M/S Pet Metal Pvt.Ltd vs Commissioner, Central Excise & Service ...

Appeal No.E/12710/2013 [Arising out of OIA No.PJ/89/VDR-II/2013-14, dt.20.05.2013, passed by Commissioner (Appeals), Central Excise & Customs, Vadodara]

M/s Pet Metal Pvt.Ltd. Appellant

Vs

Commissioner, Central Excise & Service Tax, Vadodara-II Respondent

Represented by:

For Appellant: Ms.Harpinder Sandhu, Advocate For Respondent: Shri S.K. Shukla, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

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

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

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

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:13.07.2015

Order No. A/10998 / 2015, dt.13.07.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant against OIA No.PJ/89/VDR-II/2013-14, dt.20.05.2013 passed by Commissioner (Appeals) Central Excise & Customs, Vadodara as First Appellate Authority upholding OIO No.Ref/Div.Wag/10/11-12, dt.06.02.2012.

2. Ms.Harpinder Sandhu (Advocate) appearing on behalf of the Appellant argued that an amount of Rs.9,45,255.00 was paid by the Appellant before issuing of show cause notice in an investigation undertaken by the Revenue. That total payments of Rs.9,45,255.00 made included Rs.6,93,475.00 on account of duty and interest, Rs.50,000.00 as personal penalty and Rs.2,51,750.00 as interest. That another amount of Rs.8,252.00 was paid with respect to Education cess. That CESTAT vide Order No.A/1982-1983/WZB/AHD/ 2011, dt.08.11.2011, set aside the OIA No.Commr(A)/219 & 230 VDR-II/2010, dt.08.09.2011 with respect to the case booked by Revenue with consequential relief.

2.1 That another refund claim of Rs.1,91,250.00 originally became due to the Appellant on 14.06.2007 as per CESTATs Order No.A/1414/WZB/AHD/2007, dt.14.06.2007 which was earlier wrongfully appropriated by the authorities against the dues of Rs.9,45,225.00. That Appellant sought for refund of Rs.11,44,727.00 [Rs.6,93,475.00 (BED) Rs.8252.00 (EC) Rs.2,51,750.00 (Interest) and Rs.1,91,250.00 (wrongfully appropriated)]. That entire refund of Rs.12,44,727.00 was sanctioned under OIO No.Ref/Div.Wag/10/11-12, DT.06.02.2012 but without any interest for late sanction.

2.2 Learned Advocate relied upon the following case laws to argue that interest under Section 11BB of the Central Excise Act, 1944 is payable to the Appellant after 3 months from the date of receipt of the refund claim or after 3 months from the date of an order on a issue decided by the Appellate authority in favour of the assessee.

i) CCE Hyderabad Vs I.T.C. Ltd [2005 (179) ELT 15 (SC)]

ii) Bipin Silk Synthetics Vs CCE Mumbai-V [2007-TIOL-397-CESTAT-MUM]

iii) CCE Kanpur Vs Kothari Products Ltd [2010 (262) ELT 329 (Tri-Del)]

iv) Ronald Pharmaceuticals Pvt.Ltd. Vs CCE & ST Vadodara-I [2014 (310) ELT 777 (Tri-Ahmd)]

3. Shri S.K. Shukla (AR) appearing on behalf of the Revenue argued that refund claim was sanctioned within 3 months from the date of filing of refund application after the dispute was settled by CESTAT hence no interest is due to the Appellants. Learned Authorised Representative, therefore, strongly defended the order passed by the First Appellate Authority.

4. Heard both sides and perused the case records. The provisions regarding payment of interest on delayed payment of refunds are covered by Section 11BB of the Central Excise Act, 1944, reproduced below:-

Section 11BB.?Interest on delayed refunds.  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.

4.1 As per the above provision, if a refund claim is not paid within 3 months from the date of its receipt then interest at prescribed rates become payable from the date of completion of 3 months till the same is paid. In the present case, a refund amount of Rs.1,91,250.00 was appropriated with respect to some confirmed dues which was later on set aside. For this amount of Rs.1,91,250.00 refund claim earlier filed was appropriated which was not held proper. In the present factual matrix, interest on the amount of Rs.1,91,250.00 will become due from completion of 3 months from the date of refund claim originally filed under Section 11BB of the Central Excise Act, 1944. There is no scope for postponement of payment of interest after completion of 3 months from the date of filing the refund claim. Appellants claim regarding interest from completion of 3 months from filing of first refund claim is allowed.

4.2 So far as payment of amounts, as a result of an investigation carried out by Revenue is concerned, Honble Supreme Court in the case of CCE Hyderabad Vs ITC Ltd [2005 (179) ELT 15 (SC)] held that such interest accrues from 3 months after the disposal of dispute with respect to the deposit relating to investigation. In the present proceeding, the dispute was settled as per Order No.A/1982-1983/WZB/AHD/2011, dt.08.11.2011. As per the case law of Apex Court in CCE Hyderabad Vs ITC Ltd (supra) the interest will start accruing to the Appellant 3 months after 08.11.2011. CESTAT Mumbai in the case of M/s Bipin Silk Synthetics Vs CCE Mumbai-V (supra) has held that amounts paid at the time of investigation cannot be denied interest on the grounds that the amount paid was not duty and not entitled to interest. Similarly, in the case of CCE Kanpur Vs Kothari Products Ltd (supra) CESTAT Delhi held that interest has to be paid on delayed sanction of refund on account of penalty and interest when appropriated earlier.

5. In view of the above observations, appeal filed by the Appellant is allowed to the extent indicated hereinabove with consequential relief, if any.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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