Kanyaka Parameshwari Engineering Ltd. vs Commr. of Cus. and C. Ex.

R. Kantha Rao, J.—C.E.A. No. 87 of 2007 arises out of the order passed in Appeal No. E/1197 of 2005 on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench (C.E.S.T.A.T.), Bangalore, whereas, C.E.A. No. 88 of 2007 is filed against the Appeal No. E/1198 of 2005 on the file of the C.E.S.T.A.T., Bangalore.

Since in both the appeals, the questions of law arise for consideration by this Court are one and the same concerning the same parties, we dispose of the appeals by the following common judgment.

We have heard Sri Bhaskar Reddy Vemireddy, learned counsel appearing for the appellant in both the appeals and Sri A. Rajasekhar Reddy, learned Standing Counsel for Central Excise in both the appeals.

The appellant company, which was engaged in business of manufacture and sale of LPG cylinders, the appellant in C.E.A. No. 87 of 2007 had paid excess excise duty to the tune of Rs. 39,40,086/- for the assessment year 1999-2000 and the appellant in C.E.A. No. 88 of 2007 had paid excess excise duty to the tune of Rs. 35,42,170/- for the assessment year 1999-2000. Since the price was not finalized by the oil companies, the appellant undertook to pay the differential duty, if any, on fixation of exact price. According to the appellant company, the Superintendent, Central Excise, Isnapur Range, Kukatpally, Hyderabad directed to pay differential duty under protest with a view to claim refund of excess duty paid after final assessment. Pursuant to reduction of price of LPG cylinders by M/s. Hindustan Petroleum Corporation Limited w.e.f. 1-7-1999, the appellant in C.E.A. No. 87 of 2007 filed applications on 4-1-2001, 8-3-2001 and 5-10-2001 and the appellant in C.E.A. No. 88 of 2007 filed applications on 10-7-1999, 4-11-2000, 20-3-2001 and 24-11-2002 for finalization of assessments and to refund the excess duty paid. Pursuant to the said applications, no refund was made by the Assistant Commissioner and thereafter, the appellant in C.E.A. No. 87 of 2007 on 14-5-2004 and the appellant in C.E.A. No. 88 of 2007 on 10-5-2004 filed applications for refund of excess duty u/s 11B of the Central Excise Act, 1944, The said claim of refund was rejected by the Assistant Commissioner by his orders dated 13-7-2004.

Feeling aggrieved, the appellant in C.E.A. No. 87 of 2007 filed Appeal No. 11 of 2005 and the appellant in C.E.A. No. 88 of 2007 filed Appeal No. 10 of 2005 before the Commissioner, Central Excise, Abids, Hyderabad. The Commissioner of Appeals, Central Excise, Hyderabad allowed the appeals by his order dated 21-4-2005 and vide proceedings dated 31-4-2005 the Assistant Commissioner, Central Excise has refunded the excess duty paid by the appellant.

However, in his order, no interest-cum-refund amount was granted and the appellant once again made an application to the Assistant Commissioner, Central Excise for grant of interest by letter dated 3-5-2005.

On refusal, by the Assistant Commissioner to grant interest vide proceedings dated 24-5-2005, the appellant preferred appeal before the Commissioner of Appeals and the Commissioner of Appeals in Appeal Nos. 118 & 119 of 2005 set aside the order passed by the Assistant Commissioner and in pursuance of the said orders of the concerned appeals, the Assistant Commissioner refunded the amount of Rs. 15,44,043 in C.E.A. No. 87 of 2007 for the period from 10-4-1999 to 26-4-2005 and Rs. 13,84,511/- in C.E.A. No. 88 of 2007 towards interest to the appellant.

Challenging the said order, Appeal No. 1197 of 2005 in C.E.A. No. 87 of 2007, Appeal No. 1198 of 2005 in C.E.A. No. 88 of 2007 were preferred by the department before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore. The CESTAT modified the order passed by the Commissioner of Appeals and held that the payment of interest has to be made only in terms of Section 11B of the Central Excise Act from the date immediately after expiry of three months from the date of receipt of the application for refund till the date of refund of such duty.

The following questions of law would arise for consideration in these two appeals :

(1) Whether the Tribunal is correct in law in holding that the appellant is entitled for interest u/s 11BB of the Central Excise Act only for the period after expiry of three months from the date of receipt of claim application despite the fact that the duty was paid under protest and claimed refund in the year 2001 itself and also whether the appellant is entitled for interest from the date of payment till the date of refund since the duty was paid under protest as the purchase price of LPG cylinders was not finalized by the time of clearance of goods and therefore, (2) Whether the appellant is entitled for interest from the date of payment till the date of refund u/s 11B(2) of the Central Excise Act on the difference of excise duty.

The contention of the appellant that the applications for refund were submitted on 4-1-2001, 8-3-2001 and 5-10-2001 and the appellant in C.E.A. No. 88 of 2007 filed applications on 10-7-1999, 4-11-2000, 20-3-2001 and 24-11-2002 for finalization of assessments and to refund the excess duty paid is opposed by the respondent on the ground that they have not claimed any specific amount for refund of duty u/s 11B of the Central Excise Act, 1944 and such a refund claim u/s 11B of the Act was only made by the appellant in C.E.A. No. 87 of 2007 on 14-5-2004 for an amount of Rs. 39,40,086/- and the appellant in C.E.A. No. 88 of 2007 on 10-5-2004 for an amount of Rs. 35,42,170/-. The order passed by the Commissioner of Appeals, Hyderabad directing payment of interest to the assessee from the date immediately after expiry of three months from the date of payment of duty was reversed by the CESTAT against OIA Nos. 118 and 119/2005(H-1) CE vide Final Order Nos. 1966 and 1967 of 2006, dated 21-11-2006 holding that the payment of interest has to be made in terms of Section 11BB of the Central Excise Act i.e. from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. Section 11B(1) of the Central Excise Act obligates a person to make an application for refund to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date and on such application, the authority concerned may make an order of refund duty of excise any difference of excess is refundable.

u/s 11BB of the Central Excise Act, 1944, if any duty is not refunded within three months from the date of receipt of application under sub-section (1), the interest shall be paid on such duty from the date immediately after expiry of three months from the date of receipt of such application till the date of refund of such duty. In Union of India (UOI) and Another Vs. Shreeji Colour Chem Industries, the Supreme Court dealing with appropriate procedure relating to claim of interest on refund held as follows :

If a claim of interest is on equitable grounds, a written demand therefore is imperative. Where the respondent made a written demand of interest on 12-1-2004, as per Section 11BB of the Central Excise Act, 1944, the interest shall be paid on refund after expiry of three months from the date of application for such interest. But the interest could not have been given from 24-7-1991 i.e. the first day on which the Assistant Collector rejected the prayer for refund because no written demand for interest on the refund had been made on that date.

Therefore, in the present cases, the appellant/assessee is not entitled for interest immediately after expiry of three months from the payment of duty till the date of refund. The payment of interest as held in the judgment above referred, has to be made in accordance with Section 11BB of the Central Excise Act, 1944 from the date immediately after the expiry of three months from the date of application for such interest till the date of refund. Since the order passed by the learned CESTAT is in accordance with law laid down by the Apex Court, we are not inclined to interfere with the said order.

For the foregoing reasons, the appeals fail and they are dismissed. There shall be no order as to costs.