Commissioner Of Central Excise, Pune-I vs M/S Garware Wall Ropes Ltd

IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV

APPEAL NO. E/549/09

(Arising out of Order-in-Appeal No. P-I/VSK/58/2009 dated 27.02.2009 passed by the Commissioner of Central Excise (Appeals), Pune-I.)

For approval and signature: Honble Shri Anil Choudhary, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? =====================================================

Commissioner of Central Excise, Pune-I

: Appellant Versus

M/s Garware Wall Ropes Ltd.

: Respondent

Appearance Shri Ashutosh Nath, Asst. Commissioner (A.R.) : For Appellant Shri C.K. Hande, Asstt. General Manager : For Respondent

CORAM: HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)

Date of Hearing : 30.04.2015 Date of Decision: 30.04.2015

ORDER NO.......................................................

Per: Anil Choudhary:

The Revenue is in appeal against Order-in-Appeal No. P-I/VSK/58/2009 dated 27.02.2009 passed by the Commissioner of Central Excise (Appeals), Pune-I.

2. The issue involved in this appeal is commencement of the period for the purpose of payment of interest, on delay refund, in terms of Section 11BB of the Central Excise Act. In other words the question is whether the liability of the Revenue to pay interest under Section 11BB of the Act commences from the date of expiry of 3 months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made. As per the learned A.R. interest have already been allowed to the respondent-assessee from the date of the enactment of Section 11BB. Thus the question is whether the respondent-assessee under the facts and circumstances is entitled to interest from the date of enactment of Section 11BB as already allowed or whether the respondent-assessee is entitled to interest from the expiry of 3 months from the date of its application and/or order of this Tribunal dated 25th of June, 2007.

3. The learned A.R. states that according to Revenue interest on refund is allowable from the expiry of 3 months of the date of appellate order. The final order of the Tribunal was passed on 25.06.2007, wherein the Tribunal held that the credit of refund amount to consumer welfare fund is wrong and set aside the same and allowed the appeal with consequential relief. Accordingly the interest on refund will be payable with effect from 25.09.2007, that it, 3 months after expiry of the order, under the provisions of Section 11BB of the Act.

4.1 Mr. C.K. Hande, Asstt. General Manager of the respondent company states that the issue is no longer res integra. In the impugned order, the Commissioner (Appeals) have dismissed the Revenue's appeal taking into consideration the ruling of the Honble Bombay High Court in the case of CCE, Pune-III Vs. Ballarpur Industries Ltd. reported at 2006 (229) ELT 498 (Bom). The relevant para of the Commissioner's order taking notice of the finding of the Bombay High Court is quoted herein for ready reference: Perusal of the above provision shows that Section 11BB of the Act comes into operation only after an order for refund has been made under Section 11B of the Act. It lays down that in case any duty paid is found refundable then if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under Section 11B of the Act, then interest on the amount is liable to be paid on expiry of period of three months from the date of receipt of the application. The Explanation appearing below Section 11BB of the Act shows that it introduces a deeming fiction that where the order for refund of duty paid is made not by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but is made by the Commissioner (Appeals), Appellate Tribunal or by the Court, then for the purpose of this section the order made by the Commissioner (Appeals), Appellate Tribunal or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act.

Thus, the purpose of introducing explanation was to introduce deeming fiction that for the purpose of sub-section (2) of Section 11B if the order is made not by the Assistant Commissioner or Deputy Commissioner, but by the higher authorities, the order made by the higher authorities shall be deemed to be an order made by the Assistant Commissioner or Deputy Commissioner for the purpose of sub-section (2) of Section 11B of the Act. The explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Interest under Section 11BB of the Act becomes payable on expiry of period of three months from the date of the receipt of the application for refund if the amount is not refunded within three months from the date of receipt of the application. The learned Counsel appearing for respondent also relied in support of his submission on the judgments of various High Courts. However, in our opinion, the position of law is absolutely clear that the interest is payable under Section 11BB of the Act on expiry of period of three months from the date of receipt of the application and that Explanation appearing below Section 11BB of the Act does not have any effect or connection with the date from which interest under Section 11BB of the Act becomes payable.

The only purpose served by the explanation, as observed above, is to introduce a deeming fiction which is relevant for the purpose of sub-section (2) of Section 11B of the Act. Thus, we do not find that any question of law arises, and therefore, the appeal is rejected and it is disposed of.

4.2 The respondent also draws my attention that similar issue have also been considered by the Honble Supreme Court in the case of Ranbaxy Laboratories Limited Vs. Union of India 2011 (273) ELT 3 (S.C.), wherein the question before the Honble High Court was same as in this appeal and the Honble Apex Court after taking notice of the provisions of Section 11B and 11BB of the Act have held that it is manifest from the provisions of Section 11BB of the Act which come into play only after the order for refund has been made under Section 11B of the Act. 11BB of the Act lays down that in case any duty paid is found refundable and the duty is not refunded within a period of 3 months from the date of receipt of application, to be submitted under subsection 1 of section 11B of the Act, then the applicant shall be paid interest at such rate as may be fixed by the Central Government on expiry of a period of 3 months from the date of receipt of the application. The explanation appearing below proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Asst.

Commissioner of Central Excise or Dy. Commissioner but by an appellate authority or the Court, then for the purpose of this of the section the order made by such higher appellate authority or by the Court shall be deemed to be on order made under subsection 2 of Section 11B of the Act. It is clear that the explanation under Section 11BB of the Act. Manifestly interest under Section 11 BB of the Act becomes payable, if on an expiry of period of 3 months from the date of receipt of the application for refund, the amount claimed is not so refunded. Thus, the only interpretation of section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of 3 months from the date of receipt of the application under sub Section 1 of Section 11B of the Act and that the said explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. The Honble Apex Court have also relied on CBEC Circular NO. 670/61/2002CX, dated 1/10/2002 wherein in the matter of none payment of interest in refund/EB cases which are sanction beyond 3 months of filing, the board has stressed that the provisions of Section 11BB of the Act are attracted automatically for any refund sanctioned beyond a period of 3 months.

Simultaneously, board have directed that responsibility should be fixed for not disposing of the refund claims within 3 months from the date of receipt of the application. Thus the Honble Apex Court noticed that ever since Section 11BB was inserted in the Act with effect from 26/5/95 the Department has taken the consistent stand about its interpretation. That it is evident that interest is payable from the date of expiry of 3 months from the date of receipt of application under Section 11B(1) of the Act. Accordingly the respondent prays for dismissing the appeal of the Revenue, as the same is without any merit.

5. Having considered the rival contentions, I find that the impugned order does not suffer from any illegality or impropriety. Further the view taken by the learned Commissioner (Appeals) based on the ruling of the Honble Bombay High Court in the case of Ballarpur Industries (supra) have been affirmed by the Honble Apex Court in the case of Ranbaxy laboratories Limited (supra).

6. Thus, the appeal of the Revenue is dismissed.

(Pronounced in open Court)

(Anil Choudhary)

Member (Judicial)

Sp

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