2020 (11) TMI 840 - HC - Central Excise

Refund of amount paid as supervision charges - Interest for the amount paid as supervision charges - Board s circular dated 23.04.2003 - HELD THAT - It was observed by the board that even though the circular dated 01.01.2002 does not envisage any physical supervision of such storage premises /godown by the Central Excise, the field formations are still collecting merchant overtime charges / charges on cost recovery basis as per earlier concept of physical supervision of godowns / storage places in terms of Board s Circular dated 14.04.1986. Therefore, the board s circular dated 01.01.2002 and the earlier instructions of the State have stood modified to the said extent. Thus, the over-time supervision charges could not have been charged by the respondents. Therefore, the appellant was entitled for refund of the over-time supervision charges. The board s circular dated 24.04.2003 was required to be applied and the refund was to be granted to the appellant. Interest for the amount paid as supervision charges - HELD THAT - Since the supervision charges were not to be charged by law, the appellant would be entitled for payment of interest on refund of the said amount. However, the earlier payment of the supervision charges has been made by a mistaken notion of law - the department cannot be held completely responsible for collection of these amounts. Therefore, in order to balance equities, a notional interest is liable to be imposed - interest @ 3% per annum will be paid from the date of deposit made by the appellant till the date of payment to be made to the appellant by the respondents. The substantial question of law is answered in favour of the appellant and against the department by holding that the appellant is entitled for refund of the amount paid by him towards supervision charges - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of supervision charges paid by the appellant.

Analysis:
The appellant, engaged in V.P. sugar manufacturing, stored sugar in outside godowns under departmental supervision without duty payment. The commissioner imposed over-time supervision charges. Despite subsequent circulars clarifying non-warranted charges, the appellant paid ?3,86,762/- and ?1,10,363/- for storage. The claim for refund was rejected by the deputy commissioner, affirmed in appeals till tribunal.

The appeal was admitted to consider reframed questions of law. The main issue was whether the appellant was entitled to a refund of supervision charges. The appellant argued that circulars modified earlier instructions, making charges unwarranted. The respondents contended that lower authorities rightly upheld the charges.

The Board's circular dated 23.04.2003 clearly stated that merchant overtime charges were no longer warranted for storage outside factory premises. The appellant was entitled to a refund as charges were wrongly collected. The appellant was also entitled to interest on the refunded amount due to a mistaken notion of law.

The substantial question of law was answered in favor of the appellant. Orders of lower authorities and tribunal were set aside, directing the respondents to refund the supervision charges within eight weeks with 3% interest per annum from the date of deposit.

In conclusion, the appellant successfully argued for a refund of supervision charges paid, supported by the Board's circular. The judgment favored the appellant, directing the refund with interest, acknowledging the mistaken collection of charges.