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2024 (4) TMI 381 - AT - CustomsRefusal of grant of interest on the amount deposited during investigation, which was subsequently found to be refundable - applicability of principles of unjust enrichment on the principle amount of refund granted, which was deposited during the course of investigation - HELD THAT - The issue in this appeal is squarely covered by the precedent order of this Tribunal (Allahabad Bench) in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD , wherein also, the amount paid during investigation, subsequently found to be refundable pursuant to adjudication/ appellate order, was held to be amount deposited by way of Revenue deposit. It was further held relying on the ruling of Hon ble Supreme Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT , wherein the Hon ble Court examined the scope of Sec 243 of the Income Tax Act, which provides for interest on delayed refund and also examined Sec 35FF of Central Excise Act, which also provides for interest on delayed refund of amount deposited under Sec 35F (Pre-deposit) and observed that the provisions for grant of interest on delayed refund are pari materia under both the Acts. The Apex Court, taking notice that the assessee/Sandvik Asia Ltd have suffered as their money was lying locked in litigation, withheld by the department for about 17 years without rhyme or reason, and further taking notice that the Revenue charges much higher rate of interest on the amount payable by the assessee, and whereas, pays interest at much lower rate on the amount refundable to the assessee, further observing that interest is compensatory in nature, was pleased to grant simple interest @9% per annum and failing which, to pay further interest @15% per annum. Following the said ruling of Hon ble Supreme Court, the Division Bench of this Tribunal in Parle Agro Ltd have allowed the interest @12% per annum from the date of deposit (amount paid during investigation) till the date of refund - Similarly, interest @12% was also granted by the Chandigarh Bench of this Tribunal in RIBA TEXTILES LTD VERSUS COMMISSIONER OF CE ST, PANCHKULA 2020 (2) TMI 602 - CESTAT CHANDIGARH . On appeal by Revenue, the said order was confirmed by Hon ble Punjab Haryana High Court, dismissing the appeal of Revenue following the ruling of the Apex Court in Sandvik Asia Ltd. The amounts paid during investigation are to be treated as deposits as held by the Hon ble Delhi High Court in TEAM HR SERVICES PRIVATE LTD. VERSUS UNION OF INDIA ANR. 2020 (6) TMI 342 - DELHI HIGH COURT , wherein it has been categorically held that the amount deposited in the course of investigation is not in pursuance of any assessment and therefore, cannot be unjustly retained by the department. It was also held that the amounts deposited under protest at the time of investigation are not collected by the authorities with the sanction of law and therefore, the Government does not acquire any right to retain the said deposit, till the Government is held entitled in law by an authority or Court of law. Further, it was held that the assessee is entitled to interest @6% from the date of deposit till the date of interim order and further @7.5% till such amount is actually refunded to the assessee - Accordingly, learned Counsel for assessee has prayed for grant of interest @12% per annum from the date of deposit till the date of refund, in the interest of justice. Principles of unjust enrichment - HELD THAT - Hon ble Madras High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE VERSUS M/S. PRICOL LTD., THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL 2015 (3) TMI 735 - MADRAS HIGH COURT , wherein, under similar circumstances, amount was deposited under protest at the time of investigation, it was held that any amount that is deposited during pendency of adjudication proceedings or investigation is in the nature of deposit under protest and therefore, the principle of unjust enrichment does not apply - In the present case also, there is absence of fact on record that the appellant/assessee has received any amount from the foreign buyer, in addition to the amount of final invoice, pursuant to export of iron ore. Further, admittedly, the final invoice for export is dated 25.08.2008 and remittance was received before 13.03.2009 as per BERC. The deposit(s) were made in December 2009 - the doctrine of unjust enrichment is not attracted in the facts and circumstances of the instant case, as the appellant- exporter have discharged the onus under Sec 28D of the Act. The impugned order modified directing to grant interest @6% per annum from the date of deposit till the date of refund - appeal of assessee allowed in part.
Issues Involved:
1. Whether the grant of interest has been rightly refused on the amount deposited during investigation, which was subsequently found to be refundable. 2. Whether unjust enrichment is attracted on the principal amount of refund granted, which was deposited during the course of investigation. Summary: 1. Grant of Interest on Refund: The appellant/assessee exported iron ore fines and paid export duty based on the Fe content. A dispute arose regarding the Fe content, leading to the appellant depositing Rs.1,18,12,250/- under protest during the investigation. The Tribunal previously ruled in favor of the appellant, finding no collusion or wilful misstatement. Consequently, the appellant sought a refund with interest. The Assistant Commissioner sanctioned the refund but denied interest, referencing the Andhra Pradesh High Court's decision in Maithan Ceramics Ltd vs CCT, Visakhapatnam, which stated that interest is only applicable from three months after the appellate authority's order, not from the date of deposit. The Tribunal, however, referenced the Supreme Court's ruling in Sandvik Asia Ltd vs CIT-I, Pune, which granted interest on delayed refunds, and similar Tribunal decisions granting interest from the date of deposit. The Tribunal concluded that the amount deposited during the investigation should be treated as a 'Revenue deposit' and granted interest at 6% per annum from the date of deposit till the date of refund. 2. Unjust Enrichment: The Revenue's appeal contended that the principle of unjust enrichment was not properly examined. The Tribunal noted that both the Adjudicating Authority and the Commissioner (Appeals) found no evidence that the appellant passed on the duty incidence to another party. The Tribunal cited the Madras High Court's decision in CCE, Coimbatore vs Pricol Ltd, which held that deposits made during investigations are not subject to unjust enrichment. The Tribunal affirmed that the appellant had discharged the burden under Sec 28D of the Customs Act, and the doctrine of unjust enrichment was not applicable. Conclusion: The Tribunal allowed the assessee's appeal, directing the grant of interest at 6% per annum from the date of deposit till the date of refund, and dismissed the Revenue's appeal, finding no merit in the unjust enrichment claim. Pronounced in the Open Court on 08.04.2024.
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