TaxTMI 
TaxTMI 
2022 (12) TMI 719
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....amount of Rs.3,23,09,687/- was sanctioned in favour of the appellant. The Commissioner (Appeals) modified the said order of the Assistant Commissioner to the extent that the amount of Rs.2,03,24,058/- sanctioned by the Assistant Commissioner in the CENVAT credit account of the appellant was also to directed be paid in cash. However, the claim made by the appellant for payment of interest under section 35 FF of the Excise Act was rejected by the Commissioner (Appeals). This appeal has been filed claiming interest on the delayed refund of deposit of Rs.3,23,09,687/- in terms of section 35FF of the Excise Act. 2. The appellant is engaged in the manufacture of graphite electrodes falling under Tariff Item No. 8545 11 00 of the First Schedule to the Central Excise Tariff Act, 1985. Four show cause notices for the period September 2004 to August 2010 were issued to the appellant proposing to deny CENVAT credit of Rs.1,05,72,174/- on courier services and insurance services. Four more show cause notices for the period September 2004 to March 2011 were also issued to the appellant proposing to deny CENVAT credit of Rs.97,51,884/- on port services, cargo handling services and custom house....
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....ant portion of the order dated 14.05.2018 passed by the Assistant Commissioner is reproduced below: "6. In view of the CESTAT Final No. A/54538-54539/2017 EX [DB] dated 28.06.2017, the refund claim of Rs. 3,23,09,687/- is admissible. 7. Since, it is a case of pre-deposit of duty, the clause of unjust enrichment is not applicable in the instant case. Accordingly, I hold that refund of the amount of Rs. 3,23,09,687/- is permissible to the claimant. The claimant has paid such duty amounting to Rs. 2,03,24,058/- through CENVAT Credit, the same may be refunded through Credit only. Further, the claimant has paid interest amounting to Rs. 1,19,85,629/- in cash, the same may be refunded in cash. The claimant has fulfilled all the conditions given in the notification." (emphasis supplied) 6. Feeling aggrieved, the appellant filed an appeal against the order dated 14.05.2018 before the Commissioner (Appeals) contending that the amount of Rs.2,03,24,058/- should be paid to the appellant in cash instead of credit and interest should also be paid on the amount of Rs.3,23,09,687/- that had been sanctioned in favour of the appellant. The Commissioner (Appeals), by the order dated 2....
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....herefore, the claim for interest made by them is not tenable. (emphasis supplied) 7. Shri B.L. Narasimhan, learned counsel for appellant made the following submissions: (i) The letter dated 26.03.2018 submitted by the appellant cannot be treated as an application under section 11B of the Excise Act, when in terms of Board Circulars such an application was not required to be filed for refund of pre-deposit; (ii) Consequently, when the pre-deposit amount was not sanctioned in cash within three months from the order dated 28.06.2017 passed by the Tribunal, interest became admissible in terms of section 35FF of the Excise Act; (iii) A certified copy of the final order dated 28.06.2017 was issued to the appellant only on 28.07.2017, i.e. after GST regime. Therefore, cash refund was admissible for the pre-deposit made from CENVAT credit along with applicable interest; (iv) The method of payment of pre-deposit does not determine interest eligibility. Once it is accepted that amount of Rs.3,23,09,687/- is in the nature of pre-deposit, interest becomes payable for the entire amount in case of delayed refund; and (v) Interest is payable from the date when appeal was allo....
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....be entitled to interest under the provisions of section 35 FF of the Excise Act. 11. It would, therefore, be necessary to reproduce the provisions of sections 35F and 35FF of the Excise Act, as they stood prior to 06.08.2014, and they are as follows: Section 35F prior to 6.8.2014 "35 F: Deposit, pending appeal, of duty demanded or penalty levied.-- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: PROVIDED that where in any particular case the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interest of revenue: PROVIDED FURTH....
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....d and the penalty levied. The appellant contends that it is for this reason that it deposited Rs.2,03,24,058/- towards the duty demanded and Rs.1,19,85,629/- towards interest. For the penalty levied by the Commissioner, the appellant filed an application before the Tribunal for waiver of the penalty amount and the Tribunal by an order dated 08.10.2012 granted waiver of the penalty amount since the duty and interest had already been deposited by the appellant. 13. Learned authorised representative appearing for the department, however, submitted that the amount was deposited by the appellant as duty and, therefore, is liable to be refunded under section 11B of the Excise Act and so no interest can be paid to the appellant under section 35FF of the Excise Act. 14. Section 11B of the Excise Act deals with claim for refund of duty and interest, if any, paid on such duty. Sub-section (1) of section 11B of the Excise Act provides that any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest to the Assistant Commissioner of Central Excise before the expiry of one year from the relevant ....
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....nly a condition set out for filing an appeal before the Tribunal and such amount is bound to be refunded when the appeal is allowed. The Special Leave Petition filed by the Department before the Supreme Court against the aforesaid decision of the Bombay High Court was dismissed on 07 August, 1996. 18. It transpires that after the decision of the Bombay High Court in Suvidhe Ltd., the Central Board of Excise and Customs issued a Circular dated 2 January, 2002 in connection with the return of deposit made under section 35F of the Excise Act or section 129E of the Customs Act, 1962 and the same is reproduced below; "The issue relating to refund of pre-deposit made during the pendency of appeal was discussed in the Board Meeting. It was decided that since the practice in the Department had all along been to consider such deposits as other than duty, such deposits should be returned in the event of the Appellant succeeds in appeal or the matter is remanded for fresh adjudication. 2. It would be pertinent to mention that the Revenue had recently filed a Special Leave Petition against Mumbai High Court's order in the matter of NELCO Ltd, challenging the grant of interest on d....
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....tral Board of Excise & Customs was followed by a Circular dated 8 December, 2004. This Circular also relates to return of deposit made in terms of section 35F of the Excise Act or section 129E of the Customs Act, 1962. The Board took a strict view regarding non return of pre-deposits and directed that pre-deposits shall be returned within three months of the decision of the Appeal in favour of the assessee. It further directed that all Commissioners should ensure implementation of the instructions through a suitable monitoring mechanism. The Circular is reproduced below:- "Reference earlier instructions on the above subject and looking to the instances arising out of non-implementation of the judicial orders, the Board has reason to review and reiterate the earlier Circulars on the subject of non-implementation of orders of CESTAT or any Final Authority in relation to returning pre-deposits made as per directions of CESTAT or any other Final Authority in terms of Section 35F of the Central Excise Act, 1944 & Section 129E of the Customs Act, 1962. The Board has taken a strict view with regard to non-returning of such deposits. 2. As we are all aware the CESTAT has in a number ....
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.... 1996 (82) E.L.T. 177 (Bom), and the other one is of Madras High Court in Oswal Agro Mills Limited v. Union of India, 1999 - (XC2)-GJX-4666-MAD (WP No. 6283 of 1998 and MP No. 9694 of 1998 disposed of on 13-10-1999). xxxxxxxxxxx. In these circumstances, the endorsement at Annexure-H has no legs to stand and the same has to fail in the light of the judgment of the Supreme Court confirming the Bombay High Court judgment. Pre-deposit amount cannot be equated to excise duty as held by the Bombay High Court and confirmed by the Supreme Court. I have no hesitation in setting aside Annexure-G in the case on hand. I must also notice at this stage that both Bombay and Madras High Courts have chosen to order refund of the amount along with 15 per cent interest from the date of the order till the date of payment. Same order is to be made in this case also." 21. The Supreme Court in Union of India vs. Tata SSL limited [2007 (218) ELT 493 (SC)] also relied upon its earlier judgment in Commission of Central Excise, Hyderabad vs. ITC Limited [2005 (179) ELT 15 (SC)] and the Circular dated 08 December, 2004 to hold that pre-deposit made as a condition for hearing the Appeal has to be ....
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....e made even by a simple letter along with attested xerox copy of the order in appeal, the question of the Department further adjudicating the matter invoking Section 11A of the Act, hence, does not arise. The Circulars of the Board are binding on the respondents who have the responsibility of respecting the same. More so, in the context of the decision of the Apex Court, the question of re-agitating the issue now does not arise. In the circumstances, accepting the case of the petitioner, the writ petitions are allowed. The respondents are directed to refund the amount within a period of eight weeks from the date of order along with interest at 6% per annum from the date of receipt of the order till the date of payment. No costs. Consequently, M.P. Nos. 1 and 1 of 2010 are closed." (emphasis supplied) 23. It would also be useful to refer to the decision of the Delhi High Court in Rakesh Kumar Garg versus Dy. Commr. of Central Excise, Division-I [2019 (366) E.L.T. 244 (Del.)] and the relevant portion of the judgment is reproduced below: "2. The order-in-original, made by the Deputy Commissioner was that since the application (for refund) was made on 5-4-2016, it could b....
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.... delay and the limitation provided under section 11B of the Excise Act will not be applicable. The relevant paragraph is reproduced: "4. On a very careful consideration of the issue, I find that in such cases where pre-deposits are made under Section 35F of the Central Excise Act, the decision goes in favour of the Appellant and the pre-deposited amount should be refunded suo moto by the department without much delay. In any case, there is no justification for rejecting refund claim by applying the General limitation act. As the amount claimed as refund is a pre-deposit, the limitation under Section 11B will not be applicable in terms of the decided case laws cited by the learned Counsel. Hence, I order refund claim of the pre-deposit made without any further delay. Thus, the appeal is allowed in the above terms." (emphasis supplied) 25. The Chennai Bench of the Tribunal in Commissioner of Central Excise, Madurai v/s Servalakshmi Paper and Board Pvt. Ltd. [2011 (263) ELT 476 (Tri.-Chennai)] also held that in regard to a pre-deposit, the time limit provided for under section 11B of the Excise Act would not be attracted and, therefore, the impugned order sanctioning the....