2024 (2) TMI 668 - AT - Central Excise

Entitlement for interest on the refund sanctioned - change of opinion of the Court in a subsequent matter of another party would give any leverage to the appellants to re-open the decision which has attained finality or not. Appellants argues that interest is a natural corollary of the refund granted and the rights of the appellants cannot be taken away for the reason that the Hon ble Apex Court has overturned the decision in M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT vide their decision in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS 2019 (12) TMI 286 - SUPREME COURT . HELD THAT - It is found that consequent to the passing of judgment by the Hon ble Supreme Court in the case of M/s Unicorn Industries, the Department has raised a number of demands on the refunds already granted to various assessees; Hon ble High Court of Jammu Kashmir in the case of COMMISSIONER OF CGST AND COMMISSIONER OF CENTRAL EXCISE, J K, JAMMU VERSUS NARBADA INDUSTRIAL BARI BRAHMANA JAMMU 2021 (10) TMI 1426 - JAMMU KASHMIR AND LADAKH HIGH COURT , has held that the change of opinion of the Court in a subsequent matter of another party would not give any leverage to the appellants to re-open the decision which has attained finality. If the Department is barred from raising demands for the refunds already granted, the appellants also cannot seek interest on the refunds already granted. It is further found that CBEC clarified vide Circular No.682/73/2002-CX dated 19.11.2002 that the provisions of Section 11B of the Central Excise Act, 1944 are not applicable in the case of Exemption Notifications No.56/2002 and No. 57/2002 both dated 14.11.2002. The findings of the learned Commissioner (Appeals) that the mechanism of refund has been put in place in order to operationalize the exemption contained in the notifications and to the extent, refunds arising out of these notifications cannot be considered to be refunds under Section 11B of the Central Excise Act, 1944, is agreed upon. The appellants have not made out any case for grant of interest - Appeal rejected.

Summary

Issues involved:
The issues involved in this case are whether the appellants are entitled to interest on the refund granted to them by the Department following the orders passed by the Tribunal, and whether the refunds under Notification No. 56/2002 fall under Section 11B of the Central Excise Act, 1944.

Issue 1: Entitlement to interest on refund:
The appellants, a pharmaceutical company, filed refund claims of Education Cess and Secondary and Higher Education Cess under area-based exemption. The Department rejected the claims, but on appeal, the Tribunal allowed the refund based on the Supreme Court's decision in a previous case. However, the issue of interest on the delayed payment of refund was not considered. The Commissioner (Appeals) rejected the request for interest, citing the Supreme Court's decision in another case that Education Cess refund is not admissible. The appellants argued that interest should be granted as a natural corollary of the refund, but the Department contended that since the Supreme Court's decision had changed, the refund itself was not a matter of right, and hence interest was not applicable.

Issue 2: Refunds under Notification No. 56/2002 and Section 11B:
The appellants argued that the refund was sanctioned under Section 11B, contrary to the Commissioner (Appeals) relying on a circular stating that refunds under the notification were not under Section 11B. The appellants highlighted a High Court decision stating that circulars cannot override statutory provisions. The Commissioner's order was criticized for holding that refunds under the notification do not fall under Section 11B while also invoking the doctrine of unjust enrichment. The appellants referred to a Tribunal judgment in another case to support their argument.

Judgment Summary:
The Tribunal rejected all appeals, emphasizing that the change in the Supreme Court's decision regarding Education Cess refunds affected the entitlement to interest. The Tribunal cited a High Court decision stating that a change in the law does not allow reopening of finalized matters. It was noted that the Department had raised demands on refunds granted due to the changed Supreme Court decision. The Tribunal agreed with the Commissioner that refunds under the notification were not akin to Section 11B refunds, as clarified by a CBEC circular. Therefore, the appellants were not entitled to interest on the refunds. The Tribunal concluded that granting interest would open a Pandora's box of perpetual litigation and upheld the Commissioner's decision to deny interest.