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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, D.N.RAY, JJ.
Ratnamani Metals And Tubes Ltd & Anr. – Appellants
Versus
Union Of India & Ors. – Respondents
R/Special Civil Application No. 1168 of 2019
Decided on : 27-11-2024
(A) Central Excise Act, 1944 - Sections 11B and 11BB - Interest on delayed refund - Petitioner claimed interest on amount deposited under protest; CESTAT ruled interest payable only post three months from refund application receipt - Court upheld CESTAT ruling, referencing Ranbaxy Laboratories Ltd, highlighting that interest under Section 11BB applies only after a refund order is made. (Paras 4.8, 9, 10, 11, 12)
(B) Principle of Restitution - Court emphasized that amounts paid under protest do not retain their status as deposits once adjusted against duty - The petitioner's claim for interest from the date of deposit was rejected. (Paras 8, 10, 11)
Facts of the case:
Petitioner deposited Rs. 22,93,439/- under protest due to a demand for excise duty, which was later ruled as not payable by CESTAT. The petitioner sought interest on the amount from the date of deposit until refund. (Paras 4.1, 4.8)
Findings of Court:
The petitioner was entitled to interest as per Section 11BB from the date of application for refund, not from the date of deposit. (Paras 9, 10)
Issues: Whether the petitioner is entitled to interest from the date of deposit or from the date of application for refund as per the provisions of the Act. (Paras 8, 10)
Ratio Decidendi: The court ruled that interest under Section 11BB is only payable after three months from the receipt of the application for refund, not from the date of deposit. (Paras 9, 11)
Result: Petition dismissed. (Para 13)
JUDGMENT :
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Rahul Gajera for the petitioner and learned advocate Mr. Hirak Shah for learned Senior Standing Counsel Mr. Nikunt Raval for the respondent. Rule returnable forthwith, learned advocate Mr. Hirak Shah waives noticeof Rule on behalf of the respondents.
2. Having regard to the controversy involved in this petition in narrow compass with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following relief:
4. Brief facts of the case are as under:
4.1 The petitioner is engaged in business of manufacture of goods falling under Chapter 73 of the Central Excise Tariff Act, 1985. The petitioner was served with letter dated 06.12.2005 from the Superintendent of Central Excise (Preventive) whereby the petitioner was asked to pay amount of Rs. 22,93,439/- towards central excise duty alleging that the petitioner had cleared the finished goods without including the value of sales tax paid on raw materials in the assessable value of goods manufactured on job work basis. The petitioner thereafter, as per the aforesaid letter, paid the amount of Rs. 10 Lakh vide Challan dated 31.12.2005 and the remaining amount of Rs. 12,93,439/-by Challan dated 22.02.2006 under protest.
4.2 It appears that thereafter, show-cause notice dated 10.05.2006 was issued by the Deputy Commissioner calling upon the petitioner as to why excise duty of Rs.22,93,439/- along with interest and penalty should not be levied upon the petitioner. By Order-in-original dated 13.12.2006, a demand of Rs. 22,93,439/- along with interest and penalty was confirmed by the Deputy Commissioner of Central Excise.
4.3 Being aggrieved, the petitioner preferred appeal before the Commissioner (Appeals) who, by order dated 30.03.2007, dismissed the appeal filed by the petitioner confirming the Order-in-original for levy of the excise duty of Rs. 22,93,439/- along with interest and penalty.
4.4 The petitioner therefore preferred an appeal before the Custom Excise Service Tax Appellate Tribunal [CESTAT] who, by order dated 25.03.2014, allowed the appeal filed by the petitioner holding that no excise duty is payable by the petitioner.
4.5 The petitioner therefore filed application for refund of the amount deposited by the petitioner on 31.12.2005 and 22.02.2006 during the investigation.
4.6 The Deputy Commissioner of Central Excise, however, by Order-in-original dated 08.07.2014 sanctioned the refund of the amount deposited but ordered to credit the same to the Consumer Welfare Fund.
4.7 The petitioner, therefore, preferred appeal before the Commissioner (Appeals) which was allowed and the refund of the amount deposited during the investigation was ordered to be paid to the petitioner.
4.8 The petitioner was accordingly granted the refund on 07.11.2014. The petitioner thereafter filed an application to claim interest on the refund from the date of deposit in the Year 2005 till the date of payment on 07.11.2014 before the Deputy Commissioner which was rejected. Thereafter, the Commissioner (Appeals) by order dated 09.12.2014 allowed the appeal holding that the petitioner is entitled to interest on delayed payment w.e.f. 28.06.2014 till the date of refund of Rs. 22,
Interest on delayed refunds under Section 11BB of the Central Excise Act is payable only after three months from the date of receipt of the refund application, not from the date of deposit.
Deposits made during investigation at department's insistence under mistaken duty notion are not 'duty'; Section 11B inapplicable; refundable with 12% interest from deposit to refund date.
Appellant entitled to interest on delayed refund as per Sections 11B and 11BB of the Central Excise Act, which specifically governs the timing and rate of interest applicable.
The requirement of a formal application for refund under Section 11B of the Central Excise Act, 1944, is a statutory mandate, and interest on a delayed refund is payable from the date of receipt of s....
Appellants are entitled to 12% interest on delayed rebate claims per Section 11BB of the Central Excise Act, 1944 due to inordinate delay.
The main legal point established in the judgment is that interest on delayed refunds is a statutory liability under Section 11BB of the Central Excise Act, 1944, and becomes payable if the duty order....
Section 11BB does not speak about or exempts any delay which is not intentional. The section does not distinguish delay which is intentional and delay which is unintentional. Once there is delay in p....
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