TaxTMI 
TaxTMI 
2024 (7) TMI 300
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.... amended and Notification No. 01/2011-CE dated 01.03.2011 as amended. This claim was found ineligible by the Department's Audit wing and intimated to the Appellant vide letter dated 26/05/2016. 3. Appellant accordingly paid the differential excise duty of Rs.7,72,90,743/- along with interest of Rs.56,06,660/- (total Rs 8,28,97,403/-) 'under protest' vide Challans dated 26/07/2016 and 25/08/2016. 4. Subsequently on 11.01.2017, they claimed a refund of the differential excise duty and interest paid. The Assistant Commissioner, Maraimalai Nagar Division rejected the refund claim, vide Order-in-Original dated 29.11.2017, holding that the appellant was not entitled for the exemption of excise duty equivalent to the CVD and also vacated the protest. The Commissioner (Appeals II), Chennai vide Order in Appeal dt 23.8.2018 allowed the appeal but directed the Adjudicating Officer to verify the concept of unjust enrichment. After filing a refund claim for Rs 8,28,97,403/- on 10.3.2021 with the Department under Sec 11B of Central Excise Act 1944 (CEA 1944), M/s TIIPL appealed against the said Order-in-Appeal before the CESTAT regarding the verification of unjust enrichment. They subsequ....
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.... amounts paid 'under protest' are nothing but only a "deposit" and provisions of Section 11B of Central Excise Act, 1944 will not apply. Section 11BB lays down the mechanism of interest on delay in refund of "duty". In the present case, the amounts paid are not duty but only "deposits" and hence the interest should be calculated from the date of deposit. He placed reliance on the following judicial precedents wherein he stated the courts have ruled that the amounts paid during investigation, under protest are only "deposits" and provisions of Section11B of Central Excise Act, 1944 will not apply: (i) The Commissioner Of Central Excise, Coimbatore Versus M/s. Pricol Ltd., The Customs, Excise & Service Tax Appellate Tribunal (2015 (3) TMI 735 Madras High Court) (ii) Commissioner, Central Excise 7-A, Ashok Marg, Lucknow Versus M/s Eveready Industries India Ltd (2017 (2) TMI 197 - Allahabad High Court) (iii) Ebiz. Com Pvt. Ltd. Versus Commissioner of Central Excise, Customs And Service Tax And Ors (2016 ((9) TMI 1405 - Allahabad High Court) (iv) Universal Heat Exchangers Ltd. Vs. Commissioner of Central Excise, Coimbatore (2015 (10) TMI 1678 - CESTAT....
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....ld that interest is payable on the amount refunded to the assessee from the expiry of three months from the date receipt of application till the date of payment. He also relied on the Tribunal's own case in M/s. SRF Ltd vs Commissioner of GST and CE, Chennai [2023 (6) TMI 993], where it was held that interest under Section 11BB of the Central Excise Act, 1944 is automatic and the same is to be computed from the expiry of 3 months from the date of filing the refund claim. He prayed that their appeal may be allowed. 7.2 The learned AR on behalf of Revenue provided a time chart of events as below, during the oral hearing. Sl. No EVENT DATE 1. Challan Payment Dates 26.07.2016 & 25.08.2016 2. Refund Claim Filed 11.01.2017 3. OIO Rejecting Refund 29.11.2017 4. OIA Allowing Refund and remanding for UJE 23.08.2018 5. Appeal preferred by party in CESTAT 27.11.2018 6. OIA accepted in review 05.02.2019 7. CESTAT Appeal Withdrawal Filed by party 29.06.2021 8. CESTAT Appeal Withdrawal Allowed 19.08.2021 9. Refund Claim Filed based on OIA (Proof of UJE* submitted as per impugned OIA) 10.03.2021 ....
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....plication dated 10/03/2021 is thus governed by the proviso to Section 11B of CEA 1944. The present refund claim arose consequent to the allowing of notification benefit and dropping of the audit objection by the first appellate authority vide its order dated 23.08.2018. He stated that it is clear from section 11B(5)(B)(ec) of CEA 1944 that the amount which is paid prior to or after the adjudication by the Original Authority will become refundable only after the issue of order by Commissioner Appeals dated 23.08.2018. He further submitted that TIPL while making averments that the payment under protest was a deposit outside the ambit of the Section 11B has ironically relied on Section 11BB of the CEA 1944, which in itself deals with the refunds sanctioned under Section 11B, and the averment is hence contradictory in nature. Further the present refund claim was filed by TIPL on 10.03.2021 though the appellate order was passed as early as on 23.08.2018. The Ld. AR submitted that the reason attributed to such delay on the part of TIPL was due to the pendency of TIPL's excise appeal before CESTAT between 27.11.2018 to 19.08.2021. However, the Appellant has submitted that interest is to b....
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....oresaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue, who felt that the Apex Court had directed the Revenue to pay interest on the statutory interest in case of delay in payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. The Hon'ble Court held that its only interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. The learned AR submitted that the Tribunal's judgment in Parle Agro Pvt. Ltd (supra) which has been appealed against, was not legal and proper for the following reasons: (i) The Hon'ble CESTAT is not a Constitutional Court but only a creature of an Act and cannot travel beyond the provisions of the Act; (ii) The CESTAT cannot venture into the Executive's domain. In short, CESTAT cannot legislate. The legislation (Central Excise Act) in certain provisions has enabled the Central Government to issued Notifications which is a function of the Executive. Notifications are nothing but su....
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....) The relevant date for computing interest on deposit of amounts made against an audit objection ought to be from the date of payment under protest - 26-07-2016 and 25-08-2016 OR as per provisions of Section 11BB, whereby the relevant date would be 3 months from the date of filing the refund application. (B) The interest is to be granted at 12% instead of 6%. REVENUE (C) Whether advance payments made against audit objections are to be considered as payment of duty / interest or as deposits? (D) Whether it was proper on the part of CESTAT to fix a higher rate of duty than that prescribed by a notification under section 11BB of Central Excise Act, 1944, when it cannot legislate? (E) Whether the judgment of the Hon'ble Supreme Court in Sandvik Asia Ltd. (supra) was applicable to this case being a judgment of a Constitutional Court dealing with compensation or in other words interest on interest for the delayed payment of refund in on income tax case, especially in the light of the three Judge Bench decision in Gujarat Fluroro Chemicals (supra). The Issues are reframed as under; (1) What is the relevant date for computing interest as per....
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....t and then contest the decision by paying duty 'under protest'. 9.4 The issue of payment 'under protest' has a short history. The procedure evolved under the Central Excise regime as per Rule 233B of the erstwhile Central Excise Rules 1944. Subsequently Central Excise Rules, 2001 was notified in supersession of the Central Excise Rules, 1944, by Notification No. 30 /2001-Central Excise (N. T.), dated 21/06/2001 and came into force from 01/07/2001. The new Rules did not make any reference to the procedure for payment of duty under protest. However, the procedure continues to remain in vogue as per the erstwhile Rule 233B and has also been adopted under the Customs Act 1962 and the Finance Act 1994, where there is no mention of such a specific procedure either under the Act or Rules. In fact with the Constitutional Courts having stated that appeals filed against an order or decision are to be treated as payment of duty 'under protest', the beneficial procedure has come to stay and be legally recognised under indirect tax laws. This being so it may be helpful to reproduce the said Rule for a better understanding of the current issue where advance payment was made under protest; ....
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.... paying the amount under protest, towards an objection communicated to them after an audit and before the matter was decided by issue of a formal adjudication order, gets statutory advantage. The payment of duty, freezes the interest clock and saves them from a larger interest payment burden at a much later date, if the demand is confirmed; it would further help them close the matter without issue of a notice as provided in law, if they so chooses; prove their bona fides of being a compliant assessee and thus expect not be visited by a penalty at a later date when the matter is adjudicated; removed the disqualification of time bar as per the normal statutory period, on claiming their legal rights and benefits later, among other things. 9.7 The payment of monies by the Appellant in this case, is on his own volition and in response to a objection raised by the department. Such a payment, under protest, against a quantified short payment cannot be stated to be a 'deposit', it has to be treated as a payment of duty. The amount has also been paid by the Appellant under the head of Excise Duty and interest, under the respective accounting head. As per the procedure where the remedy of....
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....d by a majority of 8:1. Hon'ble Justice B.P. Jeevan Reddy, J. speaking for himself and on behalf of four other judges delivered the majority opinion. We find that the Apex Court in the said judgment permits only the remedy of a writ or a civil suit in the case of an 'unconstitutional levy'. All other claims for refund pertaining to a Central Excise assessee will lie under section 11B of the CEA 1944. The passage relevant to the issue under discussion is reproduced below; "68. Re. : (I) : Herein before, we have referred to the provisions relating to refund obtaining from time to time under the Central Excises and Salt Act. Whether it is Rule 11 (as it stood from time to time) or Section 11B (as it obtained before 1991 or subsequent thereto), they invariably purported to be exhaustive on the question of refund. Rule 11, as in force prior to August 6, 1977, stated that "no duties and charges which have been paid or have been adjusted....shall be refunded unless the claimant makes an application for such refund under his signature and lodges it to the proper officers within three months from the date of such payment or adjustment, as the case may be". Rule 11, as in force betw....
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....nciated by a seven-Judge Bench of this Court in Kamala Mills, it must be held that Section 11B [both before and after amendment] is valid and constitutional. In Kamala Mills, this Court upheld the constitutional validity of Section 20 of the Bombay Sales Tax Act (set out hereinbefore) on the ground that the Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation of delay in filing appeal/revision. The Court pointed out that had the Bombay Act not provided these remedies and yet barred the resort to civil court, the constitutionality of Section 20 may have been in serious doubt, but since it does provide such remedies, its validity was beyond challenge. To repeat - and it is necessary to do so - so long as Section 11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision - or a similar provision - can be doubted. It must also be remembered that Central Excises and Salt Act is a special enactment creating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund ....
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....stion, they constitute "law" within the meaning of Article 265 of the Constitution. lt follows that any action taken under and in accordance with the said provisions would be an action taken under the "authority of law", within the meaning of Article 265. In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act. No suit can be filed for re....
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.... Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it. The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder. Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii....
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....nder including Section 11B too constitute "law" within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature" no claim for refund is maintainable except and in accordance therewith. The Apex court emphasized that "the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said Article". 10. Having examined various decided cases and the submissions of both the sides, we are of the considered view that a claim for refund of service tax is governed by the provision of Section 11B for period of limitation. The statutory time limit cannot be extended by any authority as held by the Apex court. (emphasis added) Based on the decisions stated above the request of the appellant for interest on the refund which does not pertain to an unconstitutional levy, will have to be considered only in terms of Section 11B and 11BB of the CEA 1944 and in the manner as prescribed by the said sections. Hence this plea of the Appella....
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....ocedure is advantageous to him as discussed earlier. A person in whose benefit a privilege is enacted has a right to waive it and pay the monies pointed out by audit, because the very concept of privilege inheres a right to waiver. However, whatever is once paid is done under the specific tax head and is towards the short-paid duty pointed out by audit is not a deposit. As emphasized by the Apex Court in Mafatlal industries Ltd (supra) "the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said Article". Hence any payment of monies made due to an audit objection stand on a different footing from that during an investigation under different statutory provisions. The Hon'ble Supreme Court in Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd [2003(2) SCC 111] observed : "It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision". Again in Union of India & Anr. Vs Major Bahadur....
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....such refund is claimed was collected from or paid by him and the incidence of such duty and interest if any, paid on such duty had not been passed on by him to any other person: Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act: Provided further that the limitation of one year shall not apply where any duty has been paid under protest. (2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise and interest, if any, paid on such duty of excise as determined by the Assistant Commissioner of Central Excise or ....
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....respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty. Explanation : Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section." (emphasis added) 11. We shall now examine the issues raised by the rival parties. 12. What is the relevant date for computing interest as per the facts of this case? 12.1 We have discussed above that monies paid towards audit objections are paid towards tax liabilities that have been determined and are not deposits. The Appellant in an alternate plea has requested for the relevant d....
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....Authority. Explanation B to Clause (5) of Section 11B of the Act defines 'Relevant Date'. Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of a judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. Explanation to section 11BB also states that where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the Court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section. Hence the relevant date for calculating the interest rate in terms of section 11BB would be three months from the date immediately after the expiry of three months from 23.08.2018, the date of the order of the Commissioner (Appeals). 13. What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection? 13.1 The appellant has pra....
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.... officer. The procedure to be followed in cases where duty is paid 'under protest' and is in vogue, was examined. The procedure for vacating the protest by the department and the successful challenge to it by the assessee paves the way for a refund under Sec. 11B and 11BB. Further the word 'duty' was defined under Rule 2 to mean the duty as levied under section 3 or 3A of the CEA 1944. The Hon'ble Apex Court in case of Dipak Babaria & Anr [2014 (3) SCC 502] held as follows: "53. It is well settled that where the statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. This proposition of law laid down in Taylor Vs. Taylor (1875) 1 Ch D 426,431 was first adopted by the Judicial Committee in Nazir Ahmed Vs. King Emperor reported in AIR 1936 PC 253 and then followed by a bench of three Judges of this Court in Rao Shiv Bahadur Singh Vs. State of Vindhya Pradesh reported in AIR 1954 SC 322. This proposition was further explained in paragraph 8 of State of U.P. Vs. Singhara Singh by a bench of three Judges reported in AIR 1964 SC 358 in the following words:- "8. The rule adopted in Taylor v. Taylor is ....