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2021 (12) TMI 72 - AT - Central ExciseRejection of refund of the amount of penalty deposited - penalty was imposed under Rule 173Q of Central Excise Rules, 1944 - HELD THAT - It is admitted fact on record that the Hon ble Supreme Court in the case of Hans Steel Rolling Mills 2011 (3) TMI 2 - SUPREME COURT has held that penalty under Rule 173Q is not imposable where an assessee is operating under the compound levy scheme which is a complete code in itself. The order of Hon ble Supreme Court is binding on all sub-ordinate Courts including the Adjudicating Authority (under the taxation law) as provided in Article 141 of the Constitution of India. The observation of the Commissioner (Appeals) for denying the refund for amount of penalty under Rule 173Q, is erroneous and bad - the impugned order-in-appeal is modified and penalty of ₹ 25,000/- deposited under the provisions of Rule 173Q is held refundable - Appeal allowed - decided in favor of appellant.
Issues:
1. Refund claim of penalty amount deposited under Rule 173Q of Central Excise Rules, 1944. 2. Admissibility of refund claim for penalty and interest imposed in the light of Supreme Court orders. 3. Liability of interest on the appellant and authority for depositing interest under Section 11AB. 4. Admissibility of refund of penalty under Rule 173Q. Analysis: Issue 1: Refund claim of penalty amount deposited under Rule 173Q The appellant filed a refund claim of ?10,87,567/- for the penalty amount deposited under Rule 173Q of Central Excise Rules, 1944. The Commissioner (Appeals) found that the appellant had deposited the penalty, interest, and Central Excise Duty as directed by the Deputy Commissioner. The Assistant Commissioner dropped the penalty proceedings and recovery of interest under the Supreme Court order. The refund of ?10,62,597/- was found admissible as the interest was deposited without any order of the adjudicating authority. Issue 2: Admissibility of refund claim for penalty and interest The Commissioner (Appeals) noted that no order for recovery of interest under Section 11AA/11AB was present in the Orders-in-original. The interest and penalty under Rule 96 ZP(3) were kept in abeyance. The Commissioner held that the interest of ?10,62,597/- was deposited without authority of law. Refund of this amount was deemed admissible based on the Supreme Court's judgment regarding the compound levy scheme. Issue 3: Liability of interest and authority for depositing interest under Section 11AB The Commissioner (Appeals) observed that there was no liability of interest on the appellant as per the Orders-in-original. The direction to deposit interest was deemed without authority of law, supported by the Supreme Court's ruling on the compound levy scheme. The refund of interest amount was allowed as it was deposited without any order of the adjudicating authority. Issue 4: Admissibility of refund of penalty under Rule 173Q The Commissioner (Appeals) held that the appellant was not entitled to the refund of the penalty of ?25,000/- imposed under Rule 173Q as it was deposited as per the Orders-in-original. The Assistant Commissioner dropped the penalty proceedings and recovery of interest under Rule 96ZP(3), but the refund of penalty was not considered admissible. In conclusion, the Tribunal modified the impugned order to allow the refund of the penalty amount deposited under Rule 173Q. The decision was based on the Supreme Court's ruling that penalty under Rule 173Q is not imposable under the compound levy scheme. The Adjudicating Authority was directed to refund the penalty amount within sixty days from the date of the order.
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