2019 (2) TMI 137 - AT - Central Excise

Amount paid on direction of Department - Whether the amount paid by the appellant as duty at the insistence of the department can be considered as payment under duress as has been claimed by the appellant? - Held that - There was no evidence to the effect the assessee was coerced into paying the amounts, the amounts were paid voluntarily and not under coercion. Whether the amount paid by the appellant without receiving demand notice under Sec.11A can be considered as payment under Sec.11A(2B) as voluntary payment during the relevant period? - Whether any interest under Section 11AB is payable on the amount so paid? - Held that - Evidently in this case, the assessee paid amount as determined by the Central Excise Officer voluntarily and has informed the department. However, they have not paid any interest. The period in question extends beyond the normal period of one year and hence demand could have been issued under Section 11A without invoking extended period of limitation. Further, they have not paid any interest on the amount paid - Therefore, all conditions of Section 11A(2B) have not been fulfilled and therefore, the payment cannot be said to be payment under Section 11A(2B). If the payment is not under Section 11A(2B) the demand of interest under Section 11AB as per the explanation (2) to Section 11A(2B) does not apply - The appellant had paid duty without any coercion but had not fulfilled all the conditions laid down under Sec.11A(2B) of Customs Act. Any refund claim needs to be decided on merits as per Section 11B. Refund claim - no SCN issued - Whether the assessee is entitled to refund of the amount paid by them on the ground that no SCN has been issued to them? - Held that - The first appellate authority has adequately considered the demand for refund on merits and has held against the assessee and we find no reason to interfere with such a reasoned order. Appeal allowed in part.

Summary

Issues:
a) Whether the payment made by the appellant under duress.
b) Whether the payment made without receiving a demand notice can be considered voluntary.
c) Whether interest under Sec.11AB is payable on the amount paid.
d) Whether the appellant is entitled to a refund due to the absence of a show cause notice.

Analysis:
1. The appellant, a manufacturer of steel products, paid duty following an audit report in 2003. The appellant later contested the audit findings but paid the duty of ?19,44,379 in 2006. Subsequently, the department demanded interest on the paid amount, leading to a legal dispute.
2. The High Court noted that the appellant's payments were voluntary, not coerced. The court allowed the appellant to file a refund application and appeal the interest demand.
3. The issue of whether the payment qualifies under Sec.11A(2B) was analyzed. The conditions for such payment include self-assessment, informing the officer, and no fraud. The appellant did not meet all conditions, so the payment did not fall under Sec.11A(2B), exempting them from interest under Sec.11AB.
4. Precedents like Innovassynth Technologies case highlighted that voluntary payment without a valid show cause notice does not attract interest liability. The Gujarat High Court also supported this view, leading to the decision that no interest was chargeable from the appellant.
5. The refund claim was reviewed on its merits, focusing on consignment sales, collection charges, and other aspects. The Asst. Commissioner rejected the refund claim due to lack of credible evidence supporting the appellant's contentions.
6. The first appellate authority upheld the rejection of the refund claim, finding the Asst. Commissioner's decision justified. Consequently, Appeal E/161/2008 was rejected, upholding the Order-in-Appeal No.16/2008. Appeal E/162/2008 was allowed, setting aside the Order-in-Appeal No.04/2008.

This detailed analysis of the judgment showcases the legal intricacies involved in the case, including voluntary payments, refund claims, and interest liabilities under the Customs Act.