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2022 (12) TMI 93 - AT - Central ExciseInterest on delayed refund - seizure of cash / currency during search - calculation of relevant time - to be calculated from expiry of three months from the date of receipt of the impugned refund application till the date of refund of such duty or not - applicability of section 11B/11BB of Central Excise Act, 1944. HELD THAT - Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , RAIGAD VERSUS M/S. FINACORD CHEMICALS (P) LTD OTHERS 2015 (5) TMI 371 - SUPREME COURT while discussing the liability of the department to pay the interest has referred to Departments own circular dated 2.1.2002 wherein the Board clarified that the matters of refund other than the amount of duty would not be covered under the provisions of section 11B of Customs Act or section 35FF of Central Excise Act. It was held by the Hon ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Another circular of department bearing No. 802/35/2004 CX dated 8.12.2004 was also being considered by the Apex Court in its above mentioned judgement dated 8.4.2015. In that circular the Board emphasised that the amounts other than the amount of duty if deposited it should be refunded immediately as non-returning of deposits attract interest that has been granted by the Courts in number of cases. Since the amount in question was not the amount of pre-deposit as required under section 35F of Central Excise Act, section 35FF has been wrongly invoked by Commissioner (Appeals). The Commissioner (Appeals) has committed an error while holding that since there is no provision to grant interest on the seized currency notes while refunding the said currency, the interest from the date of seizure cannot be granted. Commissioner (Appeals) is held to have ignored the judicial precedence as discussed above and thus is held to have committed violation of principles of judicial protocol - the order under challenge is hereby set aside and appellant is held entitled for refund of interest on the principle amount at the rate of 12% from the date of its seizure. Appeal allowed.
Issues:
- Entitlement to interest on delayed payment of refund - Interpretation of section 11B/11BB of Central Excise Act, 1944 - Applicability of judicial precedents on refund of seized currency - Claim for interest from the date of deposit of seized amount Analysis: 1. The appeal concerns the entitlement to interest on delayed payment of a refund. The appellant challenged the order denying interest on the refunded amount. The dispute arose from the seizure of goods and currency, followed by confiscation proposals and subsequent appeals resulting in the appellant seeking a refund of the seized currency along with interest. 2. The appellant argued that the Adjudicating Authority's denial of interest from the date of deposit was unreasonable. Reference was made to the Mafatlal Industries Ltd. case to support the claim that the seized currency was not related to duty liability, thus not falling under section 11B/11BB of the Central Excise Act, 1944. The appellant cited specific cases to contest the authority's decision. 3. The Departmental Representative defended the order, emphasizing the reliance on section 11BB of the Central Excise Act, stating that interest was correctly awarded after three months from the refund application date. The opposing arguments were presented, highlighting the absence of provisions for interest beyond the specified period. 4. The Tribunal examined the applicability of section 11B/11BB in the case and referred to a previous judgment by the Allahabad Bench. The Tribunal concluded that the appellant's claim was for a revenue deposit, not duty refund, making section 11B inapplicable. The Tribunal cited relevant sections of the Excise Act and previous court decisions to support its findings. 5. Citing the Commissioner of Customs vs. Finacord Chemicals case, the Tribunal discussed the liability of the department to pay interest on refunds not related to duty amounts. The Tribunal referred to circulars and court decisions emphasizing the refund of non-duty deposits and the entitlement to interest on such amounts. 6. Relying on legal principles and precedents, including constitutional provisions, the Tribunal held that the appellant was entitled to interest on the seized amount from the date of its deposit. The Tribunal found errors in the Commissioner's decision and ruled in favor of the appellant, setting aside the order and allowing the appeal for a refund of interest at a specified rate. 7. The judgment was pronounced on 2nd December 2022 by Dr. Rachna Gupta, Member (Judicial) of the Appellate Tribunal CESTAT New Delhi.
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