1996 (2) TMI 136 - HC - Central Excise

Section 35F pre-deposit deemed appellate fee, not duty; Section 11B inapplicable; refund with 15% interest ordered

SUVIDHE LTD. Versus UNION OF INDIA

HC held that a deposit made under Section 35F is a pre-deposit for exercising the right of appeal, not a payment of duty, and therefore Section 11B is ... Refund of pre-deposit - show cause notice issued under Section 11B - deposit made under Section 35F for appeal remedy - HELD THAT:- In our judgement, the claim raised by the Department in the show cause notice is thoroughly dishonest and baseless. In respect of a deposit made under Section 35F, provisions of Section 11B can never be applicable. A deposit under Section 35F is not a payment of Duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief. In respect of such a deposit the doctrine of unjust enrichment will be inapplicable. In the circumstances, the petition succeeds. The impugned show cause notice, which is annexed at Exhibit-F to the petition, is quashed and the respondents are directed to forthwith refund the amount alongwith interest thereon at the rate of 15% p.a. from the date of the order of the Appellate Tribunal i.e. from 30th November, 1993 till payment. Issues involved: Show cause notice for denial of refund claim u/s 11B of Central Excise Rules and Act, 1944 for deposit made under Section 35F for appeal remedy.Summary:The High Court of Bombay heard a case where a show cause notice was issued by the Superintendent (Tech.) Central Excise to the petitioner, questioning the refund claim for Excise Duty and Redemption fine paid amounting to Rs. 14,07,410, deposited under Section 35F for appeal remedy. The Appellate Tribunal had allowed the petitioner's appeal with consequential relief, but the refund of the deposited amount was denied, leading to the issuance of the impugned show cause notice under Section 11B. The Court found the Department's claim in the notice to be dishonest and baseless, stating that Section 11B cannot be applicable to a deposit made under Section 35F, as it is not a payment of Duty but a pre-deposit for appeal rights, mandating refund upon appeal success.Regarding the deposit under Section 35F, the Court held that the doctrine of unjust enrichment does not apply. Consequently, the petition was successful, and the impugned show cause notice was quashed. The respondents were directed to refund the deposited amount of Rs. 14,07,410 along with 15% interest per annum from the date of the Appellate Tribunal's order on 30th November 1993. The rule was made absolute in the stated terms, and the respondents were ordered to pay the petitioners the costs of the petition.