Refund
CESTAT,
Principal Bench,
Afcons
Infrastructure Ltd.
v.
Commissioner
of Central Excise,
R.
K. Abichandani, President
Appeal
No. E/5401/2004-SM(BR) in Final Order No. 1374/2006
-SM(BR)(PB)
September
12, 2006
Section
11BB read with section 11B and 35F of the Central Excise Act, 1944 - Interest
on delayed refunds - Whether amount which is ordered to be deposited under
section 35F ‘pre-deposit’, does not lose, character of deposit as being that of
duty demanded and question of refund thereof would necessarily arise under
section 11B, when order confirming demand of duty was set aside by Tribunal and
for paying interest thereon provision of section 11BB would be attracted -
Held, yes - Appellant had made pre-deposited of certain amount as required by
section 35F before Tribunal for hearing of his appeal - Tribunal allowed appeal
of appellant, which resulted entitlement of appellant to get refund of
pre-deposited amount - Appellant through his application dated 30-6-2006
claimed refund of pre-deposit amount along with interest - Assistant
Commissioner in his order dated 14-8-2003 sanctioned refund of pre-deposited
amount but denied interest there on - Order of Assistant Commissioner was
upheld by Commissioner (Appeals) - Whether since refund claim was sanctioned
within three months from date of application of refund made by appellant, he
was not entitled to claim interest on refund of pre-deposit amount - Held, yes
[Pares 8.1, 8.2 & 8.6]
The appellant, assessee had deposited certain amount as predeposit under sections 35F on the direction of the Tribunal in the context of hearing the appeal. The Tribunal allowed the appeal of the appellant by its order dated 14-5-2003 and the assessee become entitled to the refund of the predeposit amount. Therefore, the appellant filed a refund application on 30-6-2003 seeking the refund of the pre-deposit amount with interest. The Assistant Commissioner through his order dated 14-8-2003 sanctioned the refund of pre-deposited amount but denied the interest thereon on ground that the refund claim was sanctioned within the prescribed time limit, hence the question of payment of interest did not arise. On appeal, the Commissioner (Appeals) denied the interest to the appellant on ground that payment of interest on pre-deposit was not mandated under the Act.
On appeal:
The appellant
had become entitled to the refund consequent upon the order of the Tribunal
setting aside the demand of duty on the ground that ‘Cassian Gate’ was not
excisable goods. The said amount was deposited as a condition for hearing the appeal under section 35F while deciding the application for stay. It is
evident from the provisions of section 35F that ordinarily, unless dispensed
with, the entire duty was required to be deposited when a person is desirous of
appealing against the order demanding such duty. However, when the Tribunal is
of the opinion that the ‘deposit of duty’ demanded would cause hardship, it may
dispense with such deposit of duty subject to conditions. It is clear from
the wordings of section 35F that the pre-deposit will be of the duty demanded under the order, if the appellant desirous to challenge
it. Merely because such deposit of duty demanded it described as pre-deposit for the purpose of
hearing the appeal, it would not lose the character of a whole or partial
deposit of the duty demanded,
pending the appeal. The expression ‘deposit
of duty demanded’ in section 35F
leaves no scope for any doubt that the amount which, is
ordered to the deposited as a condition for
hearing the appeal, which is in common parlance described as
‘pre-deposit’, does not lose, the character of the deposit as being that of
duty demanded. (
In cases where
the duty demanded under the impugned order is already paid or recovered and the
appellant challenges such an order before the Appellate Tribunal in accordance
with the appeal provisions, no such, condition would be required, to be imposed
for deposit of the duty demanded, in view of its being already-demanded or
recovered, as the case may be. In all cases where the duty demanded under
project or recovered or wholly or partially paid by way of pre-deposit under
section 35F for hearing the appeal, the question of refund of such duty paid
under protest/recovered under the order impugned/wholly or partially paid by an
order made under section 35F of deposit
of duty remanded, the question of refund would necessarily arise under section 11B, when the order confirming the demand of duty is set aside by the
Tribunal. In all such cases, therefore, the provisions of section 11BB will get necessarily attracted. (
Under section 11B(2), the authority on being satisfied that the whole or
any part of duty of excise paid is refundable to the applicant, would make
order of the refund of the determined
amount. Section 11B does not provide for award of interest on such
refund and a separate provisions has been made in section 11BB in relation to interest on delayed refunds. (
In view of Explanation to section 11BB even when the order of refund is made by the
Tribunal or any Court against an order of the Assistant Commissioner or the
Deputy Commissioner which was made under sub-section (2) of section 11B, such
Appellate order of the Tribunal or the court ‘shall be deemed to be an order
passed under the said sub-section (2) of section 11B for the purpose of this
section’. Therefore, in cases where the appeals are flied in the Tribunal
against the order rejecting the claim for refund wholly or partially rejecting
the claim of refund with interest, the order of the Tribunal shall be deemed to
be an order passed under sub-section 11B(2) for the purposes of award of
interest on delayed refunds under section 11BB. In other words even in an
appeal which arises before the Tribunal from any order partially denying the
claim of refund with interest, when the interest is to be awarded it will have
to be in consonance with the provisions of section 11BB and the interest shall
be paid to such applicant at the rate indicated on such duty, from the date
immediately after the expiry of three months from the date of receipt of such
application for refund till the date of refund of such duty. There is
absolutely no scope under the said provisions either for Assistant/Deputy
Commissioner or the Appellate Tribunal or Court to the award interest on the
refund amount from any date earlier than the date immediately after the expiry
of three months of the date of receipt of such application. The appellant
would, therefore, not be entitled to interest on the refund claim from
15-10-1994, being the date on which the deposit of partial amount of duty
demanded was made by the appellant under section 35F for the hearing of the
appeal. (
Admittedly, the
refund claim was sanctioned within three months from the dated of application
for refund. Obviously, therefore, the appellant was not entitled to claim
interest on the refund of Rs. 4,30,000 being the
pre-deposit of the duty demanded under the order, which was challenged before
the Tribunal under section 35F. (
For the
foregoing reasons, there was no warrant for interfering with the impugned order
which was made for valid reasons. The appeal was therefore, to be dismissed. (