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2019 Supreme(Online)(KER) 31105
HIGH COURT OF KERALA
K VINOD CHANDRAN, ASHOK MENON, JJ
THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE – Appellant
Versus
XEROX BUSINESS SERVICES INDIA PVT LTD Advocate - M GOPIKRISHNAN NAMBIAR, ,P GOPINATH (SR ),K JOHN MATHAI,JOSON MANAVALAN,KURYAN THOMAS,PAULOSE C ABRAHAM – Respondent
CENTRAL EXICISE APPEAL 43/2018
The statutory right to interest on refunds cannot be altered by administrative corrigendum, maintaining that interest is an entitlement defined by law.
Headnote:
Finance - Central Excise - Finance Act, 1994 Section 74, Section 11BB - The court held that the corrigendum issued to delete interest payment from the original order was beyond the powers conferred under Section 74, emphasizing that interest on refunds is a statutory provision.
Fact of the Case:
The appeals arise from a Tribunal order concerning a corrigendum issued by the First Appellate Authority, which deleted a direction for interest payment following a rebate claim. The correctness of this corrigendum was challenged regarding its compliance with Section 74 of the Finance Act.
Issues: Whether the deletion of the direction to pay interest in the corrigendum was permissible under Section 74 of the Finance Act, 1994.
Ratio Decidendi: The court determined that the corrigendum issued did not qualify as a rectification of a mistake apparent from the record and affirmed that interest on refund claims is mandated by law and cannot be curbed by administrative following orders.
Final Decision: The appeals were rejected, and the Tribunal's order was confirmed.
JUDGMENT
K.VINOD CHANDRAN,J.
These appeals arise from an order of the Customs, Excise and Service Tax Appellate Tribunal(hereinafter referred to as 'the Tribunal'). The First Appellate Authority removed an observation in its original order, by a corrigendum; which was set aside by the Tribunal.
2. The First Appellate Authority is a Central Excise Officer as understood under the Finance Act,1994 (hereinafter referred to as 'the Act'); read with Section 2(b) of the Central Excise Act, 1944. The issue before the First Appellate Authority was with respect to the rebate claimed as per Annexure-A1 notification. It was the contention of the Assessing Officer that the documents produced were insufficient to allow the claim. The First Appellate Authority found that the documents were sufficient and for verification of the documents; remanded the matter, for the limited purpose of quantification of rebate to the appellant. The operative portion of the order read so:
“I remand back to the adjudicating authority officer as per Section 85(4) of Finance Act, for the limited purpose of verification of quantum of rebate sanctioned to the appellant. The appellant is directed to produce documents to establish that the Cenvat credit was utilised for payment of service tax on service exported. Interest will also be paid in accordance with law. I direct the adjudicating authority to pass an order within 3 months from the receipt of this order.”
3. Later, after three months, a corrigendum was issued deleting the sentence “Interest will also be paid in accordance with law”. The learned Standing Counsel appearing for the Revenue submits that the corrigendum was issued appropriately, as a rectification invoking Section 74 of the Act. The learned Counsel appearing for the respondent, however would submit that, no such corrigendum could have been issued under , since it interferes with a specific direction issued, that too in accordance with the statute.
4. We extract Section 74 of the Finance Act, 1994 .
74.Rectification of mistake “(1) With a view to rectifying any mistake apparent from the record, the [Central Excise Officer] who passed any order under the provisions of this Chapter may, within two years of the date on which such order was passed, amend the order.
(2) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub- section (1), the [Central Excise Officer] passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.
(3) Subject to the other provisions of this section, the [Central Excise Officer] concerned-
(a) may make an amendment under sub-section (1)
of his own motion;
or (b) shall make such amendment if any mistake is brought to the notice by the assessee or the Commissioner of Central Excise or the Commissioner of Central Excise(Appeals)
(4) Any amendment, which has the effect of enhancing [the liability of the assessee or reducing a refund], shall not be made under this section unless the [Central Excise Officer] concerned has given notice to the assessee of his intention so to do and has allowed the assessee a reasonable opportunity of being heard.
(5) Where an amendment is made under this section, an order shall be passed in writing by the [Central Excise Officer] concerned.
(6) Subject to the other provisions of this Chapter where any such amendment has the effect of reducing the [liability of an assessee or increasing the refund], the [Central Excise Officer] shall make any refund which may be due to such assessee.
(7) Where any such amendment has the effect of enhancing the liability of the assessee or reducing the refund already made, the [Central Excise Officer] shall make an order specifying the sum payable by the assessee and the provisions of this Chapter shall apply accordingly.
