2015 (1) TMI 944 - HC - Central Excise

Interest on refund claim - Refund sanctioned by Tribunal - Refund granted but interest not paid as appeal pending in Higher Court - Held that - The statutory prescription that the claim for refund, if sanctioned, carries the obligation to pay interest, in the event, it is not remitted in a particular time, is undisputed. The only justification for withholding the sum is that the Revenue has approached the Higher Court and the Appeal of the Revenue is pending. We are of the view that mere pendency of these proceedings and in the given facts and circumstances, would not enable the Revenue to resist the claim as eventually, the principal amount was due and recoverable. That sum has been already remitted. In other words, the Petitioners have received a sum of ₹ 41,01,467/. The balance claim that remains is of interest on this sum. If the statute provides that in the event, amount is not paid within a specified time, then, the Revenue will have to pay interest, unless and until, the Revenue was able to obtain any preventive or prohibitory order and direction. It cannot refuse to release the sum in favour of the Petitioners. The Revenue could have released the sum without prejudice to its rights and contentions and subject to the pending proceedings in this Court and equally the Tribunal. The Rule is made absolute in terms of prayer clause (a) with the direction to the Respondents to pay the sum of interest as quantified in terms of the earlier orders and direction and the provisions of law - The amount as computed and quantified shall be released and paid to the Petitioners within a period of 12 weeks from today - Decided in favour of assessee.

Summary

Issues:
1. Utilization of credit of duty paid under Additional Duties of Excise Act.
2. Show cause notice and subsequent orders by authorities.
3. Granting of interest on the refund amount.
4. Non-payment of interest amount by the Respondents.
5. Pending appeals and their impact on the refund.

Utilization of credit of duty paid under Additional Duties of Excise Act:
The Petitioners utilized duty credit on inputs for discharging liability on the final product. The Department claimed the credit was wrongly used, leading to a deposit by the Petitioners. Various orders were passed by authorities and tribunals, ultimately resulting in the sanctioning of the refund amount.

Show cause notice and subsequent orders by authorities:
A show cause notice was issued to the Petitioners, leading to orders confirming the demand and imposing penalties. Subsequent appeals and orders by different authorities and tribunals were made, ultimately resulting in the sanctioning of the refund amount.

Granting of interest on the refund amount:
The Assistant Commissioner did not grant interest on the refund amount, prompting the Petitioners to approach the Appellate Authority. The Appellate Authority directed the payment of interest at a specified rate, which the Respondents failed to pay, leading to dissatisfaction and further legal action by the Petitioners.

Non-payment of interest amount by the Respondents:
Despite the order directing the payment of interest, the Respondents failed to pay the interest amount to the Petitioners, causing grievance and dissatisfaction.

Pending appeals and their impact on the refund:
The pending appeals by the Revenue in higher courts and tribunals were cited as reasons for not paying the interest amount. However, the court held that the mere pendency of these proceedings does not justify withholding the interest amount, especially when the principal amount had been paid. The court directed the Respondents to pay the interest amount within a specified time frame, balancing the rights and equities of both parties.

In conclusion, the court made the rule absolute, directing the Respondents to pay the interest amount as quantified in earlier orders and within a specified time frame. The court clarified that this direction did not prejudice the rights and contentions of the Revenue in the pending proceedings, and the Petitioners might be called upon to remit the sums if the Revenue succeeds in their appeal. The court's order did not prevent further legal actions or proceedings from taking place, keeping the contentions of both sides open.