High Court
Case Details
WP(C) 4928/2005 BEFORE HON’BLE MR.JUSTICE T. VAIPHEI HON’BLE DR. (MRS.) JUSTICE I. SHAH JUDGMENT AND ORDER 1. In this writ petition, the petitioner is claiming payment of interes t under Section 11-BB of the Central Excise Act, 1944 for the various deposits m ade by it with the excise authorities subsequently refunded to it but without pa yment of interest.
Legal Reasoning
2. The materials facts of the case are not in dispute. In the year 1996, certa in goods of the petitioner-firm were seized by the respondent authorities which compelled it to deposit a sum of ‘36,000/- by Treasury Challan at Dhubri for pro visional release of the seized goods. After necessary inquiry, the respondents b y the order dated 10-5-2002 finally dropped the charges. Belatedly, on 12-5-2004 , this amount was refunded to it but without payment of interest to which it is entitled. On 23-5-1995, on the occasion of search of its factory and office prem ises, the petitioner-company had to deposit a sum Rs.2,50,000/- through Treasury Challan on 25-5-1995. The case was ultimately dropped by the Commissioner (Appe al), Guwahati by the order dated 9-8-2002. The appeal preferred by the Departmen t before the CESTAT,ERB, Kolkata came a cropper whereafter the petitioner-compan y was refunded a sum of Rs.2,50,000/- on 29-1-2004 but without payment of intere st. Another sum of Rs.5,00,000/- was deposited by the petitioner-firm on 14-11-1 996. A draft of Rs.1,11,462/- was also seized from the office of the petitioner- company. However, the Commissioner (Appeal), Guwahati by the order dated 5-4-200 2 dropped the case against the petitioner-company. The order of the Commissioner (Appeal) was subsequently upheld by the CESTAT,Kolkata by its order dated 11-7- 2003. The deposited amount together with the value of the seized draft was ultim ately refunded to the petitioner-company sans interest as done by them before. I n addition, another sum of Rs.93,875/- was kept in deposit since 1996 in the PLA balance, and after deduction of Rs.53,650/-, Rs.10,800/- and Rs.1,000/- from th e said deposit on account of various charges, a sum of Rs.28,425/- was refunded to the petitioner-company on 12-6-2004. Again, on 6-9-1996, a fixed deposit cert ificate of Rs.58,500/- had to be deposited by the petitioner-company, which was refunded to it only on 10-5-2004. This amount could not be utilized by the petit ioner even after the expiry of its term of 5 years. Yet, no interest has been pa id to them. The petitioner by its letter dated 5-1-2005 requested the respondent authorities to pay the interest on the aforesaid amounts, but the respondent au thorities have not paid the same till now. This prompted it to file this writ pe tition for appropriate relief. 3. The Union of India through the Revenue department resisted the writ pet ition and filed their affidavit-in-opposition. According to the answering respon dents, the petitioner filed its application to the Assistant Commissioner, Centr al Excise, Dibrugarh under Rule 173.5 of the Central Excise rules claiming for r efund of Rs.36,000/- on 13-5-2002, but it did not furnish the relevant documents indicating payment of this amount including Treasury Challans in support of his claim. The petitioner accordingly submitted on 29-12-2003 Treasury Challan No. 47 and 48 both dated 8-9-95 showing payment of Rs.35,000/- and Rs.1,000/-. On th e confirmation thereof, the Assistant Commissioner, Central Excise, Dibrugarh pa ssed the order dated 16-3-2004 sanctioning the refund of both the amounts to the petitioner in accordance with Section 11-B of the Central Excise Act, 1944 ( (cid:28)th e Act (cid:29) for short). There was thus a delay of over two years in refunding the amo unts, but the revenue blamed the delay upon the petitioner for not making the ap plication in accordance with the provisions of the Central Excise Act, 1944. As for the refund of Rs.2,50,000/-, it is the case of the Revenue that the applicat ion was filed by the petitioner on 13-9-2002, but again without the Treasury Cha llan as required by law. It was after submission of the document vide his letter dated 20-1-2004 that the Deputy Commissioner, Central Excise, Dibrugarh passed the order dated 29-1-2004 granting refund of Rs.2,50,000/- to the petitioner. In this instance also, the revenue attributed the delay in the refund upon the fai lure of the petitioner to submit the original document, which thus absolves them any liability to pay interest U/s 11-BB of the Act.
Legal Reasoning
4. It is also pleaded by the revenue that they had seized a demand draft o f Rs.1,11,462/- standing in the name of the petitioner on 27-9-1996 while conduc ting search at the premises of M/S Kela Brothers/Sripati Distributors over the e vasion of excise duty by M/S Vidharba Veneer Industries, Nagpur. In the course o f investigation, the petitioner made a voluntary deposit of Rs.5,00,000/- throug h Banker’s Cheque on 31-10-96. The case was ultimately decided on 11-7-1996 by t he CESTAT, ERB, Kolkata in favour of the petitioner. On 5-4-2002, the petitioner filed an application for refund of Rs.6,11,462/-. By the order dated 10-5-2004, the Revenue refunded Rs.5,00,000/- to the petitioner. As for Rs.1,11,462/-, the Assistant Commissioner, Central Excise, Dibrugarh sanctioned Rs.1,00,662/- to t he petitioner after deducting Rs.10,800/- against interest due from the petition er on account of wrongly availing CENVAT credit in July, 1994. The case of the R evenue is that both the amounts could not be refunded immediately as the petitio ner had failed to submit the requisite documents immediately. As the delay was a ttributable to the act of omissions or commissions on the part of the petitioner , there is no question of payment interest U/s 11-BB of the Act. In so far as re fund of balance amount standing to the credit of the petitioner in the concerned PLA account is concerned, the Assistant Commissioner, Central Excise, Dibrugarh passed the order dated 10-5-2004 directing appropriation of Rs.65,450/- from th e balance account standing to the credit of the petitioner in the said PLA accou nt for liquidating the outstanding dues and sanctioning refund of the balance am ount of Rs.28,425/- to the petitioner. It is the contention of the Revenue that as the petitioner had failed to furnish documentary evidence to substantiate its claim for refund, they have not liability to pay interest under Section 11-BB o f the Act. Lastly, it is submitted by the Revenue that all the aforesaid amounts were not paid by and/or collected from the petitioner on account of any duty of excise due from him, and the question of payment of interest U/s 11-BB of the A ct does not, and cannot arise. The writ petition is also not maintainable as the petitioner has not exhausted the alternative statutory appellate remedy provide d for by Section 35 of the Act. 5. To appreciate the controversy, we may straightaway refer to the provision of Section 11-BB of the Act, which deal with claim for interest on delayed refun ds. The relevant portion thereof is reproduced below: (cid:28)11-BB.? Interest on delayed refunds.? If any duty ordered to be refunded under sub-section (2) of section 11-B to any applicant is not refunded within three mo nths from the date of receipt of application under sub-section (1) of that secti on, there shall be paid to that applicant interest at such rate, not below five per cent, and not exceeding thirty per cent, per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette on such duty from the date immediately after the expirrty of three months from the date of receipt of such application till the date of refund of such duty: * * * 6. The provisions extracted above plainly shows that Section 11-BB of the A ct comes into play only after an order of refund has been made under Section 11- B of the Act. Section 11-BB of the Act lays down that in case any duty paid is f ound refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1 ) of Section 11-B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. Therefore, interest under Se ction 11-BB of the Act becomes payable on the expiry of a period of three months from the date of receipt of the application for refund if the amount claimed is still not refunded. Thus, the only interpretation of Section 11-BB of the Act t hat can be placed thereon is that interest under this section becomes payable on the expiry of three months from the date of receipt of the application under su b-section (1) of Section 11-BB of the Act.? See Ranbaxy Laboratories Ltd. v. Uni on of India, (2011) 10 SCC 292. 7. It is the submission of Mr. M.K. Choudhury, the learned senior counsel a ppearing for the petitioner, that once the amounts have been refunded to the pet itioner after delay, the inevitable conclusion that can be deduced is that the c laims of the petitioner falls within the four corners of Section 11-B of the Act and, so understood, if the refund is not made within three months from the date of application for refund under Section 11-B of the Act, a statutory right accr ued in favour of the petitioner for payment of interest as admissible under Sect ion 11-BB of the Act. As for the submission of Mr. D.C. Chakraborty, the learned Standing Counsel for the Revenue, on the non-maintainability of the writ petiti on for non-exhaustion of the remedy provided for under Section 35 of the Act, th e learned senior counsel submits that there is no adjudicatory order on interest under Section 11-BB of the Act in the instant case warranting an appeal. It is the further contention of the learned Standing Counsel that the delay in refund of the claimed amounts happened only for the act of omissions or commissions on the part of the petitioner, for which the Revenue could hardly be blamed, and as such, they have no liability whatsoever to pay the interest contemplated under Section 11-BB of the Act. 8. On perusing the materials on record and after giving our thoughtful cons ideration to the submissions advanced by the learned counsel appearing on both s ides, we are the opinion that the petitioner is entitled to succeed in its writ petition. There is no dispute that the application for refund of Rs.36,000/- U/s 11-BB of the Act, which was filed by the petitioner on 13-5-2002 was allowed on ly on 16-3-2004.?See Annexure-3. Similarly, though the application for refund of Rs.2,50,000/- was filed on 13-9-2002, the amount was refunded only on 28-1-2004 vide Annexure-5. In the case of Rs.6,11,462/-, the petitioner filed the applica tion on 5-4-2002 and was refunded on 10-5-2004. As for refund of Rs.93,875/-, no particular is given by the petitioner as to when it filed the application to th at effect. Consequently, no order can be passed in this behalf. As for the remai ning refunds indicated earlier, undoubtedly, the petitioner is entitled to those refunds under Section 11-B of the Act, but the same were paid to it after more than 3 months. Section 11-BB of the Act does not contemplate exemption of the Re venue from payment of interest on the ground that the delay for the not refundin g them was occasioned by the lapses on the part of the petitioner. On the contra ry, the Revenue, by admitting the claims of the petitioner and then refunding th ose amounts, has acquiesced in to any lapse on the part of the petitioner to cla im the refunds according to the prescribed procedure: these lapses are at the mo st procedural and not substantive. Once the Revenue have agreed to refund, and h ave actually refunded those amounts in exercise of its powers under Section 11-B of the Act, but could not or did not do so within three months from the date of applications filed by the petitioner, the petitioner gets the statutory right f or interest on delayed refunds under Section 11-BB of the Act. Even otherwise, t he petitioner is merely claiming his statutory right. Under the circumstances, t his Court in exercise of its writ jurisdiction under Article 226 of the Constitu tion would be justified in enforcing the statutory rights of the petitioner made available to it under Section 11-BB of the Act. 9. The result of the foregoing discussion is that this writ petition succee ds. The respondent authorities are, therefore, directed to pay interest on the d elayed refunds as admissible to the petitioner in accordance with Section 11-BB of the Act within a period of three months from the date of receipt of this judg ment. No costs.