2015 (1) TMI 944 - HC - Central Excise

Court orders Respondents to pay interest, preserves Revenue's rights in pending proceedings. Further legal actions not barred.

The court made the rule absolute, directing the Respondents to pay the interest amount as quantified in earlier orders within a specified time frame. The ... Claim for refund carrying statutory interest on delayed payment - entitlement to interest despite pendency of appellate proceedings - payment subject to 'without prejudice' reservation and restitution if Revenue succeeds - writ remedy to enforce payment of statutory interestClaim for refund carrying statutory interest on delayed payment - writ remedy to enforce payment of statutory interest - The Petitioners are entitled to interest on the refunded sum as quantified in earlier orders and the respondents are directed to pay the interest within a specified period. - HELD THAT: - The Court found that the statutory scheme provides for payment of interest where a sanctioned refund is not remitted within the prescribed time. The Tribunal had ordered refund which was subsequently sanctioned and the Commissioner (Appeals) directed payment of interest at a specified rate from a stated date. In the absence of any prohibitory or interim order restraining payment, mere pendency of appeals does not operate to withhold interest payable on the refunded amount. Balancing the parties' rights, the Court made the Rule absolute and directed the respondents to release and pay the interest as quantified in earlier orders and in accordance with law within 12 weeks. [Paras 7, 8]Rule made absolute; respondents directed to pay the interest as quantified in earlier orders and to release the computed amount within 12 weeks.Entitlement to interest despite pendency of appellate proceedings - payment subject to 'without prejudice' reservation and restitution if Revenue succeeds - Pendency of the Revenue's appeals is not a ground to refuse or withhold payment of the interest; payment is to be made without prejudice to the Revenue's rights in the pending proceedings. - HELD THAT: - The Court observed that the Revenue had not obtained any prohibitory or preventive orders restraining payment. Consequently, the pendency of appeals before this Court and the Tribunal does not entitle the Revenue to resist payment of the interest which accrued on the refunded principal. The Court permitted payment to be made 'without prejudice' to the Revenue's contentions in the pending appeals and clarified that, if the Revenue ultimately succeeds, the Petitioners can be called upon to remit amounts paid pursuant to this order. The Court also preserved the rights of the higher fora to decide the pending appeals. [Paras 7, 9, 10]Pendency of appeals does not bar payment of interest; payment ordered subject to the Revenue's right to recover sums if it succeeds in the pending proceedings.Final Conclusion: The writ petition is allowed; respondents are directed to pay the interest as previously quantified and release the computed amount to the petitioners within 12 weeks, the order being without prejudice to the Revenue's rights in the pending appeals and to restitution if the Revenue ultimately succeeds; no order as to costs. Issues:1. Utilization of credit of duty paid under Additional Duties of Excise Act.2. Show cause notice and subsequent orders by authorities.3. Granting of interest on the refund amount.4. Non-payment of interest amount by the Respondents.5. Pending appeals and their impact on the refund.Utilization of credit of duty paid under Additional Duties of Excise Act:The Petitioners utilized duty credit on inputs for discharging liability on the final product. The Department claimed the credit was wrongly used, leading to a deposit by the Petitioners. Various orders were passed by authorities and tribunals, ultimately resulting in the sanctioning of the refund amount.Show cause notice and subsequent orders by authorities:A show cause notice was issued to the Petitioners, leading to orders confirming the demand and imposing penalties. Subsequent appeals and orders by different authorities and tribunals were made, ultimately resulting in the sanctioning of the refund amount.Granting of interest on the refund amount:The Assistant Commissioner did not grant interest on the refund amount, prompting the Petitioners to approach the Appellate Authority. The Appellate Authority directed the payment of interest at a specified rate, which the Respondents failed to pay, leading to dissatisfaction and further legal action by the Petitioners.Non-payment of interest amount by the Respondents:Despite the order directing the payment of interest, the Respondents failed to pay the interest amount to the Petitioners, causing grievance and dissatisfaction.Pending appeals and their impact on the refund:The pending appeals by the Revenue in higher courts and tribunals were cited as reasons for not paying the interest amount. However, the court held that the mere pendency of these proceedings does not justify withholding the interest amount, especially when the principal amount had been paid. The court directed the Respondents to pay the interest amount within a specified time frame, balancing the rights and equities of both parties.In conclusion, the court made the rule absolute, directing the Respondents to pay the interest amount as quantified in earlier orders and within a specified time frame. The court clarified that this direction did not prejudice the rights and contentions of the Revenue in the pending proceedings, and the Petitioners might be called upon to remit the sums if the Revenue succeeds in their appeal. The court's order did not prevent further legal actions or proceedings from taking place, keeping the contentions of both sides open.