Commissioner Of Central Excise ... vs M/S Jai Corpn Ltd
2017 Latest Caselaw 7717 Bom

                                                         First Appeal No.246/2007
                                          1


              IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                               BENCH AT AURANGABAD


                           FIRST APPEAL NO.246 OF 2007




 Commissioner of Central Excise,
 & Customs, Town Centre, N-5,
 CIDCO, Aurangabad                                 ...     APPELLANT

          VERSUS

 M/s Jai Corp. Ltd.,
 Sipta Coated Steel Division,
 A-3, M.I.D.C., Nanded 431 603                     ...     RESPONDENT

                                 .....
 Shri D.S. Ladda, Advocate for appellant
 Shri A.P. Kolte, Advocate for respondent
                                 .....


                                 CORAM:       R.D. DHANUKA AND
                                              SUNIL K. KOTWAL, JJ.

DATED: 29th September, 2017.

ORAL JUDGMENT (PER R.D. DHANUKA, J.):

1. By this Appeal, filed under Section 35(G) of the

Central Excise and Customs Act, 1994, the appellant has

impugned the order dated 31.7.2006, passed by the Tribunal,

allowing the Appeal No.A/1125/C-III/SMB/WZB/2006, filed by

the assessee and holding that the revenue is liable to pay

First Appeal No.246/2007

interest to the assessee from three months from the date of the

order of the Tribunal i.e. from 22/10/1999 up to 17/3/2004.

2. The revenue has imposed a penalty of Rs.5 Lakhs

upon the assessee. The Commissioner of Central Excise &

Customs, Aurangabad confirmed the said order of penalty of Rs.5

Lakhs by an order dated 7.12.1989. The Tribunal dismissed the

appeal filed by the assessee on 5.11.1997 for default. On

5.3.1998, the assessee paid the penalty of Rs.5 Lakhs under

protest. The assessee simultaneously filed an application for

restoration of the appeal which was dismissed for default. The

said appeal was restored by the Tribunal. On 22.7.1999, the

appeal filed by the assessee came to be allowed by the Tribunal.

The order imposing penalty of Rs.5 Lakhs by the revenue came

to be set aside. On 23.12.2003, the assessee made an

application for refund of the amount of Rs.5 Lakhs. The revenue

refunded the amount of Rs.5 Lakhs on 17.3.2004, without

payment of any interest. After receipt of the said refund of Rs.5

Lakhs, the assessee made an application for payment of interest

of Rs.3,25,764/- on the said refunded amount of Rs.5 Lakhs.

The revenue, however, did not pay the said interest and passed

an order on 3.11.2004.

3. The assessee thereafter filed an appeal before the

First Appeal No.246/2007

Commissioner of Central Excise & Customs (Appeals). By an

order dated 21.2.2005, the Commissioner of Central Excise &

Customs (Appeals) dismissed the said appeal filed by the

assessee. Being aggrieved by the said order, the assessee

preferred an appeal before the Tribunal. By an order dated

31.7.2006, the Tribunal allowed the said appeal filed by the

assessee and held that the assessee would be entitled to interest

after expiry of three months from the date of the order of the

Tribunal i.e. 22.10.1999. The revenue filed this appeal under

Section 35(G) of the Central Excise & Salt Act, 1944.

4. This Court, admitted this First Appeal on 30.4.2007

on following substantial question of law.

"Whether interest under Section 11-BB can be permitted in favour of the assessee for delayed refund of the penalty imposed under Section 11-AC upon the same being set aside by higher authorities?

5. Mr. Ladda, learned counsel for the revenue invited

our attention to the various orders annexed with the appeal and

would submit that, the assessee did not make any application for

refund of the amount of Rs.5 Lakhs immediately upon the date of

First Appeal No.246/2007

the order of Tribunal allowing the appeal filed by the assessee

and directing the revenue to refund the amount of penalty of

Rs.5 Lakhs. He submits that, the application for refund of the

amount was made for the first time on 23.12.2003. The said

application for refund was processed by the revenue and an

amount of Rs.5 Lakhs was refunded by the revenue within three

months from the date of the said application i.e. on 17.3.2004.

He submits that, the assessee thereafter made a separate

application for interest which was rightly rejected by the

Department. He submits that, since no application for payment

of interest was made by the assessee immediately upon the

order of the Tribunal allowing the appeal of the revenue, the

revenue was not liable to make payment of any interest.

6. Learned counsel for the assessee, on the other hand,

without going into the issues raised by the learned counsel for

the revenue, would submit that, on 24.11.2006, the revenue has

already made payment of interest to the assessee in the sum of

Rs.2,30,576/-. He submits that, the claim of interest was for

larger amount made by the assessee. However, since the

interest allowed by the Tribunal was only for the period between

22.10.1999 and 17.3.2004, the revenue made payment of

interest in the sum of Rs.2,30,576/-. He fairly submits that, the

First Appeal No.246/2007

assessee has not disputed the amount of interest paid by the

revenue to the assessee on 24.11.2006. It is submitted by the

learned counsel that, in view of the revenue already having

complied with the order passed by the Tribunal and has released

the payment of interest on 25.11.2006, nothing survives in this

appeal.

7. It is submitted by the learned counsel that, though he

could respond to all the issues raised by the learned counsel for

the revenue in this appeal, since the impugned order passed by

the Tribunal has been already complied with, the assessee need

not answer those questions raised by the Department.

8. Mr. Ladda, learned counsel for the revenue does not

dispute that the interest amount has been already paid by the

Department on 24.11.2006 in the sum of Rs.2,30,576/-

unconditionally. In our view, since the impugned order passed

by the Tribunal has been implemented by the revenue, this Court

need not go into the other rival contentions raised by the parties.

9. It is, however, made clear that, this Court has not

gone into the issue whether the assessee was under any

obligation to make an application for refund of the interest

thereon immediately upon the date of the order of the Tribunal

First Appeal No.246/2007

thereby setting aside the order imposing penalty. The issue

raised by the revenue across the bar before this Court for

consideration that liability to pay interest would not have

commenced till application for refund of penalty or interest

thereon would have been made by the assessee or not need not

be gone into by this Court and the said issue is kept open. In our

view, the said issue can be considered by the Court in

appropriate matter.

10. Since this Court is of the view that the appeal itself

has become infructuous in view of the Department having paid

the amount of interest unconditionally, we pass the following

order:

(a) First Appeal No.246/2007 is dismissed as infructuous.

(b) We, therefore, need not answer the substantial question

of law as framed by this Court while admitting the First

Appeal.

          (SUNIL K. KOTWAL)                    (R.D. DHANUKA)
               JUDGE                                 JUDGE


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