2005 (1) TMI 135 - AT - Central Excise

Summary

Issues involved:
Refund of interest amount deposited by M/s. J.C.T. Limited.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi concerned the refund of interest amount deposited by M/s. J.C.T. Limited. The Appellant, a manufacturer of Nylon/Polyester filament yarn and Polyester Staple Fibre, argued that the interest amount paid to the Department from July 1997 to September 1999, totaling Rs. 30,49,873/-, was collected without legal authority. The Department insisted on charging interest at 25% per annum from the date of submission of cheques to the date of encashment. The Appellant contended that since the interest was collected unlawfully, they applied for a refund, which was rejected by the Asstt. Commissioner and the Commissioner (Appeals) citing time-bar under Section 11B of the Central Excise Act. The Appellant argued that interest is not a duty, and hence, Section 11B does not apply, relying on precedents like Ahmed Khan & Sons v. C.C., Calcutta and Collector of Customs v. Garden Silk Mills.

Counter-arguments:
The Department, represented by Shri A.S. Bedi, argued that there is no provision in the Central Excise Act for refunding interest paid wrongly. Refund provisions are limited to Section 11B, requiring claims to be filed within six months from the relevant date. Citing the Supreme Court's decision in Miles India Ltd. v. A.C.C., it was contended that the Department is bound by the limitation period specified in the Act. The Department also relied on the case of CCE v. Doaba Coop. Sugar Mills to support their argument.

Judgment:
The Tribunal considered both sides' submissions and held that the Appellant's claim for refund of interest paid during 1997-1999 was not valid. The Commissioner (Appeals) had correctly rejected the appeal as time-barred under Section 11B of the Central Excise Act. The Tribunal emphasized that Section 11B pertains to the refund of excise duty only, and since interest is not classified as excise duty, there is no provision for its refund under the Act. Referring to the Supreme Court's decision in Mafatlal Industries v. UOI, the Tribunal stated that in cases of unconstitutional levies, refund claims must be made through a civil suit or a writ petition under Article 226 of the Constitution, not under the Central Excise Act. Therefore, the Appellant's failure to adhere to the time limit for filing refund claims under Section 11B led to the dismissal of their appeal. The Tribunal upheld the impugned order, rejecting the appeal for refund of the interest amount.