TaxTMI 
TaxTMI 
2025 (9) TMI 123
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.... value additions i.e. 34% of total duty paid 2.1. The amended Notification provided an option for fixation of special value addition rate, representing the actual value addition, if as per the manufacturer the value addition rates prescribed in the notification are on a lower side. Accordingly, the Appellant started filing applications for determination of special rates before the Jurisdictional Commissioner for each of its units within the due dates stipulated in the amended notification. 2.2. Simultaneously, the amended Notification was challenged by the Appellant vide Writ Petition (WP No. 3070/2008) before the Hon'ble Gauhati High Court and the same was struck down by Ld. Single Judge of the Hon'ble Gauhati High Court vide its order dated 24.06.2009. The said order was challenged by the department, wherein the Division Bench of the Guwahati High Court vide interim order dated 12.12.2012 directed for releasing 50% of the disputed amount, subject to furnishing of solvent surety to the satisfaction of the jurisdiction officer. Finally, the order of the Ld. Single Judge was also affirmed by the Division Bench of the Hon'ble Gauhati High Court. 2.3. In view of the aforesaid....
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.... cumulative figures of refund eligible to the Appellant pursuant to the fixation of the special value addition rate, unit wise and period wise are mentioned below. TABLE-B Unit Period Order date Spl. VAR Fixed Total amt. refundable Refund sanctioned @34% Refund receivable after fixation of Spl. VAR Unit A 201011 29.12.2021 76.81% (Refund allowed @ 59.03%, as per claim) 1,56,21,251/- 89,97,502/- 66,23,749/- 201314 06.12.2021 43.36% 2,03,51,022/- 1,59,57,904/- 43,93,118/- 201415 06.12.2021 43.39% 2,46,60,483/- 1,93,23,725/- 53,36,758/- 201516 06.12.2021 55.82% (Refund allowed @ 55.36%, as per claim) 3,28,98,230/- 2,02,04,838/- 1,26,93,392/- 201617 06.12.2021 56.34% 3,28,33,378/- 1,98,14,249/- 1,30,19,129/- 201718 06.12.2021 58.29% 78,21,159/- 46,08,052/- 32,13,107/- 5,09,60,442/- Unit B 200809 28.....
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....Appellant along with interest. 2.9. The appellant challenged the order passed by the Ld. Assistant Commissioner before the Ld. Commissioner (Appeals). The Ld. Commissioner (Appeals), vide Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 ('impugned order'), upheld the adjudication order with following findings: (a) The authority neither invoked any provision for recovery of interest nor gave any working of the interest amount, thus, this ground raised by the Appellant is beyond the scope of appeal and cannot be gone into. (b) Amount paid to the assessee provisionally was a consequence of court's direction under Bond/ Surety. Thus, the appellant was contractually bound to pay back the inadmissible amount. It is a settled principle of law that where an amount becomes liable for recovery, the same is required to be paid back with appropriate interest. (c) As the amount finally found admissible was based on appellant's own submissions before the officers, the appellant must have been aware all along since the judgment of the Hon'ble Supreme Court regarding the tentative amount which would be admissible to them. Thus, the appellant has faulte....
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....re. Therefore, it is his contention that the impugned order confirming interest liability upon the appellant on the pretext that refund granted to the Appellant vide Refund Orders have been allowed erroneously, is wholly unsustainable. Hence, it is contended that the demand for payment of interest is not sustainable in law and the same is liable to be set aside. 3.3. Further, the appellant submits that vide the impugned order, the Ld. Commissioner (Appeals) has observed that provisional refund paid to the appellant was as per the directions of the Hon'ble Supreme Court and Hon'ble High Court, against submission of surety bond. Thus, it has been held that the appellant is contractually bound to pay back the inadmissible provisional amount; further, that once the refund is recoverable, the interest is automatically payable. In respect of the above, the appellant submits that any recovery of the refund or interest can only take under the provisions of the Central Excise Act.; a bond cannot go beyond the mandate of the Excise Act to recover what is not provided for in law. It is their argument that even if the Department intended to invoke the bond for recovery of the amount of prov....
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....e refund was granted in terms of the interim order of the Hon'ble Supreme Court; it was specifically held that the claim of interest on the basis of the interim order of the Hon'ble Supreme Court is not justified and moreover this refund is not covered under Notifications 32/99 and 20/07. Thus, it has been held therein that interest on delayed provisional refund is not applicable and hence the appellant is not entitled for any interest on such delayed provisional refund. In this regard, it is the appellant's stand that applying the same analogy by which the Department denied interest on delayed sanction of interim refund, it is estopped from demanding interest on recovery of the said interim refund. Hence, it is submitted that the impugned orders, directing for recovery of interest on provisional refund sanctioned to the appellant are exfacie erroneous and thus, liable to be set aside. 3.5. The appellant further raised the ground that the demand for recovery of interest has been charged upon the appellant arbitrarily, without following due process of law i.e. without issuance of show cause notice under Section 11A of the Central Excise Act. It is a settled position of law that n....
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....ant had opted for fixation of special rates as per Para 2D of the Notification No. 20/2008-CE dated 27.03.2008 within prescribed time period. Details of value addition applications filed by the appellant and date of sanctioning of such rate are mentioned in the Table C below: TABLE-C Unit (1) Period Date of filing of VAR Application Date of fixation of VAR Amount Sanctioned under VAR Delay (in years) Unit A 2008-09 30.09.2008 29.12.2021 56,81,189/- 13 2010-11 29.09.2010 29.12.2021 66,23,749/- 11 2013-14 27.09.2013 06.12.2021 43,93,118/- 8 2014-15 26.09.2014 06.12.2021 53,36,758/- 7 2015-16 29.09.2015 06.12.2021 1,26,93,392/- 6 2016-17 29.09.2016 06.12.2021 1,98,14,249/- 5 2017-18 26.09.2017 06.12.2021 46,08,052/- 4 Unit B 2008-09 30.09.2009 28.12.2021 3,61,70,505/- 12 2010-11 29.09.2010 28.12.2021 83,30,244/- 11 Unit C 2011-12 28.09.2011 30.12.2021 2,42,39,814/- 10 Unit D 2008-09 30.09.2008 29....
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.... 23,49,11,056/- which ought to have been sanctioned by the department to the Appellant in the respective years to which it pertained, viz. 2008-09 to 2017-18; however, the same has been belatedly paid; thus, the interest payable by the Appellant should be net-off with interest receivable by it from the Department, which has been withheld for far longer period vis-à-vis the provisional refund received by the appellant. 3.8. In view of the above submissions, the Ld. Counsel for the appellant prayed for setting aside the demand for recovery of interest confirmed in the impugned order and for allowing their appeals. 4. On the other hand, the Ld. Authorized Representative of the Revenue appearing before us has reiterated the findings in the impugned order. He also inter alia made the following submissions in support of his contentions: - (i) As regards the submission of the appellant that interest is not applicable in the present case as there is no substantive provision for charging interest w.e.f. 08.04.2011, it is submitted that the appellant's contention is without merit, as Section 11A (1) of the Central Excise Act, 1944 provides for recovery of duty not l....
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....judicate it. This is absurd. This absurdity arises because the appellant has interpreted the text without considering the context. (v) Thus the expressions "duty" or "duty of excise" used in Section 11A or 11AA must include "erroneous refund". Any other reading will produce absurd consequences. (vi) Accordingly, the appellant's contention is without merit, as the statutory framework under Section 11AA clearly envisages levy of interest on amounts erroneously refunded as well. 5. Heard both sides and perused the appeal records. 6. In these cases, the Department has sought to recover interest on the provisional refund sanctioned amounting to Rs. 24,00,07,627/-. We observe that the said provisional refund was sanctioned to the appellant pursuant to interim order of the Hon'ble Gauhati High Court, which has been affirmed by the Hon'ble Apex Court. Thus, we agree with the submission of the appellant that the provisional refunds sanctioned consequent to the Orders passed by the Hon'ble High Court and Supreme Court cannot be called as 'erroneous refund'. 6.1. We find that in view of the interim order of the Hon'ble High Court, the appellant was sanctioned 50....
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....ti and the Hon'ble Apex Court. It is relevant to observe that after adjustment, the excess refund sanctioned to the appellants was Rs. 50,96,571/- only. Thus, it is clear that if at all any interest is payable on the excess refund sanctioned to the appellant, the same should have been demanded only on the net-excess refund paid after adjustment. However, we observe that the lower authorities have upheld the demand of recovery of the entire provisional refund sanctioned as per the orders of the Hon'ble High Court of Gauhati and the Hon'ble Apex Court. Thus, under these facts and circumstances, we are of the view that the order of the lower authorities demanding recovery of interest on the entire amount of provisional refund sanctioned, is legally not tenable. 7. Regarding the interest liability, if any, payable on the excess refund sanctioned to the appellant, we take note of the fact that the demand for recovery of interest has been charged upon the appellant without issuance of any Show Cause Notice under Section 11A of the Central Excise Act. In this regard, we agree with the submission of the appellant that issuance of Show Cause Notice is a pre-requisite before recovery of a....
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....ustice. It is also called 'naturalist' approach to the phrase 'natural justice' and is related to 'moral naturalism'. Moral naturalism captures the essence of commonsense morality - that good and evil, right and wrong, are the real features of the natural world that human reason can comprehend. In this sense, it may comprehend virtue ethics and virtue jurisprudence in relation to justice as all these are attributes of natural justice. We are not addressing ourselves with this connotation of natural justice here. ............. 28. In the case of East India Commercial Company Ltd., Calcutta & Anr. v. The Collector of Customs, Calcutta - AIR 1962 SC 1893 = 1983 (13) E.L.T. 1342 (S.C.), this Court held that whether the statute provides for notice or not, it is incumbent upon the quasi-judicial authority to issue a notice to the concerned persons disclosing the circumstances under which proceedings are sought to be initiated against them, failing which the conclusion would be that principle of natural justice are violated. To the same effect are the following judgments: (a) U.O.I. & Ors. v. Madhumilan Syntex Pvt. Ltd. & Anr. - (1988) 3 SCC 348 = 1988 (35) E.L.....
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.... or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis -statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the person liable to pay duty as determined under sub-section (2) of section 11A shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty per cent per annum, as is for the time being fixed by the Board, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act or the rules made thereunder or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2) of section 11A, till the date of payment of such duty. (2) For the removal of doubts, it is hereby declared that the provisions of sub-section (1) shall not apply to cases where the duty became payable before the date on which the Finance (No. 2) Bill, 1996 receives the assent of the President." Section 11AA introduced w.e.f. 08.04.2011 reads as under: "Section 11AA. Interest on ....
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....ement. Under Section 11A(1)(a), the Central Excise Officer may, within the prescribed time, issue notice to the person chargeable with such duty, including in cases of erroneous refund. Section 11A(1)(b) further stipulates that such person may, before service of notice, pay the duty along with interest under Section 11AA; Determination of duty of excise where duty not levied, not paid, short-levied, short-paid, or erroneously refunded administrated by Section 11A(10). We observe that if we read all these provisions together, it is clear that Section 11AA applies not only to non-/short-levy, non-/short payment, but also to erroneous refunds. The term "duty" in Section 11AA, by its linkage to Section 11A, is an all-encompassing expression covering non-levy, short-levy, non-payment, short-payment, and erroneous refund. Thus, we observe that the omission of the specific expression "erroneously refunded" after 08.04.2011 does not narrow the scope, it merely consolidates the terminology, with "duty" serving as the inclusive term for all defaults. Thus, we hold that interest is payable under Section 11AA in respect of the refund, if any, paid 'erroneously'. 9. Further, from the impugne....