TaxTMI 
TaxTMI 
2024 (7) TMI 300
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....ted 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 subsequently withdrew their appeal before CESTAT on 29....
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....it" 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 Chennai) (v) Chambal Fertilizers & Chemicals Ltd. v. Commissioner of CGST, Udaipur (....
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.... 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 10. Verification Report of Range Officer 03.06.2021 11. SCN against the refund claim (Date of filing of complete refund claim as per impugned OIA) 06.07.2021 12. Reply to SCN ....
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.... 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 be computed as per provisions of Section 11BB as per which the relevant date would be three months from the date of filing the first refund application on 11.01.2017 without UJE details. The impugned order has categorically discussed the issue in ....
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....rpretation 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 subordinate legislations delegated by the legislature to the executive. It is pertinent to point out that the separation of judiciary from the executive is ensured in Article 50 of the Constitution, which states "the state shall take steps to separate the judici....
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....ted 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 the facts of this case? (2) What is the appropriate rate of interest for a delayed refund, of an advance payment made towards an audit objection? (3) Whether the Tribunal is competent to decide the effective rate of interest other than that notified under sec. 11BB, for a delayed refund under the Act? 9. Before taking up the issues above, the point raised by the App....
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....xcise (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; "RULE 233B. Procedure to be followed in cases where duty is paid under protest.- Where an assessee desires to pay duty under protest he shall deliver to the proper officer a letter to this effect and give grounds for payment of the duty under protest. (2) On receipt of the said letter, the proper officer shall give an acknowledgement to it. (3) The acknowledgement so given shall....
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....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 an appeal or revision is not available to the assessee against an order or decision which necessitated him to pay duty under-protest he shall give a detailed representation to the Assistant Commissioner of Central Excise for obtaining an appealable order. The amount paid was accordingly confirmed by the Original Authority as being correctly done when he vacated the protest and rejected the refund claimed by the appellant. A Bench of seven Judges of t....
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....ed 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 between August 6, 1977 and November 17, 1980 contained sub-rule (4) which expressly declared: "(4) Save as otherwise provided by or under this rule, no claim of refund of any duty shall be entertained". Section 11B, as in force prior to April, 1991 contained sub-section (4) in identical words. It said: "(4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained". Sub-section (5) was more specific and emphatic. It s....
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....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 and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to "form a complete central excise code". The idea was "to consolidate in a single enactment all the laws relating to central duties of excise". The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and a....
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....o 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 refund of duty invoking Section 72 of the Contract Act. So far as the jurisdiction of the High Court under Article 226 - or for that matter, the jurisdiction of this court under Article 32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise....
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....d 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) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court. ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been....
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.... 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 Appellant that refund of 'deposits' is not falling under section 11BB too does not have any substance being against the law declared by the Hon'ble Supreme Court as above. 9.11 We now examine the various judgments cited by the Appellant in support of their views discussed above. Although many judgments were cited, copies of only two judgments were provided. All cited judgments were however stated to support the view that the amounts paid during investigation under protest are only "deposits" and provisions of Section11B of Central Excise Act, 1944 will not apply. Deposits made a....
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....dance 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 Singh [(2006) 1 SCC 368] the Apex Court cited Lord Denning with approval. The relevant portion is extracted below; The following words of Lord Denning in the matter of applying precedents have become locus classicus: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of th....
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....n 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 Deputy Commissioner of Central Excise under the foregoing provisions of this sub- section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to----- (a) . . . . . . . (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal of any Court in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) ................................................................. (5) For the removal of any notification issued un....
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.... 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 date for interest to be calculated in terms of the judgment of the Apex Court in M/S Ranbaxy Laboratories Ltd (supra). We find that the said judgment examined the question whether the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? They went on to answer the question as formulated, based on the issue of that case and stated that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said....
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....poses 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 prayed to disregard the interest rate as prescribed by a notification under section 11BB and grant a higher interest @ 12% on the 'delayed payment of refund', based on the judgment of the Apex court in Sandvik Asia Limited (supra) and applied to indirect tax regime by the Tribunal relying on the said judgment in Parle Agro Pvt. Ltd, (supra) and other judgments. In response Revenue has strongly challenged the relevance of the judgment in Sandvik Asia Limited being one on the payment of compensation, and in the light of the subsequent judgment of the Hon'ble Supreme Court clarifying the position in Gujarat Fluro Chemicals (supra). They have also questioned the authority of this Tribunal, a creature of the statute, to determine the rate independent of the rate prescribed under the Act. Th....
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....d 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 well recognised and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted...." This proposition has been later on reiterated in Chandra Kishore Jha Vs. Mahavir Prasad reported in 1999 (8) SCC 266, Dhananjaya Reddy Vs. State of Karnataka reported in 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Limited vs. Essar Power Limited reported in 2008 (4) SCC 755." (emphasis added) In the circumstances, the appellant would only be eligible for interest at the effective rate as per the not....