Commissioner Of Central Excise, ... vs Western Cans Pvt. Ltd

[Arising out of Order-in- Appeal No. PD/606/Th-II/2014 dtd. 19/6/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai-I]

For approval and signature:

Honble Mr Ramesh Nair, 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 : 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, Thane-II : Appellants

VS

Western Cans Pvt. Ltd. : Respondent

Appearance

Shri. Sanjay Hasija, Superintendent(A.R) for the Appellants Shri. J. N. Tiwari, Advocate for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 15/5/2015 Date of decision: 15/5/2015

ORDER NO.

Per : Ramesh Nair

Revenues appeal is directed against Order-in- Appeal No. PD/606/Th-II/2014 dtd. 19/6/2014 passed by the Commissioner of Central Excise & Service Tax (Appeals-IV), Mumbai-I, wherein the Ld. Commissioner(Appeals) has allowed the appeal of the appellant directing the department to pay interest on refund amount sanctioned as per the provision 11B of Central Excise Act, 1944 for the period of delay in sanctioning the refund. The issue involved in the present case whether appellant is entitle for interest on refund which has already been sanctioned under Section 11B of Central Excise Act, 1944 for the delayed period in sanctioning the said refund.

2. Shri. Sanjay Hasija, Ld. Superintendent (A.R.) appearing on behalf of the Revenue submits that interest in the present case is not applicable for the reason that respondent have delayed in providing complete information and due to which sanction of claim got delayed. He further submits that this refund was sanctioned against remand order of the CESTAT wherein certain information was directed to be verified therefore the refund was not mature before passing denovo order, for this reason also there is no delay on the part of the Revenue for sanctioning refund claim. Hence, Ld. Commissioner(Appeals) has wrongly sanctioned the claim of interest to the respondent.

3. On the other hand, Shri. J. N. Tiwari, Ld. Counsel for the respondent submits that now law on interest is finally settled by the Honble Supreme Courts judgment in the case of Ranbaxy Laboratories Ltd. Vs. UOI[2011(273) ELT 3(SC)] that once the sanction of refund is delayed beyond three months from the date of filing of refund application, the Revenue is under obligations to grant the interest on refund amount. As regard the submission of the Ld. A.R. that there was delay in providing certain information to the Revenue, he submits that time period for processing refund application is provided under statute is three months and within the three months all the aspect must be verified by the Revenue and the refund application should be disposed of within such stipulated time period. If at all any information is required, the same can be asked for and verified within the such given time. On this ground Revenue can not escape from payment of interest which otherwise legitimately available to the respondent. He further submits that even though the matter was remanded by the Tribunal but fact remains that after all the litigation once refund is legally sanctionable to the respondent interest to be paid in terms of Section 11BB after three months from the date of refund application and there is no restrictions or prohibition provided under Section 11B to avoid the interest.

4. I have carefully considered the submission made by both sides.

5. I find that after passing of Honble Supreme Court judgment in Ranbaxy Laboratories Ltd case, if refund is sanctioned belatedly beyond three months from the date of application, interest is unavoidably payable to the assessee. On careful reading of the Commissioner(Appeals) order, I find that he has given elaborated findings and allowed interest on the refund, the findings is extracted below:

4. I have gone through the appeal papers, written submissions during the course of personal hearing and above mentioned relied upon instructions and orders/judgments passed by the various Tribunals and High Courts/Supreme Court. I find as mentioned below.

5. I find that the brief question to be decided in this matter is whether the appellants are eligible to get interest, under provisions of Section 11BB of the Central Excise Act, 1944, in this case and if yes, from which date.

6. The relevant provisions of Section 11BB of the Central Excise Act, 1944 are reproduced below:

SECTION [Interest on delayed refunds. 11BB- 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 interest at such rate, [not below 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. Explanation - Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal, [National Tax Tribunal] or any other court against and order of the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise], under sub-section (2) of Section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal, [National Tax 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.]

7. I find that as per provisions of Section 11BB of the said Act, it has been laid down that in case amount is not refunded by the department within three months from the date of application, then the department is obliged to pay interest, calculated at the rate notified by the Central Government, to the claimant from the date after expiry of three months from the date of receipt of application till the date of refund of such duty.

8. I further find that vide explanation to the said Section 11BB of the said Act it has been explained that in case any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any court against an order passed by the AC/DC C.Ex. then such order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court is to be deemed as an order passed under sub-section (2) of the said Act.

9. I further find that in support of their claim for interest on delayed refund, the appellants have relied upon instructions/circular bearing No. 670/61/2002-Cx dated 01.10.2002. Relevant para no. 2 of the said Circular, is as mentioned below.

2. In this connection, Board would like to stress that the provisions of Section 11BB Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the order of higher appellate authority for grant of interest.

10. I find that vide said Circular it has been clarified that the provisions of Section 11BB of the said Act are attracted automatically for any refund sanctioned beyond a period of three months. I also find that the said circular is binding on the department being in the form of instructions as has been settled by the Apex Court vide judgment passed in the case of M/s. Paper Products Ltd., Commissioner C.Ex. Vide para No. 4 and 5 of the said judgment it has been laid down that the Circular/s issued by the Board are binding on the department and the department cannot take contrary stand.

11. I find that the only contention of the department to reject the claim of interest of the appellants is that the department conducted certain verifications as per directions of the Honable CESTAT, vide its order dated 09.03.2011; that the order has been passed within time period of three months from the date of latest/last information/clarification that was made available to the department and hence the provisions of Section 11BB of the said Act are not attracted for these cases.

12. I find that basically department was obliged to examine the refund claim in right perspective and decide the issue. It is clear from the facts of the case that department had not carried out the necessary verifications while disposing of the refund applications and when the matter reached to the Honble CESTAT it categorically directed to conduct verification to clinch the issue. Therefore, there was no fault on the part of the appellants and the appellants were not responsible for delay that was caused for coming to correct decision in the matter.

13. I find that issue of applicability of provisions of Section 11BB of the said Act in such cases is also settled by the Apex court vide below mentioned judgments.

a. Ranbaxy Laboratories Ltd. V/s UOK reported at 2011 (273) ELT 3(SC).

b. Commr of C.Ex. & Cus. V/s J K Drugs & Pharmaceuticals reported at 2012 (280) ELT 365 (All.) c. Commr of C.Ex. & Cus., Hyderabad V/s Shanti Auto (P) Ltd. reported at 2012 (284) ELT 219 (Tri.- Bang.)

14. I find that vide above said Judgment and order it has been settled that as per provisions of Section 11BB of the said Act the department is obliged to pay interest to the claimant from the expiry of three months after the date of making an application.

15. In view of the above findings, I hold that provisions of Section 11BB of the said Act are applicable to this case and the department is obliged to pay interest, at the rate notified by the Central Government, to the appellants for the period from expiry of three months from the date of refund application till the date on which the refund was actually paid to them as detailed below.

Amount of Refund claim sanctioned (RS) Date of submission of refund application Date of completion of three months Date of sanction of refund claim Period of delay (no. of days) 2019130 17 Apr-2008 17-Jul-2008 5-Oct-2011 1175 2763009 9-Mar-2010 9-Jun-2010 18-Apr-2012 679

16. In view of the above findings, I allow the appeal and direct the department to pay interest, on the refund amount sanctioned, calculated at the notified rate/s, to the appellants as per provisions of Section 11BB of the Central Excise Act, 1944, for the period of delay as mentioned above.

From the above findings of the Ld. Commissioner(Appeals) which squarely based on the Honble Supreme Court judgment in Ranbaxy Laboratories Ltd. and Allahabad High Court judgment in case of Commissioner of C. Ex. & Cus. Vs. J.K. Drugs & Pharmaceuticals [2012(280) ELT 365(All.) the impugned order does not require any interference. Following the ratio of both the judgments and in view of detailed findings given by Ld. Commissioner(Appeals), I do not find any infirmity in the impugned order therefore the same is maintained. Revenues appeal is dismissed.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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