S.S. Garg ORDER
S.S. Garg, Member (J)
1. The present appeal is directed against the impugned order dated 15/05/2019 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has allowed the interest to the appellant after the expiry of three months from the date of receipt of application under Section 11B (1) of the Central Excise Act i.e. 10/10/2017.
2. Briefly the facts of the present case are that the appellant is a manufacturer of both dutiable and exempted goods and is therefore required to maintain separate accounts for receipt, consumption and inventory of inputs meant to be used for dutiable goods and exempted goods as per Rule 6(3) of the Cenvat Credit Rules, 2004. They are eligible to avail credit on that quantity of inputs used in the manufacture of dutiable goods. In case no separate accounts are maintained, they shall pay an amount equivalent to 10% of the value of the exempted goods cleared or he shall pay an amount equivalent to cenvat credit attributable to inputs used in relation to the manufacture of exempted goods.
During the period from 15.04.2008 to 31.12.2008, the assessee had cleared excisable goods to different developers of SEZ without payment of duty and since they neither maintained separate accounts nor did they reverse/pay the duty as per Rule 6(3) of the CCR, 2004, they appeared liable to pay 10% of the value of goods supplied to SEZ Developers. A show-cause notice was issued demanding an amount of Rs. 36,81,089/- (Rupees Thirty Six Lakhs Eighty One Thousand and Eighty Nine only) to be paid/reversed by them. The demand in the show-cause notice was confirmed earlier Order-in-Original No. 29/2010 dated 30.04.2010. The assessee preferred an appeal before the Commissioner (Appeals) wherein vide Order-in-Appeal No. 188/2011 CE dated 20.06.2011, the Commissioner (Appeals) upheld the order of the original adjudicating authority. Aggrieved by the order of the Commissioner (Appeals), the appellant filed appeal before the Tribunal along with the stay application and the Tribunal vide Order dated 17/05/2012 ordered for stay of recovery of adjudged dues. Thereafter, on 16/12/2012 the jurisdictional Superintendent of Central Excise initiated recovery proceedings vide letter C. No. 1370/2012 on the basis that the Stay Order by the CESTAT is vacated. Stay order further extended by the CESTAT on 27/12/2012. Thereafter, on 10/01/2013 on the basis of insistence of the jurisdictional officers, the appellant remitted an amount of Rs. 36,81,089/- (Rupees Thirty Six Lakhs Eighty One Thousand and Eighty Nine only) under protest and this fact was also communicated to the Department vide letter dated 10/01/2013. Thereafter on 25/07/2017, the Tribunal vide its Final Order No. 21720/2017 dated 25/07/2017 allowed the appeal in favour of the appellant. Thereafter on 10/10/2017, the appellant approached the Department to sanction the refund of Rs. 36,81,089/- (Rupees Thirty Six Lakhs Eighty One Thousand and Eighty Nine only) along with applicable interest from the date of recovery of the said amount. Thereafter, the Department vide Order-in-Original dated 31/05/2018 sanctioned refund of Rs. 36,81,089/- (Rupees Thirty Six Lakhs Eighty One Thousand and Eighty Nine only) but rejected the interest claim. Thereafter appellant filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) vide the impugned order held that appellant is entitled for interest only to the extent of delay in payment of refund from the date of refund claim after the order of the CESTAT. Hence, the present appeal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the appellant is entitled to interest on the refund as the amounts paid by the appellant are not voluntary and is on account of recovery proceedings initiated by the Department during the operation of Stay Order. He further submitted that the Apex Court has categorically held that the taxes which are collected either in excess or without authority of law, then the Revenue must compensate the assessee with interest even in the absence of statutory provision. For this submission, he relied upon the following decisions:
a. Sandvik Asia Ltd. Vs. Commissioner of Income Tax - MANU/SC/0752/2006 : 2007 (8) S.T.R. 193 (S.C)
b. Kuil Fireworks Vs. UOI - MANU/SC/0881/1997 : 1997 (95) E.L.T. 3 (S.C)
4.1. He further submitted that the amount has been recovered by the respondent in spite of the existence of Stay Order issued by the CESTAT. In such cases, various High Courts and the Tribunal have categorically held that interest on such payments to be made from the date of payment of deposits made by the assessee. For this submission, he relied upon the following decisions:
a. Binjrajka Steel Tubes Ltd. Vs. CCE - MANU/CB/8380/2007 : 2008 (12) S.T.R. 788 (Tri.-Bang.)
b. Omjai Bhavani Silk Mills Pvt. Ltd. V. Commissioner - 2009 (243) E.L.T. 560(Tribunal)
c. Amidhara Texturising (P) Ltd. Vs. CCE - MANU/CS/0285/2011 : 2012 (278) E.L.T. 257 (Tri.-Ahmd.)
d. CCE & ST Vs. Balaji Wire Pvt. Ltd. - MANU/CN/0184/2018 : 2019-TIOL-2447-CESTAT-ALL
e. CCE Vs. Ucal Fuel Systems Ltd. - MANU/TN/5496/2011 : 2014 (306) E.L.T. 26 (Mad.)
4.2. He further submitted that in the present case the payments were not made in the nature of pre-deposits and also the amounts are recovered in spite of the extension of Stay Order passed by the Tribunal. He further submitted that the provision of Section 11B of the Central Excise Act will not be applicable in the present case because the amount paid by the appellant is not in the nature of pre-deposit and it is similar to the duties which are recovered during the period of stay. For this submission, he relied upon the following decisions:
a. Suvidhe Ltd. V. UOI - MANU/MH/0224/1996 : 1996 (82) E.L.T. 177 (Bom.)
b. Commissioner of Customs (Imports) Raigad Vs. Fincord Chemicals (P) Ltd. - MANU/SC/0626/2015 : 2015 (319) E.L.T. 616 (S.C)
c. Nestle India Ltd. V. Assistant Commissioner of Central Excise - MANU/KA/0138/2003 : 2003 (154) E.L.T. 567 (Kar.)
d. Voltas Ltd. V. Union of India & Ors. - MANU/DE/0273/1998 : 1999 (112) E.L.T. 34 (Del.)
e. Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. Commr. of Cus., Bangalore - MANU/CB/8307/2007 : 2009 (240) E.L.T. 124 (Tri.-Bang.)
5. On the other hand, the learned AR defended the impugned order and submitted that the cases relied upon by the appellant are not applicable in the present case because in the present case recovery was affected against the confirmed demand passed by the Commissioner (Appeals) whereas the decisions relied upon by the appellant cited supra the duty was paid during investigation. She further submitted that vide letter dated 16.12.2012 the Department asked the appellant to pay the adjudication levies since the Stay Order gets vacated by afflux of time. She further submitted that when the duty was paid by the appellant, at that time Stay Order was not in operation.
6. After considering the submissions of both the parties and perusal of the material on record, I find that the Tribunal vide Order dated 17/05/2012 while disposing of the stay application has granted complete stay of recovery in respect of the adjudged dues. Further I find that the Tribunal vide Order dated 27/12/2012 extended the stay for recovery of the adjudged dues but in the meantime the Department had issued him a letter dated 16/12/2012 to pay the adjudication levies and he has reversed the same at the insistence of the Department and after the visit of the Department to the unit of the appellant. Further I find that the appellant vide their letter dated 10/01/2013 has informed the Department that they have got the Stay Order and will produce the copy of the same. The appellant has also informed the Department that they have reversed the credit under protest. Further I find that the Tribunal vide its Final Order dated 25/07/2017 has set aside the impugned order and allowed the appeal of the appellant. After the decision of the Tribunal, appellant approached the Department seeking refund of the amount along with interest from the date of recovery of the said amount but the Department vide order dated 31/05/2018 sanctioned the refund but rejected the interest claim and the Commissioner (Appeals) has allowed the interest after the expiry of three months from the date of filing the application i.e. from the date the appellant filed an application dated 10/10/2017. Further I find that in the present case the amount was recovered by the Department from the appellant in spite of the extension of Stay Order issued by CESTAT which was subsequently extended also vide order dated 27/12/2012. The Department in fact compelled the appellant to reverse the credit in spite of stay in his favour though the appellant informed the Department that they have got the extension of stay but they could not produce the copy of the stay in time and therefore the Department coerced the appellant to reverse the credit. Further I find that in the present case the deposit made by the appellant was totally unauthorized because the CESTAT has given him complete waiver. Further I find that it has been consistently held by the Tribunal that if the amount is not voluntarily paid by the assessee and later on the case is decided in favour of the assessee, then he is entitled to interest from the date of deposit made by the assessee. Further I find that in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. Commr. of Cus., Bangalore cited supra, the Tribunal has held in para 6 as under:
"6. On a very careful consideration of the matter, we find that the duties were collected in the years 2004 and 2006 as seen from the Tabular column given and it is seen that the Order-in-Original was passed on 30-8-2005 and it has been mentioned that it has been also served after a delay of 244 days. It is very clear that atleast a major portion of the amount was with the Department right from the year 2004. When it is held that the amount is not due and it had also been collected much before the adjudication order, the amount can only be treated as deposit. This amount has been withheld by the department on account of the wrongful denial of the exemption notification. In all fairness, the appellant is entitled for interest on the amount, which has been withheld by the Department unlawfully from the date of deposit. Several case-laws relied on by the learned Advocate are applicable to the facts of the present case. Hence, we order payment of interest at appropriate rate to the appellant. The rate of interest will be the rate applicable to normal refunds, which are paid belatedly and the adjudicating authority should adopt the rates notified by the Government of India for delayed refunds. Thus, we allow the misc. application in the above manner."
6.1. Further the Tribunal in the case of Commissioner of Central Excise and Service Tax Vs. Balaji Wire Pvt. Ltd. in para 7 has held as under:
"7. We further take note of the fact that the amount paid by the appellant was under protest during the course of investigation itself. Therefore, the said amount is not paid towards duty and was a deposit by the appellant under protest. Moreover, this Tribunal vide its Final Order dated 13/11/2016 has held that the respondent was not liable to pay any duty therefore the amount of refund was no duty and was only a deposit. Therefore, as held by the Hon'ble High Court of Madras in the case of Ucal Fuel Systems Ltd. (supra), we hold that the provisions of Section 11BB of Central Excise Act is not applicable as the amount in question was not paid towards duty, but only by way of deposit during investigation. As the Hon'ble High Court has granted interest on such deposit from the date of deposit till the date of refund, therefore, following the precedent decision of the Hon'ble High Court of Madras in the case of Ucal Fuel Systems Ltd. (supra), we hold that the learned Commissioner (Appeals) has rightly sanctioned the refund of interest to the respondent from the date of deposit till the date of refund."
6.2. Further I find that in view of the decisions relied upon by the appellant wherein it has been held that the assessee is entitled to interest from the date of deposit till the date of refund.
7. By following the ratio of the above said decisions, I am of the considered opinion that the impugned order is not sustainable in law and therefore the same is set aside by allowing the appeal of the appellant.
(Order was pronounced in Open Court on 18/11/2019)
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