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TMI Blog2021 (5) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... t for payment of the short paid amount of duty and, thereafter, adjudicate upon it. In the present case, however, the amount deposited by the appellant under protest has been appropriated towards differential excise duty without issuance of any notice contemplated under section 11A of the Excise Act. It has now to be seen whether an amount of ₹ 14,38,359 /- could have been appropriated as interest for alleged late payment of the amount of ₹ 43,57,427/-, which was deposited under protest (from rebates claimed and sanctioned to the appellant) - In the first instance, when the order rejecting the refund claim filed by the appellant has been set aside and the appellant is entitled to the refund amount, there is no reason as to why the appellant should be asked to pay any interest for the alleged delay in deposit of said the amount. Secondly, no notice was issued to the appellant for deposit of this interest amount. In the absence of any notice having been issued demanding this amount, for the reasons stated above, the amount could not have been appropriated. The appellant would be entitled to refund of ₹ 43,57,427 /- claimed in the application filed on 05.11.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of production + 10% profit and also enclosed therewith a list of products cleared on assessable value (cost+10%) by a letter dated 24.05.2006. 5. However, the Indian Drug Manufacture s Association challenged the said Circular dated 25.04.2005 before the Bombay High Court but the Circular was upheld by the High Court by judgment dated 28.09.2006. On receipt of the judgment, the appellant started paying excise duty as per rule 4 w.e.f. 01.10.2006. The payment of duty under rule 11 of the Valuation Rules had continued only till 30.09.2006. 6. The appellant, however, received a letter dated 16.01.2007 from the Range-ll Superintendent of Central Excise directing it to pay excise duty on physician samples according to the Circular dated 25.04.2005. The appellant sent a reply by dated 23.01.2007 stating that it had started paying duty on physician samples under rule 4 of the Valuation Rules w.e.f. 01.10.2006. 7. The appellant has also stated that since there was a continued insistence from the department to pay differential duty, the appellant informed the Division Assistant Commissioner of Central Excise, Ujjain by a letter dated September 19, 2008 that though the appellant di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled upon to Show Cause to the Assistant Commissioner Customs and Central Excise, Division Ujjain, within 7 (seven) days of receipt of this Noticee as to why:- (i) The Interest amount of ₹ 14,38,359 /- should not be appropriated from the impugned rebate claims of ₹ 4,12,87,601 /- under the provisions of Section 11 of the Central Excise Act, 1994, if the claims are sanctioned under the provisions of section 11B of the Act read with Rule 18 of Central Excise Rules 2002. (emphasis supplied) 13. By order dated 30.12.2011, the amount of ₹ 14,38,359 /- was appropriated from the rebate claim. The appellant filed an appeal against this order before the Commissioner (Appeals), but the appeal was dismissed by order dated 25.04.2012 and the order dated 30.12.2011 was upheld. 14. It is against both the aforesaid orders dated 30.11.2009 and 25.04.2012 that the appellant filed an appeal before the Tribunal. Both orders were set aside by the Tribunal by order dated 31.10.2017 and the matter was remanded to the adjudicating authority for passing a fresh order in regard to both the matters, after providing a reasonable opportunity to the appellant to present its cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. (ii) I further Order that the appropriation of ₹ 14,38,359 /- towards interest amount, on the aforesaid recovery, made vide OIO No. R-139/2011-12/Rebate/AC dated 30.12.2011, from the Refund claim filled by the assessee claimant M/s Ranbaxy Laboratories Ltd. Dewas is correct and Order upheld. (emphasis supplied) 16. This order dated 10.05.2018 was assailed by the appellant before the Commissioner (Appeals). The Commissioner (Appeals) dismissed the appeal by order dated 16.08.2018 and confirmed the order passed by the Assistant Commissioner. 17. In regard to the contention raised on behalf of the appellant that a show cause notice should have been issued under section 11A of the Excise Act for appropriation of the amount deposited by the appellant under protest, the Commissioner (Appeals) made the following observations: 10.3 Further as regards the contention of the Appellant that since the differential duty was paid under protest; the show cause notice should have been issued for the appropriation of said duty. I take note of Section 11A of the Central Excise Act, 1994 and upon going through the same, I find that there is nothing in this Section which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to how said payment of differential duty was not due to them and that they had made excess payment. Their only ground for seeking refund is that the differential duty paid under protest has not been appropriated by the department by issuance of show cause notice. (emphasis supplied) 19. In regard to the appropriation of interest amount of ₹ 14,38,359 /-, the Commissioner (Appeals) observed as follows: 12. Further, as regard recovery of interest of ₹ 14,38,359 /-, on the aforesaid amount, it is clear that interest is liable to be paid when the correct duty is not discharged by due date. The Appellant in the present case by subsequently depositing the differential duty of ₹ 43,57,427 /- has accepted that initially duty had not been paid by them correctly and that it has been corrected subsequently . Further, as per records, I find that a show cause Notice vide C.No.V(18)18-173/11-12/Rebate/10136-37 dated 12.12.2011 was issued to the Appellant wherein it was proposed as to why the Interest amount of ₹ 14,38,359 /- be not appropriated from the impugned claim of ₹ 4,12,87,601 /-, as even after repeated reminders/request letters from the Rang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the time of payment of differential duty and the dispute pertaining to assessment of physician samples was settled by the Bombay High Court, a separate show cause notice for the appropriation of differential duty was not required; (ii) There was no good reason for the appellant to deposit the duty under protest in view of the decision of the Bombay High Court in the writ petition filed to challenge the Circular dated 24.05.2005; and (iii) It was also not necessary for the department to issue a show cause notice for recovery of the interest since the short payment of duty was admitted by the appellant and payment of interest is mandatory. In fact, a show cause notice dated 12.12.2011 had been issued for appropriation of the interest amount. 22. The submissions advanced by learned counsel for the appellant and the learned Authorized Representative of the Department have been considered. 23. The appellant had been paying excise duty on the physician samples by adopting valuation under rule 11 read with rule 8 of the Valuation Rules in terms of the Board Circular dated 01.07.2002. Subsequently, the Board issued a Circular dated 25.04.2005 clarifying that the valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA. (2) The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder. (emphasis supplied) 26. It would be seen from the aforesaid provision of sub-section (1) of section 11A that where any duty of excise has been short paid, the Central Excise Officer shall within one year from the relevant date serve notice on the person chargeable with the duty which has been short paid requiring him to show cause why he should not pay the amount specified in the notice. Further, the person chargeable with duty may, before service of notice pay the amount of duty along with interest. on the basis of his own ascertainment of such duty or the duty ascertained by the Central Excise Officer. Sub-section (2) of section 11A requires the person to inform the Central Excise Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice, it is the primary requirement of the law that has to be adhered to by the authorities. In the absence of any show cause notice, the proceedings initiated against an assessee would be vitiated and would be a serious violation of the principles of natural justice. The purpose of the principles of natural justice is to prevent miscarriage of justice. 7. We find that the Hon'ble High Court of Calcutta in the case of Pradeep Co. v. Customs reported in 2003 (152) ELT 294 (Cal.) has held as follows: Having regard to the mandatory provision of Section 124 even if the petitioner was aware of such proceedings the duty to serve notice upon the petitioner and to adjudicate the question of confiscation and penalty in the manner indicated under Section 124 could not be shaken off. A mere plea of constructive notice is not a sufficient answer either to such non-compliance with statutory duty. Be that as it may, the fact remains that before the conclusion of the adjudication proceeding culminating in the impugned order of confiscation and penalty they had the knowledge that the respondent No. 5 was a hirer of the car under a Hire Purchase Agreement with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. The said show cause notice having not been issued, the deposits made by the appellant cannot take the colour of the duty so as to invite the limitation provisions. The appellants were admittedly not required to pay the said duty and the refund claim does not pertain to the routine payment of duty in the ordinary course of the business where such refund claim requires scrutiny from the angle of limitation as also from unjust enrichment angle. The order of the Commissioner (Appeals) denying the refund claim on the point of limitation cannot be upheld. The same is accordingly set aside and the appeal allowed with consequential relief to the appellants. (emphasis supplied) 32. As noticed above, after the appellant deposited the amount under protest, it filed a representation dated 03.11.2008 explaining the circumstances under which the amount had been deposited under protest. The appellant also mentioned that it was entitled to refund of the amount, for which a separate application would be filed. Subsequently, the appellant did file an application on 05.11.2008 for refund ₹ 43,57,427 /-. The application was initially rejected by the Commissioner and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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