2004 (4) TMI 94 - HC - Central Excise

Writ jurisdiction - Refund - Interest on duty - duty for an activity deemed as manufacturing - seeking refund of the duty paid under protest and the entitlement to interest on the refunded amount - HELD THAT - In our considered view, though it could be said as stated by the learned Standing Counsel for the Central Government, the second proviso to Section 11B is applicable to only limitation aspect. However, the provision under clause (f) of sub-section (2) of Section 11B would say the relevant date and as such, we are convinced that the claim of the petitioner would fall within clause (f) of sub-section (2) of Section 11B and therefore, the petitioner shall be entitled to get interest from the date on which the duty is paid under protest. It is to be examined that the petitioner was not liable to pay duty but however, on the insistence by the Department, paid duty under protest. Therefore, these provisions cannot be construed to apply to the duty paid under protest and deny the petitioner interest on the amounts so collected by the Department. It is well settled that while interpreting a statute as to the benefit to be given either to the State or to a citizen, courts have held the statute has to be interpreted in favour of the citizen when the litigation is between the mighty State and the subject. In this case, admittedly the action of the respondents has been declared as illegal by the Division Bench of this court holding that the activity undertaken by the petitioner does not fall within the ambit of manufacturing activity and the goods are not taxable. That being so, the respondents though insisted the petitioner to pay huge sums of more than 4 crores, that action, in our considered view, is a forced action and therefore, the petitioner cannot be denied interest on the amounts which are directed to be refunded from the dates of its deposit. We declare that the petitioner is entitled for the interest on the amount of Rs. 2,35,36,936/- from the date of payment made to the respondent under protest. Accordingly, the writ petition is allowed. No costs.

Summary

Issues Involved:
The issues involved in this case include the petitioner being compelled to pay excise duty for an activity deemed as manufacturing, seeking refund of the duty paid under protest, and the entitlement to interest on the refunded amount.

Excise Duty Issue:
The petitioner, a company, was compelled to pay excise duty for assembling duty paid manufactured articles into a 'Cable Jointing Kit,' despite claiming it was not a manufacturing activity. The High Court previously declared the activity as non-taxable.

Refund Application:
Following the court's judgment, the petitioner sought a refund of the excise duty paid under protest. The Assistant Commissioner of Customs rejected the initial refund application, but the Appellate Authority later granted a partial refund without interest.

Legal Arguments:
The petitioner's counsel argued that interest should be granted on the refunded amount, citing provisions of the Central Excise Act, particularly Section 11B. The counsel relied on previous court decisions to support the claim for interest on the duty paid under protest.

Refund Provisions Analysis:
The court analyzed Sections 11B and 11BB of the Central Excise Act, determining that the petitioner was entitled to interest on the duty paid under protest. The court emphasized that the petitioner's payment was forced due to the Department's insistence, making them eligible for interest on the refunded amount.

Judicial Interpretation:
The court distinguished a Supreme Court judgment cited by the Standing Counsel, asserting that the petitioner was legally entitled to claim interest on the post-payment duty. It highlighted the principle of interpreting statutes in favor of citizens in disputes against the State.

Final Decision:
The court ruled in favor of the petitioner, declaring them entitled to interest on the refunded amount from the date of payment made under protest. The writ petition was allowed without costs, affirming the petitioner's right to interest on the refunded sum.

Separate Judgment:
The judgment was delivered by Dr. Motilal B. Naik, J., with no separate judgment mentioned in the summary.