M/S Shoreline Hotel Pvt. Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. SB/72/MI/2010 dated 20.12.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai-I).

For approval and signature:

Honble Shri Raju, Member (Technical)

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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? ======================================================

M/s Shoreline Hotel Pvt. Ltd. Commissioner of Central Excise, Mumbai-I Appellant

Vs.

Commissioner of Central Excise, Mumbai-I M/s Shoreline Hotel Pvt. Ltd. Respondent

Appearance: Shri R.D. Wagley, Advocate with Ms. Anagha Gavade, Advocate for Appellant

Shri N.N. Prabhudesai, Supdt. (AR) for Respondent

CORAM: SHRI RAJU, MEMBER (TECHNICAL)

Date of Hearing: 13.01.2016

Date of Decision: .2016

ORDER NO.

Per: Raju

M/s Shoreline Hotel Pvt. Ltd. (hereinafter called as SHPL) were visited by the Revenue officers on 11.11.1997 by the Central Excise Officers. A case was booked against them in respect of furniture found in their premises, manufactured by M/s Interscape. M/s SHPL paid Rs.11 lakhs under protest from 10.12.1997 to 3.02.1998 during investigations. A show-cause notice was issued to M/s SHPL on 15.4.1998. Later on, on the basis of same investigations, a show-cause notice was issued on 21.11.2000 to M/s Interscape demanding duty from them on the very same furniture. In the said notice the appellants were also asked to show cause as to why the furniture seized in their premises not be confiscated and why Rs 11 Lakhs paid by them not be appropriated against it. The notice dated 21.11.2000 against M/s Interscape was adjudicated and the duty was confirmed against M/s Interscape. In the same order, the furniture found in the premises of M/s SHPL was confiscated and was redeemed after adjusting Rs.11 lakhs already paid by them. Subsequently, on 29.1.2001, the notice dated 15.4.1998 raised against M/s SHPL was dropped.

M/s SHPL filed an appeal challenging the said order before the Tribunal along with other noticees including M/s Interscape. The Tribunal vide its order dated 19.7.2005 set aside the Order-in-Original No. 13/M-I/2001 dated 23.1.2001. Consequently, M/s SHPL filed a refund claim for Rs.11 lakhs duty paid by them during investigation, which was appropriated against redemption fine by Order-in-Original dated 23.1.2001. The Assistant Commissioner on 22.6.2010 returned the refund claim filed by M/s SHPL on the grounds that it was premature. On 12.7.2010, M/s SHPL filed a refund claim again which was rejected by Assistant Commissioner on 20.8.2010. M/s SHPL filed an appeal before Commissioner (Appeals), who allowed their appeal and ordered refund of pre-deposit of Rs.11 lakhs. However, he did not order anything in respect of interest thereon. Consequently, M/s SHPL filed an appeal to CESTAT (E/396/2011) seeking direction for Commissioner (Appeals) to pass order in respect of payment of interest. Meanwhile, Revenue also filed an appeal against the order of Commissioner (Appeals) directing refund (E/453/2011).

In the said appeal, it has been argued that the refund of pre-deposit in case of M/s Interscape only has been ordered by the Tribunal in its order dated 21/5/2010. The said order of the Tribunal is silent in respect of refund of amount adjusted against the redemption fine. It is seen that the order of the Tribunal dated 21.5.2010 is passed directing refund of amounts paid by M/s Interscape under Section 35F of the Central Excise Act. The Tribunal in that case had observed that such pre-deposit needs to be refunded along with interest within three months of the remand order of CESTAT. In the review, it was argued that the said order of the Tribunal is not applicable to M/s SHPL. It was argued that since the case is pending adjudication, therefore, the refund of M/s SHPL is premature. It was argued in the review petition that as the appeal of the party is pending in CESTAT, the Commissioner (Appeals) ought to not have decided the appeal in favour of party and should have awaited for outcome of the case pending in CESTAT. It is seen that no appeal of M/s SHPL was pending in CESTAT at the time of review and, therefore, the statement made in review is incorrect.

2. Consequent to the order of Commissioner (Appeals) dated 20.12.2010, Revenue filed an appeal in CESTAT, challenging the order allowing the refund. The said order of Commissioner (Appeals) did not direct any interest and, therefore M/s SHPL filed an appeal against the said order of the Commissioner (A) seeking directions to Commissioner (A) to pass suitable orders for grant of interest. Later on Dy. Commissioner of Central Excise following the order of Commissioner (A) sanctioned refund of Rs.11 lakhs vide order dated 9/10.8.2011. M/s SHPL filed an appeal before Commissioner (Appeals) against the said refund order seeking interest on the refund. The Commissioner (Appeals) vide order dated 30.11.2011 rejected the claim of interest on the ground that the refund has been sanctioned only as a consequence of the order of Commissioner (Appeals) dated 20.12.2010 and since no stay could be obtained from CESTAT. M/s SHPL filed an appeal against the order of Commissioner (Appeals) dated 30.11.2011 rejecting the claim of interest on refund. Thus there are two appeals against the two orders of Commissioner (Appeals), one against the order dated 20.12.10 allowing the refund claim but with no directions on grant of interest and the other against the order dated 30.11.2011 rejecting the interest claimed on the refund sanctioned. Both are being heard together alongwith the appeal of revenue against the order of Commissioner (Appeals) dated 20.12.10 directing sanction of refund.

3. Learned Counsel for M/s SHPL prepared a chart of above event and explained the same. He argued that Rs.11 lakhs were paid in 1997/98 in respect of investigation conducted by the Central Excise officers and consequently a show-cause notice was issued on 15.4.1998 and the same was dropped on 21.1.2001. He argued that they became entitle to refund of the same amount paid in 1997-98 immediately after the investigations were closed on 29.1.2001. He argued that the Revenue has wrongly adjusted the amount of Rs.11 lakhs against the redemption fine. He argued that redemption fine is a matter of option and only if it is exercised, the same can be adjusted.

3.1 He further argued that the amount deposited in respect of one investigation cannot be appropriated in a different investigation. He also argued that the amount of Rs.11 lakhs deposited during investigation should be treated as a pre-deposit and benefit of Circular No. 802/35/04-CX dated 8.12.2004 should be granted. The said Circular directs that the pre-deposit shall be returned within a period of three months of the disposal of the appeal in the assessees favour. The said Circular also states that default will entail an interest liability, if such liability accrues by reason of any order of the CESTAT/Court, such orders will have to be complied with and it may be recoverable from the concerned officers. The said Circular however does not clarify under what provisions of law, the interest liability shall arise. The said Circular has been issued for the return of deposits made in terms of Section 35F of the Central Excise Act, 1944. It was pointed out that Section 35FF was introduced on 10.5.2008 in respect of interest on account of delay in refund of deposit made under Section 35F of the Central Excise Act, 1944.

4. The learned AR relies on the impugned order and on grounds of appeal. He argued that on 22.6.2010, the refund claim was returned to M/s SHPL by an order. M/s SHPL had not challenged the said order and, therefore, are not entitled to any refund claim. He further argued that in this case the cause of action for refund does not arise, as the case is still pending adjudication before Commissioner after remand by Tribunal. He argued that in case of Interscape, the cause of action has arisen as a result of CESTAT order dated 19.7.2005 in which M/s Interscape had deposited Rs.15 lakhs as pre-deposit under Section 35F of the Central Excise Act. He argued that no pre-deposit was made by M/s SHPL and therefore, the said order does not become the cause of action in respect of M/s SHPL. He argued that the order of the Tribunal issued in respect of M/s Interscape dated 21.5.2010, which has been cited by Commissioner (Appeals) in his order dated 20.12.2010, is incorrect as the said order was not in respect of M/s SHPL. He argued that the order of CESTAT in case of Interscape cannot be made applicable to M/s SHPL in view of the following decisions: -

(i) Mafatlal Industries Ltd. Vs. Union of India  1997 (89) ELT 247 (SC), wherein the Hon'ble Supreme Court has held that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessees case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. The Hon'ble Supreme Court has also held that it is not open to any person to make a refund claim on?the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the Court/Tribunal in another persons case has led him to discover the mistake of law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law.

?

(ii) He also relied on the decision of the Tribunal in case of Commissioner of Central Excise, Allahabad Vs. V.N. Dyes & Processors P. Ltd.  2004 (167) ELT 183 (Tri-Del) wherein the Tribunal has held as under: -

4. I have gone? through the record and in my view the contention raised by the learned JDR deserves to be accepted. From the record, it is evident that the order of the Commissioner determining the ACP of the furnace of the respondents by adding the galleries, was never challenged by them. That order had become final and duty was paid by them in compliance with that order. Even if it is taken that the said order of the Commissioner was not legally correct keeping in view the ratio of law referred in the above referred cases relied upon by the Commissioner (Appeals) that the galleries could not be added while determining the ACP of the furnace of an assessee, still, the same was required to be got set aside. The respondents rather accepted that order and paid the duty. They cannot under the law be permitted to take advantage of the judgments rendered in favour of the other assessees. They have to stand on their own legs and any benefit allowed by the Tribunal or the Court on a similar issue to another assessee, that cannot be claimed as of right by another assessee who had kept mum and not challenged the order which prevented him from taking that benefit. The learned Commissioner (Appeals) has lost sight of this principle of law. The respondents cannot be said to have paid excess duty. They had paid duty in compliance with an order passed against them and the validity of which had never been challenged by them. Therefore, no refund of duty could be legally claimed by them. The impugned order of the Commissioner (Appeals) consequently cannot be sustained and is set aside. The appeal of the Revenue is allowed.

5. I have gone through the rival contentions. I find that M/s SHPL had paid an amount of Rs.11 lakhs during 10.12.1997 to 3.2.1998, whereas statements were recorded during the period 11.11.1997, when the officers visited the SHPL premises, to 15.4.1998, when the first show-cause notice was issued. Subsequently, it is noticed that on the same set of statement recorded during 11.11.97 to 15.4.98, another show-cause notice was issued on 21.12.2000 to M/s Interscape. In the second show-cause notice, SHPL were issued to show cause as to why the furniture valued at Rs. 2,04,95,235/- situated in their premises on 18.2.1998 should not be confiscated and Rs.11 lakhs paid by them should not be appropriated against it. The Order-in-Original dated 23.1.2001 confirmed these charges and ordered confiscation of seized goods valued at Rs.2,04,95,235/- at the premises of Hotel Marine Plaza belonging to SHPL. The order further goes on to give an option to M/s SHPL for redemption of such goods on payment of redemption fine of Rs.11 lakhs in lieu of confiscation. The order also appropriated Rs.11 lakhs paid by them. It is seen that in respect of same set of investigation and statements recorded, two show-cause notices were issued at the gap of two and half years. The second show-cause notice issued on 21.11.2000 was confirmed o 23.01.2001 and first show-cause notice issued on 15.4.1998 was dropped on 29.1.2001. It would appear that there was some confusion and, therefore, Revenue was unable to come to a conclusion as to who was manufacturer and therefore in the same investigation, two show-cause notices were issued. The assertion of the Counsel that the deposit of Rs.11 lakhs was made in respect of first show-cause notice is without basis as it is seen that both the show-cause notices were based on same set of investigation, statements and facts. Thus, the assertion of learned Counsel that on conclusion of first show-cause notice, the amount deposited by them in 1997-98 became due for refund is misplaced.

5.1 The second show-cause notice which was confirmed on 23.1.2001 was set aside by the Tribunal vide order dated 19.7.2005. The appellants have relied on the following decisions to assert that deposit made during investigation is to be treated as pre-deposit and are liable to be refunded on success of litigation: -

(i) Rajiv Plastic Industries Vs. Commissioner of Central Excise, Vapi  2009 (245) ELT 274 (Tri-Ahmd).

(ii) Interscape  2011 (267) ELT 560

(iii) Afcon Infrastructure Ltd. Vs. Union of India  2006 (193) ELT 276 (AP).

I find that the deposit made by SHPL has to be treated a Pre-deposit in view of aforesaid decisions. In the instant case, an amount of Rs.11 lakhs was deposited during investigation and was appropriated in the Order-in-Original. The said Order-in-Original was set aside by the order of the Tribunal dated 19.7.2005 and hence, in terms of the aforesaid decisions of Tribunal and in terms of the Circular No. 802/35/04-CX dated 8.12.2004 cited above, the refund of Rs.11 lakhs becomes due along with interest at the applicable rate. In this very case, this Tribunal has ordered refund of pre-deposit along with interest to M/s Interscape in terms of order dated 21.5.2010 as modified by the order dated 21.1.2011. The deposits made by the SHPL during investigations were appropriated against redemption fine. As soon as the order appropriating such fine was set aside, they became eligible to refund of the deposits made during the investigations in terms of Circular No. 802/35/04-CX dated 8.12.2004 read with the decisions of the tribunal cited above in this para.

6. In view of the above, the appellants are also entitled to interest in terms of aforesaid order of CESTAT dated 21.5.2010 as modified by order dated 21.1.11 (2011 (267) ELT 560), awarded to M/s Interscape. The appeal filed by the Revenue is dismissed and the appeals filed by the appellants are disposed of in the above terms.

(Pronounced in Court on .)

(Raju) Member (Technical)

Sinha

1 Appeal No. E/396, 453 & 1769/11