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Judgment
The appellant is in appeal against the impugned order wherein the claim of interest on delayed refund has been rejected by the authorities below.
The facts of the case are that in terms of the Section 35F of the Central Excise Act, 1944, the ld. Commissioner (Appeals) directed the appellant to
make a pre-deposit to entertain the appeal and the same was deposited by the appellant on 09.04.2010. The said appeal was decided by the ld.
Commissioner (Appeals) on 23.07.2010; thereafter, the appellant filed an appeal before this Tribunal and this Tribunal vide order dt. 05.09.2019
dropped the demand against the appellant with consequential relief. On 04.11.2019, the adjudicating authority sanctioned the refund claim to the
appellant in terms of the order of this Tribunal dt. 05.09.2019 on the amount of pre-deposit made in terms of the Section 35F of the Central Excise
Act, 1944 without interest. The appellant claimed the interest by filing this appeal from the date of deposit till its realization.
Heard the parties.
During the course of arguments, the ld. Counsel for the appellant adopted the arguments advanced by Ms. Krati Singh, Advocate appearing in the
case “M/s Modern Dairies Ltd†listed on the same day.
As the case of “M/s Modern Dairies Ltd†has been decided by this Tribunal vide Final Order No. 60413/2020 dt. 03.12.2020, wherein this
Tribunal has observed as under:
“8. ---- I find that the merits of the case have not been disputed either of the side which were decided in the favour of the appellant vide
order dt. 05.07.2018.
The issue involved in the matter is whether the appellant is entitled to claim the interest on delayed refund or not? If yes, then from which
date?
The Section 35FF of the Central Excise Act, 1944 was relevant to decide the issue in hand, which is extracted herein blow:
“SECTION 35FF â€" Interest on delayed refund of amount deposited under the proviso to Section 35F.
Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner (Appeals) or the Appellate Tribunal
(hereinafter referred to as the appellate authority), under the first proviso to Section 35F, is required to be refunded consequent upon the
order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the
adjudicating authority, unless the operation of the order of the appellate authority is stayed by a superior court or tribunal, there shall be
paid to the appellant interest at the rate specified in Section 11BB after the expiry of three months from the date of communication of the
order of the appellate authority, till the date of refund of such amount.â€
The said provision of Section 35FF was amended w.e.f. 06.08.2014 and the amended provisions are not applicable to facts of this case as
per the said amendment.
As per the said provision, the assessee is entitled to claim the interest on delayed refund after the expiry of three months from the date of
communication of the order of the appellate authority till the date of refund of such amount.
In the matter in hand, the appeal was finally disposed of on 05.07.2018 by setting aside the impugned order and the predeposit made as
per the directions of this Tribunal on 15.05.2013, became refundable to the appellant. But the adjudicating authority held that the said
amount is refundable to the appellant but appropriated the said amount against interest and penalty which was already set aside by the
order dt. 05.07.2018 and started another round of litigation. The said act of the adjudicating authority shows the high handedness by not
to refund the amount to the appellant. The same is in contravention of the speech given by the Hon’ble Finance Minister on 08.11.2019
where the Hon’ble Finance Minister has said that the Revenue Officers are the facilitators for the tax payer; whereas in this case, the
act of the Revenue Officer does not seem to be a facilitator for the tax payer. Therefore, as held by this Tribunal, the appellant is entitled to
claim the refund of Rs. 15 lacs. Furthermore, during the course of arguments, it came to the knowledge of the Bench that the appellant filed
the appeal against the order of the adjudicating authority appropriating the amount of refund claim before the Commissioner (Appeals) and
intimated to the ld. Commissioner (Appeals) vide letter dt. 12.06.2019 that this Tribunal has allowed the refund to the appellant on
21.05.2019. Instead of taking note of the said fact, the ld. Commissioner (Appeals) dismissed the appeal filed by the appellant without
taking note of the decision of this Tribunal on 22.07.2019, whereas the order of this Tribunal was uploaded on the website itself on
01.07.2019. The act of the ld. Commissioner (Appeals) cannot be appreciated.
Now, the issue comes that from which date the appellant is entitled to claim the interest till its realisation. Admittedly, as per Section
35FF of the Act, the appellant was entitled to claim the interest on delayed refund after three months from the date of the order of this
Tribunal. This Tribunal has finally disposed of the appeal of the appellant on 05.07.2018.
The ld. A.R. relied on the decision of Hon’ble Bombay High Court in case of CEAT Ltd (supra) to say that the date when the
application for Rectification of Mistake has been decided, from the said date, limitation for refund claim is to be reconed. As discussed
above, in this case, the issue has been settled by this Tribunal on 05.07.2018 finally by setting aside the impugned order, but the
adjudicating authority after sanctioning the refund claim, has adjusting the said amount by wrong interpretation of order of this Tribunal
which does not amount to a mistake apparent on record; therefore, the said decision is of no help to the appellant.
The ld. Counsel for the appellant has heavily relied upon the decision of this Tribunal in the case of M/s Fujikawa Power & Another
(supra). The facts of the said case are not applicable to the facts of the case in hand, as in the said case, the appellant did not deposit the
amount as per the directions of the appellate authority in terms of Section 35F of the Central Excise Act, 1944. In fact, the amount has been
paid before filing the appeal before the Tribunal. Further the reliance on the case of UCAL Fuel Systems Ltd (supra) it also no help, as in
the said case, the amount was deposited by the assessee during the course of investigation. Further the other case laws relied upon by the
ld. Counsel for the appellant followed the decision in the case of M/s Fujikawa Power & Another (supra); therefore, they are not relevant
to the facts of the case in hand. In the case of Balaji Wire Pvt Ltd (supra), relied upon by the ld. Counsel, the amount was paid by the
assessee under protest. Moreover, in the case of M/s CNH Industrial India Pvt Ltd (supra) also, the amount was paid by the assessee under
protest. Therefore, those decisions are of no help to the appellant. On the other hand, the ld. A.R. for the Revenue relied on the decision
Som Flavour Masala Pvt Ltd (supra). The facts of the said case are not relevant to the facts of the case in hand as in that case this Tribunal
has held that refund claim is pre mature as no adjudication took place while deciding the claim of interest.
Further, I find that in the case of IFP Products (P) Ltd (supra), the issue has been dealt in details by the Hon’ble Allahabad High
Court, wherein the Hon’ble High Court has observed as under:
“The aforesaid provision of Section 35FF of the Act was amended by the Finance Act No. 25 of 2014 with effect from 06.08.2014 and it
was provided that where any amount deposited by the party under Section 35F of the Act is required to be refunded consequent upon the
order of the Appellate Authority, it will carry an interest at the specified rate till the date of refund.
It permits payment of interest at the specified rate for the entire period, the amount remains deposited with the authority. However, the
aforesaid provision has been subjected to a proviso, which lays down that if any amount has been deposited prior to the enforcement of the
Finance Act No. 25 of 2014 i.e. before 06.08.2014, it shall continue to be governed by the unamended provision of Section 35FF of the Act,
which means that in cases of deposit made prior to 06.08.2014, interest would be payable only if the amount is not refunded within a period
of three months from the date of communication of the appellate order. Apart from the above provision, there is no other provision, which
permits payment of interest on the amount of excise duty deposited in pursuance to the order of the Commissioner (Appeals) or the Tribunal
by any party.
A composite reading of unamended Section 35FF and amended Section 35FF of the Act reveals that in respect of an amount deposited prior
to the commencement of the Finance Act No. 25 of 2014, interest on the refunded amount is payable only if it is not refunded within three
months of the communication of the order of the appellate authority entitling the refund and that too after the expiry of three months of the
communication of the order.
In the present case, the amount was deposited on 24.04.2014 and 28.04.2014, the appeal entitling the refund was allowed on 03.08.2016
and the refund was actually made on 28.11.2016. All the aforesaid dates are earlier to 06.08.2016, the date of enforcement of Finance Act
No. 25 of 2014. Thus, in view of the proviso to the amended Section 35FF of the Act, the payment of interest to the petitioner would be
governed by the unamended Section 35FF of the Act.
Accordingly, if at all the petitioner would be entitled to interest on the amount refunded, it will be for the period the amount had remained
with the respondents after three months from the date of communication of the appellate order.
Sri Mathur at this stage submits that the amount deposited by the petitioner was not under Section 35F rather it was deposited as a duty and
the claim was made for refund under Sections 11B and 11BB of the Act.
The submission is devoid of any force, inasmuch as the petitioner had deposited the duty of excise on 24.04.2014 and 28.04.2014 pursuant
to the order of the Tribunal, which would essentially be a deposit under Section 35F of the Act. The deposit under Section 35F of the Act
also contemplates the deposit of excise duty and not any other amount.
Sri Mathur next argued that merely for the reason that there is no express provision for the payment of interest for the entire period, the
petitioner cannot be denied interest on the amount that had remained with the Department for the entire period, it was with the Department.
In support of his submission, he has placed reliance upon the decision of the Division Bench of this Court dated 26.04.2017 passed in
Central Excise Appeal No. 127 of 2015, R.H.L. Profiles Limited Vs. Commissioner, Customs, Excise and Services, Kanpur. In the said case,
the sole question, which came up for consideration, was whether the Tribunal was justified in rejecting the claim of interest on the amount
refunded on the ground that there is no provision for paying interest on such amount.
The aforesaid question was answered in favour of the assessee and against the Department holding that where the amount was illegally
detained by the Revenue and ultimately, refunded, the assessee is entitled to interest even though there may not be a specific provision to
that effect.
This was laid down following the decision of the Apex Court in the case of Union of India through Director of Income Tax Vs. TATA
Chemicals Limited (2014) 6 SCC 335, wherein it was held that when the collection is illegal, there is corresponding obligation on the
Revenue to refund such amount with interest.
The aforesaid decisions would not be any help of the petitioner inasmuch as there was neither any illegal detention nor any unauthorized
collection of any amount by the Revenue, rather the said amount was deposited by the petitioner pursuant to the interim direction of the
Tribunal.
The law is well settled that the taxing statutes have to be construed strictly and when there is no specific provision for doing a particular
thing, the same cannot be done either in equity or on compassionate basis.
All other decisions, which have been cited on behalf of the petitioner, only observes that when there is a delay on the part of the Revenue in
refunding the amount, the Revenue is liable to pay interest by way of compensation.
In the case we are dealing, there is no undue delay on the part of the Revenue in refunding the amount. The amount has refunded more or
less within the period of three months from the date of the order of the Tribunal entitling the refund.
The period of three months for refunding the amount has to be computed from the date of communication of the order of the Tribunal. The
date of communication of the appellate order has not come on record.
The application for refund was moved by the petitioner on 05.09.2016 and therefore, in the absence of any date of communication of the
order, the date of the application would be recognized as the date of communication of the appellate order.
In addition to the above, the application of the petitioner for refund was decided vide order dated 28.11.2016 and the petitioner was held
entitled to the refund of the excise duty deposited pursuant to the interim orders of the Tribunal. The petitioner was not held entitled to any
interest.
The petitioner has not objected to the said order and has neither challenged it in appeal or has asked for its rectification. The above order
having become final and accepted by the petitioner by taking he refund without interest with no protest, no further relief in exercise of extra
ordinary jurisdiction can be extended to the petitioner.
In view of the aforesaid facts and circumstances, we do not find any merit in this petition to direct for payment of any interest on the amount
refunded in the absence of any specific provision providing for payment of interest for the entire period, the amount had remained in
custody of the Revenue. Accordingly, the writ petition is dismissed.â€
In view of the above discussions and observations, I hold that the appellant is entitled to refund of pre-deposit of Rs.15,00,000/- along
with interest on delayed refund from 19.02.2019 (the day on which the refund claim was allowed) till its realization. In these terms, the
appeal is disposed of.â€
As the issue has been decided by this Tribunal that the assessee is entitled to claim interest on refund of the amount of pre-deposit in terms of the
Section 35F of the Central Excise Act, 1944, after three months from the date of communication of the order of the appellate authority till its
realization. Admittedly, in the case in hand, the refund claim was sanctioned on 04.11.2019, whereas the order of this Tribunal was passed on
05.09.2019; therefore, I hold that no interest is payable to the appellant.
In these terms, the appeal has no merits; hence dismissed.
(Order pronounced on 03.12.2020)