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TMI Blog2024 (7) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. Explanation to section 11BB also states that where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section. Hence the relevant date for calculating the interest rate in terms of section 11BB would be three months from the date immediately after the expiry of three months from 23.08.2018, the date of the order of the Commissioner (Appeals). What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection? - HELD THAT:- It has been categorically held by the Hon ble Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] and discussed elaborately above, that notwithstanding anything to the contrary contained in any judgment, decre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, vide Order-in-Original dated 29.11.2017, holding that the appellant was not entitled for the exemption of excise duty equivalent to the CVD and also vacated the protest. The Commissioner (Appeals II), Chennai vide Order in Appeal dt 23.8.2018 allowed the appeal but directed the Adjudicating Officer to verify the concept of unjust enrichment. After filing a refund claim for Rs 8,28,97,403/- on 10.3.2021 with the Department under Sec 11B of Central Excise Act 1944 (CEA 1944), M/s TIIPL appealed against the said Order-in-Appeal before the CESTAT regarding the verification of unjust enrichment. They subsequently withdrew their appeal before CESTAT on 29.06.2021 so as to pursue their refund claim. 5. During verification of the refund claim it appeared to the Commissionerate that the differential excise duty equivalent to the CVD of Rs.38,13,559/- was passed on to the buyer of such goods. Accordingly, the appellants were issued Show Cause Notice dated 6.7.2021 and the matter adjudicated in due course vide OIO dated 20/12/2021, sanctioning the differential excise duty of Rs.7,34,77,184/- with interest of 53,30,025/- to their Bank account. The differential excise duty equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner Of Central Excise, Coimbatore Versus M/s. Pricol Ltd., The Customs, Excise Service Tax Appellate Tribunal (2015 (3) TMI 735 Madras High Court) (ii) Commissioner, Central Excise 7-A, Ashok Marg, Lucknow Versus M/s Eveready Industries India Ltd (2017 (2) TMI 197 - Allahabad High Court) (iii) Ebiz. Com Pvt. Ltd. Versus Commissioner of Central Excise, Customs And Service Tax And Ors (2016 ((9) TMI 1405 - Allahabad High Court) (iv) Universal Heat Exchangers Ltd. Vs. Commissioner of Central Excise, Coimbatore (2015 (10) TMI 1678 - CESTAT Chennai) (v) Chambal Fertilizers Chemicals Ltd. v. Commissioner of CGST, Udaipur (2023 (71) G.S.T.L. 171 (CESTAT Delhi). (vi) M/s KG. Denim Ltd (FINAL ORDER Nos. 40411-40415/2024 Chennai CESTAT) He further submitted that in lieu of various judicial precedents, the interest due to them ought to be computed at 12% from the date of deposit of amounts under protest. He referred to the judgment of a Coordinate Bench of this Tribunal in M/s. Parle Agro Pvt. Ltd. Versus Commissioner, Central Goods Service Tax, Noida (2021 (5) TMI 870 - CESTAT Allahabad) which relying on the Hon ble Supreme Court s judgment in M/s Sandvik Asia Limited vs Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rejecting Refund 29.11.2017 4. OIA Allowing Refund and remanding for UJE 23.08.2018 5. Appeal preferred by party in CESTAT 27.11.2018 6. OIA accepted in review 05.02.2019 7. CESTAT Appeal Withdrawal Filed by party 29.06.2021 8. CESTAT Appeal Withdrawal Allowed 19.08.2021 9. Refund Claim Filed based on OIA ( Proof of UJE* submitted as per impugned OIA ) 10.03.2021 10. Verification Report of Range Officer 03.06.2021 11. SCN against the refund claim ( Date of filing of complete refund claim as per impugned OIA ) 06.07.2021 12. Reply to SCN by TIPL 14.07.2021 13. First Personal Hearing 29.07.2021 14. Second Personal Hearing by Adjudicating Authority 24.08.2021 15. CA Certificate (Submitted only with FAA) 09.11.2021 16. OIO Allowing Refund after reducing UJE 20.12.2021 17. Appeal filed on with FAA (resulting in impugned OIA) 24.12.2021 18. CA Certificate dated 09.11.2021 (Not submitted with Adjudicating Authority) 24.12.2021 19. Personal Hearing with FAA (for the impugned OIA) 10.01.2023 20. Impugned Order-in-Appeal 15.03.2023 * Unjust Enrichment He submitted that apart from the two grounds stated by the appellant it was also critical to decide the following questions; (a) Who is the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.08.2018. The Ld. AR submitted that the reason attributed to such delay on the part of TIPL was due to the pendency of TIPL s excise appeal before CESTAT between 27.11.2018 to 19.08.2021. However, the Appellant has submitted that interest is to be computed as per provisions of Section 11BB as per which the relevant date would be three months from the date of filing the first refund application on 11.01.2017 without UJE details. The impugned order has categorically discussed the issue in Para 7.1 that as per Section 11 B of the Central Excise Act,1944, a refund application should be considered complete only when documents evidencing unjust enrichment is submitted along with the refund application and that in the instant case, the appellant had filed a refund claim with proof of unjust enrichment only on 10.03.2021 based on which Show Cause Notice was issued on 06.07.2021. He submitted that it is pertinent to mention that the ratio of the decision in the case of Mafatlal Industries Ltd. Vs. Union of India reported in 1997(89)ELT 247(SC) is squarely applicable to the facts of the case in which the Hon ble Court held that all claims for refund except where levy is held to be unconsti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In short, CESTAT cannot legislate. The legislation (Central Excise Act) in certain provisions has enabled the Central Government to issued Notifications which is a function of the Executive. Notifications are nothing but subordinate legislations delegated by the legislature to the executive. It is pertinent to point out that the separation of judiciary from the executive is ensured in Article 50 of the Constitution, which states the state shall take steps to separate the judiciary from the executive in the public services of the state ; (iii) It assumes the payments made by the Appellant to be revenue deposits and believes the rate of interest is not prescribed. However, the same order takes into consideration the Notifications prescribing the rate of interest on delayed payment of duty , on delayed refunds u/s 11BB , in excess of duty , on delayed payment of duty , and finds the rate of interest varies in these notifications from 6 to 18% and without any rationale nor any authority concludes it as appropriate to fix the rate of interest at 12% for the deposit made. The rate has thus been fixed arbitrarily. (iv) The Hon ble Supreme Court in Northern Plastics Ltd., Vs. Hindustan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; (1) What is the relevant date for computing interest as per the facts of this case? (2) What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection? (3) Whether the Tribunal is competent to decide the effective rate of interest other than that notified under sec. 11BB, for a delayed refund under the Act? 9. Before taking up the issues above, the point raised by the Appellant that amounts paid under protest are nothing but deposit and provisions of Section11B of Central Excise Act, 1944 will not apply, needs to be addressed. 9.1 The use of the word deposit has many connotations. In common parlance payment of duty is also referred to as deposit of duty. Section 35F of CEA 1944, includes mandatory pre-deposit provisions before filing an appeal. The rate of interest payable on refund of such pre-deposit is provided in section 35FF ibid. That is not the case here. In this case it has to be understood correctly as an amount that has been paid towards duty liability as per a decision communicated by audit. It is the appellants view that the amount collected cannot be treated as duty until and unless the said amount is adjusted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was made under protest; RULE 233B. Procedure to be followed in cases where duty is paid under protest.- Where an assessee desires to pay duty under protest he shall deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest. (2) On receipt of the said letter, the proper officer shall give an acknowledgement to it. (3) The acknowledgement so given shall, subject to the provisions of sub-rule (4), be the proof that the assessee has paid the duty under protest from the day on which the letter of protest was delivered to the proper officer. (4) An endorsement Duty paid under protest shall be made on all copies of the gate pass, the Application for Removal and Form R.T.12 or Form R.T. 13, as the case may be. (5) In cases where the remedy of an appeal or revision is not available to the assessee against any order or decision which necessitated him to deposit the duty under protest, he may, within three months of the date of delivery of the letter of protest, give a detailed representation to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise. (6) In cases where the remedy of an appeal or revision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or decision which necessitated him to pay duty under-protest he shall give a detailed representation to the Assistant Commissioner of Central Excise for obtaining an appealable order. The amount paid was accordingly confirmed by the Original Authority as being correctly done when he vacated the protest and rejected the refund claimed by the appellant. A Bench of seven Judges of the Hon ble Supreme Court in its judgment in Smt. Ujjam Bai v. State of Uttar Pradesh, [1962 AIR 1621/ 1963 SCR (1) 778/ 1961 1 SCR 778], held as under; A taxing authority, which has the power to make a decision on matters falling within the purview of the law under which it is functioning is undoubtedly under an obligation to arrive at a right decision. But the liability of a tribunal to err is an accepted phenomenon. The binding force of a decision which is arrived at by a taxing authority acting within the limits of the jurisdiction conferred upon it by law cannot be made dependent upon the question whether its decision is correct or erroneous. For, that would create an impossible situation. Therefore, though erroneous, its decision must bind the assessee. Further, if the taxing law is a valid restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise provided by or under this rule, no claim of refund of any duty shall be entertained . Section 11B, as in force prior to April, 1991 contained sub-section (4) in identical words. It said: (4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained . Sub-section (5) was more specific and emphatic. It said: Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim. It started with a non-obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect of such claim. Sub-section (3) of Section 11B, as it now stands, is to the same effect - indeed, more comprehensive and all-encompassing. It says, (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll which became the Act, the Act along with the Rules was intended to form a complete central excise code . The idea was to consolidate in a single enactment all the laws relating to central duties of excise . The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and also for refunding the taxes which have been collected contrary to law, viz., Sections 11A and 11B and its allied provisions . Both provisions contain a uniform rule of limitation, viz., six months, with an exception in each case. Sections 11 and 11B are complimentary to each other. To such a situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable, viz., where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available - except to the limited extent pointed out therein. Central Excise Act specifically provides for refund. It expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction of this court under Article 32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment. 69. There is, however, one exception to the above proposition, i.e., where a provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. . . . . . ********* PART - IV 99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment. (i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court. ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. . . . . (emphasis added) 9.9 As per the majority decision of the Hon ble Judges, the language of the statute could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters. The Hon ble Court felt that taking any other view would amount to nullifying the provisions in Rule 11/ Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. Although many judgments were cited, copies of only two judgments were provided. All cited judgments were however stated to support the view that the amounts paid during investigation under protest are only deposits and provisions of Section11B of Central Excise Act, 1944 will not apply. Deposits made at the time of filing an appeal are compulsory in nature being based on statutory provisions. It must be stated at the risk of repetition that monies paid during an investigation are not based on any letter issued by the department stating the issue involved and quantifying the amount payable. They are discretionary amounts paid by the assessee which are to be set off against any future demand that may be confirmed. We have examined the issue in the case of M/s. Pricol Ltd. and in Ebiz. Com Pvt. Ltd. (supra) copies of which were submitted. They, as stated, relate to payments made during an ongoing investigation. The matter is distinguished as during investigations the duty does not crystalise and no letter / objection is issue by the department asking the assessee to pay a specific amount of duty. On the other hand audit checks are made and objections are raised as per a procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. As stated circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases and cannot be blindly relied upon. Hence payments made after the quantification of duty / interest on the completion of an audit can be refunded only as per the provisions of sec. 11B and 11BB and are governed by the law as declared by the Apex Court in Mafatlal Industries Ltd. (supra). The judgments cited by the Appellant are not found relevant to the issues in this appeal. 10. Before evaluating the rival cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) ................................................................. (5) For the removal of any notification issued under clause (f) of doubts, it is hereby declared that the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.] [Explanation. For the purposes of this section, - (A) refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (B) relevant date means, - (a) . . . . . (b) . . . . . (c) . . . . . . . . . . . . . (ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction;] (f) in any other case, the date of payment of duty.] (emphasis added) *****. *****. ***** 11BB. Interest on delayed refunds.- If any duty orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. We find that the facts are different in this case. 12.2 As per the time chart given by Revenue the refund claim was filed by the Appellant on two dates. Firstly on 11/01/2017 i.e. after payment of duty as per the audit objection, which was before the matter was decided by way of a quasi-judicial order i.e. OIO confirming the payment of duty and vacating the protest. At this stage the right to receive a refund had not crystalised nor had proof of UJE been submitted. The refund claim was filed the second time around on 10/03/2021 along with proof of UJE, after the issue of OIA dated 23/08/2018 which set aside the duty demand and allowed the refund of duty paid. This appears to be the more appropriate date, in terms of the M/S Ranbaxy Laboratories Ltd judgment, since as per section 11B(1) of CEA 1944, any person claiming refund of any duty of excise and interest, shall be accompanied by such documentary or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarifying the position in Gujarat Fluro Chemicals (supra). They have also questioned the authority of this Tribunal, a creature of the statute, to determine the rate independent of the rate prescribed under the Act. The arguments have been set out at para 7.2 above and are not repeated. 13.2 We find that the rate of interest as prescribed in section 11BB of CEA 1944 is for delayed refund. If the refund is paid on time the question of paying interest would not arise. The language of the section is not ambiguous, or uncertain and must be given effect to. In Girdhari Lal Sons Vs Balbir Nath Mathur [(1986) 2 SCC 237]. the position of law was affirmed by the Apex Court in the following terms: This is the real basis of the so-called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges. (emphasis added) It has been categorically held by the Hon ble Supreme Court in Mafatlal industries Ltd (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igam Limited vs. Essar Power Limited reported in 2008 (4) SCC 755. (emphasis added) In the circumstances, the appellant would only be eligible for interest at the effective rate as per the notification issued under section 11BB of Central Excise Act, 1944 and not at any higher rate. The judgments cited by the appellant in the case of Sandvik Asia Limited (supra) which deals with the payment of compensation in an Income Tax case and Parle Agro Pvt. Ltd, (supra) and other judgments cited, which relates to refund of advance payment made during an investigation, are not germane to the facts of this case. 13.4 Having come to a conclusion on both the issues raised by the appellant within the framework of sec. 11B and 11BB of the CEA 1944, we do not feel it necessary to attempt an answer to the third question as stated at para 8 above. 14. In the light on the discussions, we partially modify the impugned order and direct as under:- (a) The appellant will be eligible for interest on the delayed payment of duty calculated from the date immediately after the expiry of three months from the date of the Order-in-Appeal i.e. 23.8.2018, in terms of section 11B(5)(B)(ec) and the explanation to se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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