M/S. Mahavir Spinning Mills Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No. 582 /CE/APL/JAL/2004 dated 23.12.2004 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Jalandhar].

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Mahavir Spinning Mills Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Chandigarh

Appearance:

Shri Balbir Singh, Sr. Advocate and Shri Rupender Singh, Advocate for the Appellants

Shri R K Grover, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 03.09.2015

FINAL ORDER NO. 52806 /2015-EX(DB)

Per Ashok Jindal:

The appellant is in appeal against the impugned order denying the interest on delayed refund.

2. The facts of the case are that the appellant adopted the method of provisional clearance and during the period 1994-1995, appellant cleared the goods on the basis of provisional assessment. On 7.7.98, the provisional assessments were finalized by allowing certain deductions claimed by the appellant which resulted in refund of 91.13 lakhs. The appellant was directed to file refund claim under section 11 B of Central Excise Act, 1944 on 31.7.1998. Consequent to that, appellant filed the refund claim on 11.8.1998 without prejudice basis under Rule 9B(5) of the Central Excise Rules, 1944 on the ground that appellant is not required to file refund claim under Rule 9B(5) of the Rules as per various judicial pronouncements. The Revenue preferred an appeal against the order of finalization of Assistant Commissioner of provisional assessment dated 7.7.1998 and the appeal was decided by learned Commissioner (Appeals) on 30.5.2001 as a result of which appellant was entitled for refund of Rs.72.28 lakhs. Thereafter on 7.6.2001, the appellant filed reminder and on 5.10.2001, a show cause notice was issued for rejection of interest and on 10.5.2002, another show cause notice was issued for denial of refund on the ground of unjust enrichment. On 31.3.2003, both the show cause notices were adjudicated and it was held that refund has passed the bar of unjust enrichment, therefore, appellant is entitled for refund but claim of interest was rejected. Thereafter on 7.4.2003, the refund was given to the appellant without interest. The appellant challenged the order of rejecting the claim of interest of the appellant before learned Commissioner (Appeals), who vide order dated 23.12.2004 also rejected the claim of appellant for interest. Aggrieved from the said order, appellant is before us.

3. The learned Senior Counsel appearing on behalf of the appellant submits that as the assessments were finalized on 7.7.98, the appellant was not required to file applications for refund. Infact refund was to be given to the appellant suo moto. But as the appellant has been directed to file refund claim under section 11 B of the Act, therefore, provisions of section 11BB of the Act is also attracted as same relates to payment of interest. He therefore, prays that appellant is entitled for interest for delayed refund. He further submits that the order of sanctioning refund claim was challenged by the Revenue before the learned Commissioner (Appeals) and who on 30.5.2001 held that appellant is entitled for refund of Rs.72.28 lakh. During the relevant time, provisions of section 11B of the Act came into force in the light as per Notification No. 45/99-CE (NT) dated 25.6.1999. Therefore, appellant is entitled to claim interest after three months from 30.5.2001 as they have also filed refund claim on 11.8.1998. In these circumstances, he prayed that interest be given to them as per CBEC Circular No. 765/81/2003-CX. Dated 10.12.2003.

4. On the other hand, learned AR opposed the contention of the learned counsel and submits that at the time of filing the refund claim, the provisions of section 11B are not applicable to the claim of refund under Rule 9B(5) of the Central Excise Rules, 2005. Therefore, appellant is not entitled to claim interest and notification No. 45/99-CE(NT) dated 25.6.99 cannot be implemented retrospectively in the light of decision of this Tribunal in the case of GKN Drive Line (India) Ltd. vs. CC, New Delhi [2013 (295) ELT 466 (Tri-Del)]. He also relied on the decision of this Tribunal in the case of Indian Dyestuff Industries Ltd. vs. CCE, Mumbai [2001 (136) ELT 867 (Tri-Mumbai)] which has been affirmed by the Honble Apex Court as reported in [2002 (143) ELT A266 (SC)] to say that provision of Section 11A or 11B of Central Excise Act are not attracted as refund resulted from finalization of provisional assessment under Rule 9B(5) of the Central Excise Rules, 1944.

5. Heard the parties. Considered the submissions.

6. The facts of the case are not in dispute as the adjudicating authority finalized the provisional assessment on 7.7.1998 and appellant has filed refund claim under section 11B of the Act on 11.8.1998. The order of adjudicating authority dated 7.7.1998 was challenged by the Revenue before the learned Commissioner (Appeals), who passed the order on 30.5.2001 holding that appellant is entitled for a refund of Rs.72.28 lakhs, as the said order has attained finality as nobody has challenged the said order. It is admitted fact that for the period prior to 25.6.1999 for finalization of provisional assessment under Rule 9B(5) of the Central Excise Rules, 1944, the provisions of section 11B of the Act were not attracted as held by this Tribunal in the case of Indian Dyestuff Industries Ltd.(supra) which has been affirmed by the Honble Apex Court reported supra. But it is a fact on record that appellant has filed refund claim under section 11 B under the directions of departmental authorities. As per the decision of Honble Apex Court in the case of Mafatlal Industries reported in [1997 (89) ELT 247 (SC)] which provides as under:-

95.?Rule 9B provides for provisional assessment in situations specified in Clauses (a), (b) and (c) of sub-rule (1). The goods provisionally assessed under sub-rule (1) may be cleared for home consumption or export in the same manner as the goods which are finally assessed. Sub-rule (5) provides that when the duty leviable on the goods is asssessed finally in accordance with the provisions of these Rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed falls short of or is in excess of the duty finally assessed, the assessee shall pay the deficiency or be entitled to a refund, as the case may be. Any recoveries or refunds consequent upon the adjustment under sub-rule (5) of Rule 9B will not be governed by Section 11A or Section 11B, as the case may be. However, if the final orders passed under sub-rule (5) are appealed against - or questioned in a writ petition or suit, as the case may be, assuming that such a writ or suit is entertained and is allowed/decreed - then any refund claim arising as a consequence of the decision in such appeal or such other proceedings, as the case may be, would be governed by Section 11B. It is also made clear that if an independent refund claim is filed after the final decision under Rule 9B(5) re-agitating the issues already decided under Rule 9B - assuming that such a refund claim lies - and is allowed, it would obviously be governed by Section 11B. It follows logically that position would be the same in the converse situation.

7. As per the said decision if final order passed under Rule 9B(5) is appealed against, in that case, the refund claim arisen is consequence of decision, the same would be governed by section 11B. Admittedly, in this case, the order dated 7.7.98 of finalization of provisional assessment was challenged by the Revenue before learned Commissioner (Appeals) which attained finality on 30.5.2001, therefore, refund claim is governed by section 11B of the Central Excise Act, 1944. At this stage, the learned Counsel for the appellant have conceded their claim of interest for the period prior to 30.5.2001.

8. As we have held that the refund claim is governed by section 11B of the Central Excise Act, 1944 as discussed hereinabove, in that circumstances, the appellant is entitled for interest on delayed refund after three months from the date i.e. 30.5.2001 when the claim of refund has attained finality till the refund claim was given to the appellant.

9. With these terms, we pass the following orders:

The appellant is entitled for interest for the period after three months from the date 30.5.2001 till 7.4.2003 when the appellant got the refund claim.

10. The appeal is disposed of in the above terms.

(operative part of the order pronounced in the open court )

( Ashok Jindal) Member(Judicial)

( B Ravichandran )

Member(Technical)

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