rules - the interest is required to be paid on duty i.e., as arrived at after self-abatement. The original authority has rightly granted the refund after following the Rules prescribed under Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of interest paid on belated duty payment under Central Excise Tariff Act, 1985.

Analysis:
The appeal challenged an order by the Commissioner (A) allowing the Revenue's appeal and setting aside the Order-in-Original related to a refund claim of interest on belated duty payment by manufacturers of Pan Masala. The appellants claimed a refund of interest amounting to ?1,35,277 paid on belated duty payment of ?1,30,62,500 attributable to a 15-day closure period in June 2011. The original authority sanctioned the refund, but the Department appealed, arguing that the duty payment timing was not correctly assessed as per Rule 9 of Pan Masala Packing Machines Rules, 2008. The Commissioner (A) allowed the Department's appeal, leading to the present appeal.

The appellant contended that the Commissioner (A) erred in not considering the binding judicial precedents and submissions, highlighting that interest was mistakenly paid on the total duty amount instead of the actual payable duty. The appellant argued that the refund was correctly sanctioned, and the Commissioner (A) failed to discuss relevant judgments. The appellant cited decisions such as CCE Vs. Shakti Fragrances Pvt. Ltd., CCE Vs. Thakkar Tobacco Products P. Ltd., and CCE, Delhi Vs. Som Pan Products Alloys Pvt. Ltd. to support their case.

Upon review, the Tribunal found that the Commissioner (A) allowed the Department's appeal based on a failure to assess if duty was paid before the due date as per the rules, without considering the appellant's cited judgments. Relying on precedents like the Delhi High Court's ruling in the case of Son Pam Products Alloys Pvt. Ltd., the Tribunal determined that interest should be paid on the duty amount after self-abatement. Consequently, the Tribunal concluded that the original authority rightly granted the refund in accordance with Rule 9 of Pan Masala Packing Machines Rules, 2008, and allowed the appellant's appeal based on the supportive judgments, providing consequential relief.

In summary, the Tribunal's decision favored the appellant, emphasizing adherence to legal rules and precedents in granting the interest refund on belated duty payment, as per the provisions of the Central Excise Tariff Act, 1985.