2004 (96) ECC 557 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Shri V.K. Agrawal, Member (Technical) Shri P.G. Chacko, Member (Judicial)

Steel Strips Ltd.

Versus

CCE, Ludhiana

WITH
CROSS APPEALS

Appeal No. 1. E/4066/03-NB(B) 2. E/S/2567/03-B with Appeal No. E/4006/03-NB(B)

[Arising out of O-in-A No. 514/CE(DH)/2003 dt. 19.9.03 passed by CCE (A), Ludhiana]

Stay Order No. 140/2004/B
Final Order No. 290-291/2004-B, dt. 3.4.2004, Certified on 7.4.2004

Refund

Duty collected by Department alongwith interest -- Manufacture of cold rolling of duty paid hot-rolled strips -- In view of the decision in the case of Union of India v. Orient Enterprises, 1998 (60) ECC 482 (SC), there is no merit in the appeal filed by M/s. Steel Strips Ltd., which is accordingly rejected. The refund had been found to be sanctionable to the assessee by the Commr. (Appeals), which was only denied to them on the ground of unjust enrichment. Dispute regarding excisability of hot rolled steel strips in any case had been decided by the Supreme Court in favour of the assessee vide judgment dated 2.5.1995.

Revenue appeal is rejected

PRESENT :

Shri K.K. Anand, Adv. for Steel Strips Ltd.

Shri V. Valte, SDR for CCE, Ludhiana.

Cases Cited :

1. B.H.E.L. v. CCE, Meerut, 2002 (139) ELT 591 (T)............................................. [Para 3]

2. CCE v. Mahavir Aluminium Ltd., 2003 (57) RLT 467 (CEGAT-Mum.)................... [Para 2]

3. Eastern Coils (P) Ltd. v. CCE, Kolkata-I, 2003 (153) ELT 290 (Cal.)................... [Para 3]

4. Sheela Foam Pvt. Ltd. v. CCE, Noida, 2003 (154) ELT 522 (T-LB)..................... [Para 3]

5. Suganmal v. State of Madhya Pradesh & Ors., AIR 1965 SC 1740..................... [Para 4]

6. Union of India v. Orient Enterprises, 1998 (60) ECC 482 (SC)....................... [Paras 3, 4]

Per : V.K. Agrawal

These are two appeals, arising out of a common Order-in-Appeal No. 514/03 dated 19.9.03 -- one by M/s. Steel Strips Ltd. and other by the Revenue.

2. Shri K.K. Anand, learned Advocate, submitted that M/s. Steel Strips Ltd. had been undertaking the activity of cold rolling of duty paid hot rolled strips, which were contended by them as not amounting to manufacture; that the matter was finally settled by the Hon'ble Supreme Court, which had held that the Department had not been able to establish that the process undertaken by them brought into existence in new article; that they had claimed refund of the duty collected by the Department alongwith interest for the period 2.4.80 to 20.3.82; that, initially, the Assistant Commissioner rejected the refund claim and the Tribunal remanded the matter to the original authority vide Final Order No. 1457/96-NB dated 30.5.96; that in de novo proceedings, the Deputy Commissioner sanctioned the refund claim vide order dated 26.8.99; that, however, the Deputy Commissioner declined their request of interest on the ground that provisions of Section 11BB of the Central Excise Act are not attracted; that the Commissioner (Appeals), under the impugned order, ordered that the interest is payable to M/s. Steel Strips Ltd. after three months from the date of insertion of provision regarding payment of interest i.e. with effect from 24.8.95 till the date of issuance of cheque at the rates notified under Section 11BB during the relevant period. The learned Advocate contended that they are eligible for the interest w.e.f. 2.4.80 as the amount, got deposited by them, from that date is without authority of law; that there are various judgments of the Hon'ble Courts where interest had been held to be payable in circumstances where the Department had retained deposit unlawfully and delayed refund and in the matter, even after the matter was finally decided in favour of the assessee. He relied upon the decision in the case of CCE v. Mahavir Aluminium Ltd., 2003 (57) RLT 467 (CEGAT-Mum.).

3. On the other hand, Shri V. Valte, learned SDR, submitted that no interest is payable by the Revenue; that as per the Explanation to Section 11BB of the Central Excise Act, where any order of refund is made by the Commissioner (Appeals), the Appellate Tribunal or any Court, against the order of the Assistant/Deputy Commissioner, the order passed by the Commissioner (Appeals), the Appellate Tribunal or Court, shall be deemed to be an order passed under Sub-Section (2) of Section 11B for the purpose of this Section; that in the present matter, the Appellate Tribunal, vide order dated 30.5.96, remanded back the case to decide the issue of unjust enrichment; that the Tribunal had not passed any order of refund within the purview of Section 11BB of the Central Act; that, therefore, the question before the Adjudicating Authority, was to decide the issue involved in the refund case and refund was admissible only after the decision of the case. As such mere direction of the Tribunal for de novo consideration, was not an order in terms of Explanation. He relied upon the decision in the case of Union of India v. Orient Enterprises, 1998 (60) ECC 482 (SC) : 1998 (99) ELT 193 (SC), wherein it has been held that interest on delayed refund was conferred for the first time by insertion of Section 27A of the Customs Act and claim for payment of interest on delayed refund for the past period cannot be maintained. Reliance has also been placed on the decision in the case of B.H.E.L. v. CCE, Meerut, 2002 (139) ELT 591 (T), wherein it has been held that interest on the amount of pre-deposit pending appeal is payable only from the date of final order in favour of the assessee as the entitlement of refund arises only when the appeal is finally disposed of. He also relied upon the decision in the case of Eastern Coils Private Ltd. v. CCE, Kolkata-I, 2003 (153) ELT 290 (Cal.) and Sheela Foam Pvt. Ltd. v. CCE, Noida, 2003 (154) ELT 522 (T-LB).

4. We have considered the submissions of both the sides. Section 11B of the Central Excise provides for payment of interest if the refund is not sanctioned within three months from the date of receipt of the application. This provision was inserted in the Central Excise Act w.e.f. 26.5.95 by Sec. 75 of the Finance Act, 1995. There was no provision provided under the Act earlier for sanctioning of refund on delayed refund of duty. The interest has become payable under the Central Excise Act for the first time w.e.f. 26.5.95 only. This was the view expressed by the Hon'ble Supreme Court in the case of Orient Enterprises (supra) wherein the Supreme Court had held that till the insertion of Section 27A in the Customs Act by Act 22 of 1995, there was no right entitling payment of interest on delayed refund under the Customs Act and at the relevant time involved in the said judgment (which was prior to 1995) "there was no statutory right entitling the respondents to payment of interest on delayed refund and the Writ Petition filed by them was not for enforcement of the legal right available to them under any statute. The claim for interest was in the nature of compensation for wrongful retention by the appellants of money that was collected from the respondents by way of customs duty, redemption fine and penalty. In view of the law laid down by this Court in Suganmal (supra), a writ petition seeking the relief of payment of interest on delayed refund of the amount so collected could not, in our opinion, be maintained". (Hon'ble Supreme Court has referred to the case in Suganmal v. State of Madhya Pradesh & Ors., AIR 1965 SC 1740. The Hon'ble Supreme Court also observed that the reliance had been placed by the respondents on the case where the legality of the orders requiring payment of duty were challenged and the High Court in exercise of its jurisdiction under Article 226 of the Constitution, while setting aside the said order, has directed the refund of the amount so collected with interest and those cases, thus, stand on a different footing and have no application to the present case. Thus, in view of the decision of the Hon'ble Supreme Court in the case of Orient Enterprises (supra), we find no merit in the appeal filed by M/s. Steel Strips Ltd., which is accordingly rejected. We also do not find any merit in the appeal filed by the Revenue. The Commissioner (Appeals) has allowed the interest under Section 11BB of the Act to be paid to M/s. Steel Strips Ltd. after three months from the date of insertion of Section 11BB of the Act. It has not been disputed by the Revenue that the assessee had filed the refund claim in 1988, which was rejected by the Assistant Commissioner in December 1990 on the ground that the claim was time-barred and that they had collected the duty from their customers; that on appeal, filed by the assessee, the Commissioner (Appeals) had set aside the time-bar aspect but upheld the ground of unjust enrichment. On appeal, filed by the assessee, the Tribunal vide Final Order No. 35/96 remanded the case to the jurisdictional Assistant Commissioner for de novo adjudication after giving an opportunity of hearing to M/s. Steel Strips Ltd. to establish that they had not passed on the incident of duty to any other person in accordance with the amended provisions of Section 11B of the Central Excise Act. From these undisputed facts, it is very much evident that the refund had been found to be sanctionable to the assessee by the Commissioner (Appeals), which was only denied to them on the ground of unjust enrichment. The Commissioner (Appeals) has also observed, in the impugned order, that even after remand by the Tribunal, the first hearing was given by the Adjudicating Authority after a period of over two years, that too after the assessee had requested for the same.

The Commissioner (Appeals) has, further, observed that even after conducting personal hearing, the Adjudicating Authority took full one year to finalise the case and the assessee had to suffer without any lapse on their part. We, therefore, agree with the learned Commissioner (Appeals) that the interest is payable to them. The decisions, relied upon by the learned SDR, are in respect of the amount which has been deposited as pre-deposit under Sec. 35F of the Central Excise Act. Certainly, in such cases, a question of refund will arise only after the final order, deciding the dispute, is made in favour of the assessee. Such a situation does not exist in the present matter as the Department itself has been dealing with the refund claim since 1990. We also observe that the dispute regarding excisability of hot rolled steel strips in any case had been decided by the Supreme Court in favour of the assessee vide judgment dated 2.5.1995 as reported in 1995 (77) ELT 248 (SC). We. therefore, reject the appeal filed by the Revenue.

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