2018 (5) TMI 1185 - AT - Central Excise

Refund claim - duty paid under protest - refund was sought on the ground that the Department did not issue any show cause notice to the Appellant for demanding the duty even after the passage of a period of 4 years from the date of deposit, which shows that there was no case against the Appellant - section 11B of CEA - Held that - the Assistant Commissioner vide his order dated 09/04/2009 was pleased to disburse the refund of the principal amount, but as regards interest, it was observed that the CBEC vide Circular No.802/35/2004-CX dated 08/12/2004, has clarified that the interest in case of pre-deposit has to be refunded within 3 months from the date of the order passed by the Appellate Tribunals/Court or other Authority, unless there is any stay on the order of the Appeal Authority/CESTAT/Court (by a Superior Court). In the facts of the present case, it was not pre-deposit within the terms of Section 35F of the Act rather the Department had got the amount deposited during investigation, being out of pocket of the Appellant. But later on failed to establish the duty liability against the appellant and even failed to issue show cause notice. The amount was lying with the Department for more than 4 years without any reason and thus the assessee was entitled for compensation in the shape of interest which was granted to them by the Appellate order dated 13/01/2009. Also, observing that the directions of CBEC vide the aforementioned Circular is not applicable in the facts and circumstances. Appeal dismissed as not maintainable.

Summary

Issues:
1. Whether the Assistant Commissioner overlooked the direction given by the Commissioner (Appeals)?

Analysis:
The appeal revolved around a refund application for Central Excise Duty deposited under protest by the Appellant. The Appellant claimed that no show cause notice was issued by the Department even after four years from the deposit date, indicating no case against them. The Department contended that the duty was not deposited under protest as per prescribed procedures and that Section 11B was applicable. The Commissioner (Appeals) allowed the appeal, considering the deposit as under protest and directing the refund with interest. The Assistant Commissioner disbursed the principal amount but denied interest citing a circular. The Respondent appealed again, and the Commissioner (Appeals) overturned the denial of interest, emphasizing the Department's failure to establish duty liability or issue a show cause notice. The Tribunal later affirmed the entitlement to interest from the deposit date, rendering the present appeal against the Commissioner (Appeals) order inconsequential.

2. Whether interest should be allowed from the date of deposit?

Analysis:
The Commissioner (Appeals) directed interest to be paid from the deposit date till the actual refund at a rate of 6% per annum, citing legal precedents. The Assistant Commissioner initially denied interest based on a circular's interpretation, but the subsequent Commissioner (Appeals) order reinstated the interest, highlighting the Department's failure to prove duty liability or issue a show cause notice. The Tribunal, in a separate appeal by the Revenue, affirmed the allowance of interest from the deposit date, emphasizing the entitlement of the assessee to compensation for the amount held by the Department without justification for over four years. The final dismissal of the present appeal as infructuous confirmed the entitlement to interest from the deposit date, as established in the earlier orders.