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TMI Blog2024 (9) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... rcentage of the demand to be paid as a condition precedent for entertaining the appeal. It is also important to note that in the present case cash was seized on 29th August 2011 and therefore appropriation of cash seized during investigation towards any pre-deposit as a condition for filing an appeal also cannot arise. Therefore, the contention raised by Respondents to justify the impugned O-I-O on this count is to be rejected. The Petitioner has not brought to our notice any provision to justify claim of interest @18% per annum and therefore such a claim cannot be granted to Petitioner. However, Petitioner s alternative submission on grant of interest at the actual rate which the fixed deposit has earned is certainly required to be considered. In the present case it is undisputed that at no point of time the cash seized was appropriated towards final tax dues and rightly so because the order discharging Petitioner of tax dues had attained finality. It is settled position that a trustee cannot enrich himself on behalf of the person for whom the money is held in trust. A trustee is supposed to account for each and every sum of money which is held in trust on behalf of the beneficiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt No. 4 against one Perfect Containers Pvt. Ltd. In the course of the investigation, Petitioner s residence premises were searched and a sum of Rs. 2,06,33,000/- was seized on the allegation that same constitutes unaccounted receipts arising out of sales made by Perfect Containers Pvt. Ltd. In the course of said investigation Rs. 15,94,000/- was also seized from the residence of Petitioner s son. The aggregate cash seized was Rs. 2,22,27,008/-. The seized amount was deposited by Respondent No. 4 in fixed deposit with Punjab Sind Bank. 5. On 19th May 2016, O-I-O was passed against Perfect Containers Pvt. Ltd., Petitioner and others whereby it was held that cash seized was towards sale proceeds of clandestinely removed goods and therefore the said cash was liable for confiscation. Penalty of Rs. 21,25,199/- under Rule 26 of the Central Excise Rules was also imposed on Petitioner. Against the said O-I-O Petitioner and Respondents filed cross-appeals before Commissioner of Central Excise (Appeals). 6. On 31st March 2017, the first appellate authority set aside the order of confiscation of cash seized and penalty imposed on Petitioner. The said order was challenged by Respondents by fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 35FF of the Central Excise Act, 1944 or section 129EE of the Customs Act. Petitioner, thereafter, filed a letter dated 29th July 2024 with the Tribunal informing that Respondents have granted refund along with interest @6% and therefore do not wish to pursue the Miscellaneous Application. However, in the said letter it was stated that Petitioner is aggrieved by rate of 6% per annum and will pursue the remedies available in law for redressal of the same. The interest worked out by Respondents @6% per annum from the date of fixed deposit till the grant of refund was Rs. 1,59,83,313/-. 11. It is on the aforesaid backdrop that the present petition is filed challenging the grant of interest only @6% per annum and praying for interest to be granted @18% per annum. Submissions of Petitioner: 12. Petitioner submitted that Circular No. 984 dated 16th September 2014 relied upon in impugned O-I-O is applicable only to pre-deposits made under section 35FF of the Central Excise Act and section 129EE of the Customs Act and not to the return of cash seized in the course of the investigation. Petitioner further submitted that the Circular is dated 16th September 2024 whereas the cash was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 have been substituted with new sections to prescribe mandatory pre-deposit as a percentage of the duty demanded where duty demanded is in dispute or where duty demanded and penalty levied are in dispute. Where penalty alone is in dispute, the pre-deposit shall be calculated on the penalty imposed. 1.2 The amended provisions apply to appeals filed after 6th August, 2014. Sections 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 contain specific saving clause to state that all pending appeals/stay applications filed till the enactment of the Finance Bill shall be governed by the erstwhile provisions. 1.3 Section 35FF of the Central Excise Act, 1944 and Section 129EE of the Customs Act, 1962 have also been substituted to provide for payment of refund along with interest at the prescribed rate on the amount pre-deposited from the date of such payment till the date of refund. In exercise of the powers conferred under the new Section 35FF of the Central Excise Act, 1944 and Section 129EE of the Customs Act, Notification Nos 24/2014-CE(NT) and 70/2014-Cus(NT), both dated 12.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962, shall not be treated as deposit under the said sections. 3.2 Since the amount paid during investigation/audit takes the colour of deposit under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962 only when the appeal is filed, the date of filing of appeal shall be deemed to be the date of deposit made in terms of the said sections. 3.3 In case of any short-payment or non-payment of the amount stipulated under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962, the appeal filed by the appellant is liable for rejection. 4. Recovery of the Amounts during the Pendency of Appeal: 4.1 Vide Circular No. 967/1/2013 dated 1st January, 2013, Board has issued detailed instructions with regard to recovery of the amounts due to the Government during the pendency of stay applications or appeals with the appellate authority. This Circular would not apply to cases where appeal is filed after the enactment of the amended Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962. 4.2 No coercive measures for the recovery of balance amount i.e., the amount in excess of 7.5% or 10% deposited in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in favour of the revenue is collected by adjusting the deposited amount along with interest. 5.6. It is reiterated that refund of pre-deposit made should not be withheld on the ground that Department is proposing to file an appeal or has filed an appeal against the order granting relief to the party. Jurisdictional Commissioner should ensure that refund of deposit made for hearing the appeal should be paid within the stipulated time of 15 days as per para 5.2 supra. 6. Procedure and Manner of making the pre-deposits: 6.1 E-payment facility can be made use of by the appellants, wherever possible. 6.2 A self attested copy of the document showing satisfactory proof of payment shall be submitted before the appellate authority as proof of payment made in terms of Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962. 6.3 Column 7 of EA.1, column 6 of CA.1 and column 6 of ST.4 for filing appeal before Commissioner (Appeals), seek details of the duty/penalty deposited. The same may be used for indicating the deposits made under amended Section 35F of the Central Excise Act, 1944 or section 129E of the Customs Act, 1962. 6.4 The appeal filed before the CEST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original adjudicating authority An appeal against this order shall lie before the Tribunal on payment of 7.5% of the duty demanded where duty or duty and penalty are in dispute, or penalty, where penalty alone is in dispute . 9. Receipt of the Circular may please be acknowledged. 10. Hindi version follows. (Sunil K. Sinha ) Director (Judicial Cell) 16. In our view, the aforesaid Circular is not applicable to the case of Petitioner since, admittedly, the cash seized was during investigation proceedings against the company of which Petitioner was a Director. The said cash seized was not an amount deposited by Petitioner as pre-deposit for filing an appeal under the Central Excise Act. Affidavit of Respondent Nos. 1 to 3 in paragraph 3 have admitted that this is not a case of interest on delayed refund of amount deposited under section 35FF of the Central Excise Act. In our view, on the basis of this admission and on a reading of Circular 984 of 2014, the contention raised by Respondents to justify interest @6% per annum is erroneous. The said Circular was issued in the light of amendments made to section 35F of the Central Excise Act and 129E of the Customs Act whereby these section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in trust on behalf of the beneficiary. In the instant case, therefore, action of Respondents in granting interest @6% per annum when the fixed deposits arising out of cash seized from Petitioner have earned more than 6% per annum cannot be justified and Respondents are duty bound to handover the entire amount of interest which they have earned. 20. In our view, attempt of Respondents to retain interest earned at the rate of more than 6% and to grant interest @6% to Petitioner would amount to unjust enrichment and trading in interest by Respondents which is not permissible under any law nor has any such provision been shown to us by Respondents. In our view, it may amount misappropriation. 21. Respondent No. 4 in its Affidavit affirmed on 9th September 2024 by one Shubh Agarwal has annexed letter dated 4th September 2024 issued by Punjab Sind Bank giving calculation of total interest paid on fixed deposits arising out of cash seized from Petitioner and his son. Petitioner submitted that on a perusal of the said interest calculation statement and more particularly for the period 4th January 2021 to 3rd March 2022 the interest earned is shown only Rs. 5,98,217/- whereas in the immedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and pay over the amount alongwith interest to Petitioner. 23. We may observe that if the aforesaid two amounts are not returned within a period of four weeks from the date of uploading the order then Respondents would be liable to pay interest @6% per annum on the said two amounts till the actual date of refund. The rate of 6% is not based on the Circular No. 984 of 2014 but we have arrived at this rate based on the fixed deposit made by Respondents on 14th August 2024 for a period of one year on which the interest yield is 6.45%. 24. Before parting, we may observe that as per letter dated 4th September 2024 issued by Punjab Sind Bank giving working of interest, it is observed that for the period 4th January 2021 to 25th April 2024, there is no interest earned on the fixed deposits. On a submission made by Petitioner pointing to the said aspect and on a query raised by the Court, Respondents after consulting the Bank stated that there were regulations governing banking system whereby auto-renewal gets inactivated after a period of 10 years and therefore no interest is shown to have been earned on the fixed deposit. We fail to understand as to whether this aspect was brought to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of the interest from the salary/retirement benefits of the person found responsible. 26. Writ Petition No. 12299 of 2024 disposed. 27. Rule is made absolute in above terms. WRIT PETITION (STAMP) NO. 26523 of 2024 :- ORDER (i) Impugned O-I-O dated 5th July 2024, Exhibit A to the petition is quashed and set aside. (ii) Petitioner is not entitled to interest @18% per annum. However, is entitled to sum of Rs. 6,95,899/- being the interest in excess of 6% earned on fixed deposits arising out of cash seized from Petitioner. (iii) Respondents are directed to refund a sum of Rs. 6,95,899/- within a period of four weeks from the date of uploading the present order to Petitioner and if the same is not paid within four weeks then Petitioner would be entitled to interest @ 6% per annum from the expiry of four weeks from the date of actual refund. (iv) Concerned Commissioner GST and CX is directed to initiate inquiry and fix the accountability and responsibility for non-renewal of fixed deposits after the expiry of 10 years and take appropriate action against the persons who are involved in the said negligence including recovery of the interest from the salary/retirement benefits of the pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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