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TMI Blog2013 (8) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be given - The claim was not barred by period prescribed under sub-section (1) of Section 11B of the Central Excise Act - Held to be entitled to the interest on the delayed refund of amount of Rs.20 Lacs for the period from September 3, 2001 to February 4, 2004 – Decided in favor of Assessee. - Special Civil Application No. 3780 of 2004 - - - Dated:- 8-2-2013 - Akil Kureshi And Sonia Gokani, JJ. For the Appellant : Mr S S Iyer, Adv For the Respondent : Mr Gaurang H Bhatt, Adv, Mr Harin P Raval, Adv JUDGEMENT:- PER : Sonia Gokani For understanding the dispute between the parties, the facts narrated in the petition are being reproduced briefly as under. 1.1 The petitioner-company is engaged in manufacturing of Draw Twisted Yarn (hereinafter referred to as "DTY) and Twisted Yarn (hereinafter referred to as "TY ), falling under Chapter Heading 54 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as "the Tariff Act ). 1.2 The petitioner-company was searched by the officers of Preventive branch of Surat Commissionerate. It was found during the search that a "Creel Register"was being maintained by the petitioners, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal allowed the appeal of the petitioners and set aside the order of October, 31, 2000, whereby the Commissioner of Central Excise, Surat had confirmed the demand pursuant to the show-cause notice. 1.9 The petitioners, therefore, filed a refund claim for the redemption fine of Rs.50,000/- imposed on them by the OIO. It appears that the Commissioner of Central Excise (Appeals) rejected the appeal of the petitioners, holding that the refund claim was filed beyond the prescribed period of six months and hence, was time barred. Being aggrieved, the petitioners had also preferred an appeal before the Appellate Tribunal. The Appellate Tribunal on August 28, 2003 had set aside the order of Commissioner and also held that the refund claim was not hit by limitation. 1.10 A request was made by the petitioners to respondent no.2 to sanction the refund of Rs.20 Lacs with interest. Such amount was refunded to the petitioner by cheque of February 4, 2004, however, no interest was paid nor was any reference made in respect of the same. It is, therefore, urged that the petitioners are entitled to interest on the said amount of Rs.20 lacs. 2. In the affidavit-in-reply, the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t requires to be addressed in this petition is as to whether the appellants herein would be entitled to the interest on the said refund claim. Law on the subject at this stage requires discretion before further adverting to the rival claims of the parties. 7. It would be profitable to reproduce Section-11BB of the Central Excise Act as under: "11BB. Interest on delayed refunds : if any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant at such rate [not below that five per cent. and not exceeding thirty per cent. per annum as is for the time being fixed [by the Central Government, by notification in the Official Gazette] on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty.; Provided where any duty ordered to be refunded under sub-section (2) of section 11B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XV. Thus, an appeal before the Supreme Court would also be an appeal under the said Chapter as envisaged under Section 129E of the Act. Thus, any amount deposited during the pendency of an appeal before the High Court or the Supreme Court would also be by way of deposit under section 129E of the Act and has to be treated accordingly. 9. Adverting to the facts of the present case, it is an undisputed position that the amount in question had been deposited by the respondent during the pendency of the appeal before the Supreme Court. In the circumstances, it is apparent that the amount so deposited would squarely fall within the ambit of section 129-E of the Act and has to be treated as pre-deposit. Thus, the contention raised on behalf of the appellant that the amount has been paid by way of duty and not pre-deposit, being contrary to the provisions of section 129E of the Act, does not merit acceptance." 9. The Apex Court in the case of Commissioner of Central Excise, Hyderabad Vs. I.T.C. Ltd. reported in 2005 (179) E.L.T. 15 (S.C), has held that in the event of refund of any pre-deposit when a question arises of giving interest on the delayed refund of pre-deposit, as provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not exceeding thirty percent per annum. It also further held that the said provision would come into play only after the order of refund is made under Section 11B. If the duty is not refunded within a period of three months from the date of receipt of application to be submitted under sub-section (1) of Section 11B, then question of interest would come into play under Section 11B at such rate of interest fixed by the Central Government on expiry of period of three months. The Court held that the explanation appearing below subsection (2) to Section 11BB introduced a deeming fiction that where the order of refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but, by the Appellate Authority or by the Court, then for the purpose of this Section, the order made by the higher Appellate Authority or the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. While further interpreting Section 11BB, the Apex Court held further that interest under the said Section 11B of the Act becomes payable on the expiry of a period of three months from the date of receipt of application under sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile so ordering to set aside the order of the Commissioner, ordered to refund the said amount. Any delay having been occasioned in refunding the amount beyond the period of thee months, would attract interest. The refund of amount considered as predeposit would be at par with the refund of duty and the interest would be payable on such pre-deposit, as is also clear from the judgment of the Apex Court in the case of Commissioner of Central Excise Vs. I.T.C. Limited (Supra). 16. Admittedly, in the facts and circumstances of the case, the refund of amount of Rs.20 Lacs had been made on February 4, 2004. Thus, there has been a delay of considerable period in returning the amount after the Appellate Tribunal held in favour of the appellants assessee. The interest on the pre-deposit is, therefore, required to be given when the Tribunal at New Delhi held that in its judgment that the claim was not barred by period prescribed under sub-section (1) of Section 11B of the Central Excise Act, but on September 3, 2001, when the Tribunal set aside the order of the Commissioner with consequential relief. Resultantly, this petition is allowed. The petitioners herein are held to be entitled to ..... 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