2020 (3) TMI 585 - HC - Central Excise

Interest on refunds - Relevant date for Grant of interest - applicant seeks interest from the date the respective amounts were deposited with the respondents till the date of actual refund of the deposit - HELD THAT - This court has held that since refund is not in the nature of duty under the Central Excise Act, the petitioner is not entitled to statutory interest under section 11BB of that Act. It has further been held that in the absence of any statutory provision entitling the petitioner to interest, a mandamus cannot be issued to the revenue to pay interest. It may be noted that while the petitioner in the relief paragraph has prayed for interest at the rate of 18% per annum, at the time of hearing of the petition, no submissions had been made in this regard. Nonetheless, since in the reliefs prayed for a prayer for grant of interest had been made, this court had considered the same and rightly or wrongly, for the reasons set out in the order as recorded hereinabove, declined to grant such relief. Once the court has after duly recording reasons, turned down the prayer for grant of interest, even if the reasoning for declining such relief may be fallacious, the same would not fall within the scope of a review application. It may be pertinent to note that in the present application, the petitioner has sought review of the judgement dated 16.6.2016 and grant of interest at the rate of 18% per annum or such other rate as the court may deem fit from the date the respective amounts were deposited with the respondents till the date of actual refund of the deposit. However, in the memorandum of petition of the captioned special civil application, the petitioner has prayed for interest at the rate of 18% per annum claimed vide application dated 21.7.2014. Thus, the refund application claimed in the application is not identical to the relief claimed in the petition. At this stage of review, the court would be required to rehear the learned counsel for the respective parties on the question of interest, namely, the entitlement, quantum and the date from which such interest is required to be granted which would amount to giving a fresh opportunity to the petitioner to argue on a point which though, could have been argued, was not argued at the relevant time when the case was heard, which would be beyond the scope of a review petition. Therefore, even while accepting the submission of the learned counsel for the petitioner that the findings recorded by this court in paragraph 19 of the judgment are inconsistent with each other, it would not be possible for this court to grant the relief prayed for in the application as it would entail long drawn arguments on the question of entitlement, rate of interest as well as the point of time from which such interest should be granted which would be beyond the scope of a review application. Application rejected.

Summary

Issues Involved:
1. Review of the judgment and order dated 16.6.2016.
2. Grant of interest at the rate of 18% per annum or such other rate deemed fit by the court from the date of deposit to the date of refund.

Detailed Analysis:

1. Review of the Judgment and Order Dated 16.6.2016:
The applicant sought a review of the judgment and order dated 16.6.2016, which directed the respondents to refund ?73,60,061/- but denied the claim for interest at the rate of 18% per annum. The applicant argued that the court had incorrectly concluded that the interest claimed was not backed by any statutory provision. The applicant contended that since the amount was not a duty of excise or education cess but was deposited under a mistake of law, the statutory provisions of the Central Excise Act, 1944, including those pertaining to interest, should not apply. The applicant further argued that the court's denial of interest was inconsistent with its finding that the amount was not in the nature of a duty of excise, thus warranting a review due to an error apparent on the face of the record.

2. Grant of Interest at the Rate of 18% Per Annum:
The applicant's counsel reiterated that the court had erred in denying interest, citing various precedents where courts had granted interest on amounts paid under a mistake of law. The applicant referenced decisions from the Supreme Court and various High Courts, including cases like M.K. Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd., Vijay Textile v. Union of India, Pure Drinks Pvt. Ltd. v. Union of India, Dulichand Shreelal v. CCE, and Sheel Thermoplastics Limited v. Union of India, where interest was awarded on amounts collected without authority of law.

The respondents, represented by Mr. Ankit Shah, opposed the review, arguing that no arguments were advanced on the question of interest during the original hearing, and thus, a review was not permissible. The respondents relied on the Supreme Court's decision in Lily Thomas v. Union of India, which held that the power of review is limited to correcting mistakes and not substituting a view, and that a review cannot be treated as an appeal in disguise.

Court's Findings:
The court noted that in its judgment dated 16.6.2016, it had recorded that the amount was paid by mistake and that the provisions of the Central Excise Act were not applicable. Consequently, the court held that the petitioner was not entitled to statutory interest under section 11BB of the Central Excise Act. The court reiterated that in the absence of a statutory provision entitling the petitioner to interest, a mandamus could not be issued to the revenue to pay interest.

The court acknowledged the applicant's argument that the findings were inconsistent—if the provisions of the Central Excise Act were not applicable, the question of denying interest on the ground of absence of any statutory provision would not arise. However, the court emphasized that the review jurisdiction is limited and cannot be used to correct every error, whether factual or legal. The court cited the Supreme Court's decisions in Asharfi Devi v. State of U.P. and State of West Bengal v. Kamal Sengupta, which clarified that an error apparent on the face of the record must be evident per se and not require detailed examination.

Conclusion:
The court concluded that even if the findings were inconsistent, the issue of interest was not argued during the original hearing, and no foundational facts were laid down in support of such a claim. Therefore, rehearing the parties on the question of interest would amount to giving a fresh opportunity to argue a point not argued at the relevant time, which is beyond the scope of a review petition. Consequently, the court rejected the review application and discharged the rule with no order as to costs.