V.P.I. (P) Ltd. vs Commissioner of Central Excise

Heard Sri Piyush Agrawal for the appellant. Sri R.C. Shukla, Advocate, has appeared for the respondents. This appeal u/s 35G of the Central Excise Act has been filed against the judgment and order dated 26th of March, 2004 passed by the Customs, Excise and Service Tax Tribunal in appeal No. A/696/2004/NB (S.M.).

The Tribunal by the impugned order allowed the appeal filed by the appellant claiming the payment of interest on pre-deposit which was made before the Commissioner (Appeals). The Tribunal allowed the appeal directing for payment of interest at the rate prevailing at the time till the date of payment from 1st of July, 2000.

The order of the Tribunal by which the petitioner''s liability was deleted, was passed on 31st of March, 2000. Copy of the order has been brought on record.

The appellant made an application for refund of five lakhs of rupees on 4-5-2000 which claim was rejected by the adjudicating authority by its order dated 4-5-2001. The appeal filed against the said order before the Commissioner (Appeals) was also partly allowed on 25-7-2003 and refund of Rs. 5 Lakhs was granted which was ultimately paid to the appellant on 18-9-2003.

Issue of interest has been gone into by the Tribunal and interest was allowed with effect from 1st of July, 2000.

The learned counsel for the appellant contended that the appellant was entitled for the payment of interest from the date of pre-deposit. The issue from which date the interest on refund made be granted came for consideration before the Apex Court in 2005 (179) E.L.T. 15 (S.C.), Commissioner of Central Excise, Hyderabad v. ITC Ltd. Before the Apex Court a proposed circular was placed by the department and the Apex Court decided the matter in the light of the proposed circular which fact is recorded in the order. It is useful to quote para 1 of the order which is to the following effect:-

The issue in this appeal and in several other appeals is whether the pre-deposit made as a pre-condition for the hearing of the appeal under the Central Excise Act, 1985 was, on the assessee being ultimately successful, refundable to the assessee with interest. The learned Solicitor General has taken instructions and has stated before this Court that the Central Board of Excise & Customs proposes to issue a circular in connection with the payment of interest on all such pre-deposits. A draft copy of the proposed circular has been handed over to this Court. Having regard to the contents of the draft circular we direct compliance with the final order impugned before us and payment of interest in terms of the draft circular. The draft circular shall be appended to and the contents form part of this order. The appeal is disposed of. In view of this order any judgment of any High Court holding to the contrary will no longer be good law.

The learned counsel for the appellant has placed reliance before the Court on the circular which was issued on 8-12-2004 being Circular No. 802/35/2004-CX., dated 8-4-2004 which was proposed circular and was placed before the Apex Court while deciding the case of the Commissioner of Central Excise, Hyderabad (supra). In the aforesaid circular it was clearly mentioned that the pre-deposit must be refunded within three months from the date of order passed by the Appellate Tribunal. It is useful to quote the following portion of the circular:-

Subject: Return of deposits made in terms of Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962.

Reference earlier instructions on the above subject and looking to the instances arising out of non-implementation of the judicial orders, the Board has reason to review and reiterate the earlier Circulars on the subject of non-implementation of orders of CESTAT or any Final Authority in relation to returning pre-deposits made as per directions of CESTAT or any other Final Authority in terms of Section 35F of the Central Excise Act, 1944 & Section 129E of the Customs Act, 1962. The Board has taken a strict view with regard to non-returning of such deposits.

As we are all aware the CESTAT has in a number of such cases awarded interest on pre-deposits where its orders have not been implemented and the Department had challenged this and filed Civil Appeals in the Supreme Court.

The Board has noted the observations of the Hon''ble Supreme Court in its order dated 21-9-2004 and has decided that pre-deposits shall be returned within a period of three months of the disposal of the appeals in the assesee''s favour.

Accordingly, the contents of the Circular No. 275/37/2000-CX.8A dated 2-1-2002, as to the modalities for return of the pre-deposits are reiterated. It is again reiterated that in terms of Hon''ble Supreme Court''s order such pre-deposit must be returned within 3 months from the date of the order passed by the Appellate Tribunal/Court or other Final Authority unless there is a stay on the order of the Final Authority/CESTAT/Court, by a superior Court.

In the present case, the Tribunal has allowed the interest to the appellant immediately after three months period from passing the order of the Tribunal. The order of Tribunal was passed on 31st of March, 2000 and interest has been allowed from 1st July, 2000. Thus, the order of the Tribunal is fully in accord with the circular as approved by the Apex Court. The submission of the appellant that he is entitled for payment of interest from the date of deposit cannot be accepted. No substantial question of law arises for consideration. The appeal is dismissed.