M/S Fabrimax Engineering Pvt. ... vs Commissioner Of Central Excise, ...
2021 Latest Caselaw 10723 Bom

CEL 2-21                                        1                           Judgment

            IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                      NAGPUR BENCH, NAGPUR.
                  CENTRAL EXCISE APPEAL NO. 2/2021

M/s Fabrimax Engineering Pvt. Ltd.
A Company incorporated under the provisions of
Companies Act, 1956, having its Registered Office
at Plot No.J-20, MIDC Industrial Area, Hingna Road,
Nagpur 440016. Through its Director Mr.Pawan
S/o Omprakash Chokhani.                                                APPELLANT
                                  .....VERSUS.....
Commissioner of Central Excise
Telangkhedi Road, Civil Lines, Nagpur 440 001.                       RESPONDENT

                    Shri S.S. Dewani, counsel for the appellant.
                   Shri S.N. Bhattad, counsel for the respondent.

CORAM : A. S. CHANDURKAR AND G.A. SANAP, JJ.
DATE ON WHICH ARGUMENTS WERE HEARD : 29TH JULY, 2021.
DATE ON WHICH JUDGMENT IS PRONOUNCED : 10TH AUGUST, 2021.

JUDGMENT         (PER : A.S. CHANDURKAR, J.)

This appeal filed under Section 35G of the Central Excise Act,

1944 was heard on the following substantial question of law:-

"In the light of adjudication of Central Excise Appeal No.15 of 2016 by this Court on 22.02.2017 in the case of the present appellant itself, whether the appellant is entitled for refund under Rule 5 of the Cenvat Credit Rules read with Notification dated 18.06.2012 and Section 11B of the Central Excise Act, 1944?"

2. The aforesaid substantial question of law arises in view of the

following facts:-

CEL 2-21 2 Judgment

The appellant claims to have cleared finished goods under

International Competitive Bidding (ICB) without payment of excise duty

in view of notification dated 17.03.2012. Since the appellant was not in

a position to utilize Cenvat credit on duty paid on inputs in view of the

fact that majority of the finished goods were cleared under ICB there was

an accumulation of Cenvat credit. Accordingly on 17.04.2015 the

appellant filed a refund claim under Rule 5 of the Cenvat Credit Rules,

2004 (for short 'the said Rules') for an amount of Rs.96,53,590/-. The

refund was claimed on account of duty paid on inputs used in the

manufacture of finished goods cleared under ICB during the period from

January-2015 to March-2015. On 12.05.2015 a show cause notice was

issued to the appellant proposing to reject the refund as claimed

principally on the ground that there was no "Physical Export" under Rule

5 of the said Rules for seeking refund. Since the clearances under ICB

were treated as deemed exports it was proposed to refuse the refund.

The appellant filed its reply on 29.06.2015 justifying its entitlement for

refund. The Assistant Commissioner by his order dated 16.07.2015

rejected the refund claim which order was maintained on 11.03.2016 by

the Commissioner (Appeals) and further on 11.02.2021 by the Customs,

Excise and Service Tax Appellate Tribunal, Mumbai. Being aggrieved, the

appellant has filed this appeal.

CEL 2-21 3 Judgment

3. Shri S.S. Dewani, learned counsel for the appellant submitted

that the question as to whether goods cleared under the notification

dated 17.03.2012 against ICB at Nil rate of duty would entitle the

appellant for refund under Rule 5 of the said Rules stands concluded in

favour of the appellant especially in view of the earlier adjudication by

this Court in Central Excise Appeal No.15/2016 in the case of the

appellant itself. Referring to the order dated 17.06.2016 passed by the

Customs, Excise and Service Tax Tribunal in proceedings pertaining to the

appellant itself, he submitted that the Tribunal had recorded a finding

that since the clearances made by the appellant under ICB were

considered as exports this adjudication was challenged by the Revenue in

the aforesaid appeal. It was held by this Court that the aforesaid

conclusion arrived at by the Tribunal was justified and the finding that

the clearances made by the appellant under ICB could be treated as

exports was upheld. This adjudication was relied upon by the appellant

before the Tribunal in the present proceedings but the same was

disregarded for no justifiable reason. It was not permissible for the

Revenue to re-agitate the aforesaid issue when the same had been

answered against it previously especially in proceedings pertaining to the

appellant itself. He further referred to the judgment of the Gujarat High

Court in Commissioner of Central Excise Versus Shilpa Copper Wire

Industries [2011 (269) ELT 17] to urge that clearances were made by one

CEL 2-21 4 Judgment

100% export oriented unit to another 100% export oriented unit were

deemed exports and were to be treated as physical exports for the

purposes of entitling refund of unutilized Cenvat credit under Rule 5 of

the said Rules. The aforesaid decision was thereafter consistently

followed and infact was also referred to by the Tribunal in the earlier

proceedings which culminated with the adjudication of Central Excise

Appeal No.15/2016 referred to hereinabove. It was thus submitted that

the appellant was entitled to refund under Rule 5 of the said Rules and

the impugned orders refusing such refund were liable to be set aside.

4. Shri S.N. Bhattad, learned counsel for the respondent

opposed the aforesaid submissions. According to him the Tribunal had

taken a correct view of the matter and the claim for refund had been

rightly refused. He referred to the submissions filed on behalf of the

respondent on record to urge that the earlier adjudication in Central

Excise Appeal No.15/2016 did not adjudicate the substantial question

involved in the present appeal. The learned counsel however did not

dispute the fact that the said adjudication between the said parties had

attained finality.

5. On hearing the learned counsel for the parties and after

giving due consideration to their respective submissions, we are of the

CEL 2-21 5 Judgment

view that the substantial question of law as framed has to be answered in

favour of the appellant. It is undisputed that for the period from January-

2014 to December-2014 the present appellant had claimed similar refund

of Cenvat credit under Rule 5 of the said Rules on the ground that said

credit remained unutilized due to clearances of the final products under

ICB. The Tribunal by its judgment dated 17.06.2016 considered the

judgment in the case of Shilpa Copper Wire Industries (supra) and held

that in view of that decision, the clearances made by the appellant herein

to ICB had to be considered as exports for being entitled to claim refund

of Cenvat credit. The Revenue proceeded to challenge that adjudication

by filing Central Excise Appeal No.15/2016 and this Court on 22.02.2017

upheld the order of the Tribunal. It is thus clear that for the earlier

period from January-2014 to December-2014 the claim for refund made

by the appellant under Rule 5 of the said Rules was upheld by the

Tribunal as well as by this Court. Notably this adjudication pertains to

the appellant itself. Despite the fact that the aforesaid orders were placed

before the Tribunal in the present proceedings it has not given due

weightage to the same but has sought to distinguish the same on

untenable grounds. In view of the fact that the claim for refund based on

Rule 5 of the said Rules as made by the appellant was allowed for the

entire period which adjudication was upheld by this Court there was no

reason to disregard such adjudication especially when in those

CEL 2-21 6 Judgment

proceedings the Tribunal itself had followed the ratio of the decision in

Shilpa Copper Wire Industries (supra). We find that the entitlement to

refund under Rule 5 of the Rules stands established in view of the legal

position referred to above as the claim as made has been disallowed in a

manner contrary to law. In that view of the matter the substantial

question of law as framed is answered by holding that the appellant is

entitled for refund under Rule 5 of the said Rules read with notification

dated 17.03.2012 and Section 11B of the said Act. Consequently, the

order passed by the Customs, Excise and Service Tax Appellate Tribunal,

Mumbai on 11.02.2021 in Excise Appeal No.86434/2016 is set aside.

6. During the course of hearing of the appeal the learned

counsel were heard on an additional substantial question of law as under:

"That, if the appellant is entitled for refund under Rule 5 of the said Rules whether the amount of refund would carry interest in view of provisions of Section 11BB of the said Act?".

For said purpose the learned counsel for the respondent was

called upon to verify as to whether the calculation of the refund claim as

made by the appellant was correct and in accordance with law. On

27.07.2021 the respondent has filed pursis alongwith communication

dated 26.07.2021 issued by the Deputy Commissioner, CGST and Central

Excise, Division Hingna in which it has been stated that there was no

CEL 2-21 7 Judgment

error in the amount of refund claim by the assessee as per the formula

given in Rule 5 of the said Rules. As noted above the amount of refund

claim was calculated at Rs.96,53,590/-. Thereafter the learned counsel

have been heard on the aforesaid substantial question of law.

7. According to the learned counsel for the appellant in view of

the provisions of Section 11BB of the said Act the appellant is entitled to

interest on the amount of refund to which the appellant has been found

entitled. Placing reliance on the decision in Commissioner of Central

Excise, Hyderabad Versus ITC Ltd. [(2005) 13 SCC 689], Vikram Ispat

Versus Union of India [2009 (234) ELT 74], Ranbaxy Laboratories

Limited Versus Union of India & Others [(2011) 10 SCC 292],

Commissioner of Central Goods and Service Tax and Central Excise,

Daman Versus Alfa Packaging [AIRONLINE 2019 BOM 1322] and the

judgment of the Division Bench of this Court at the Principal Seat in Writ

Petition No.1775/2020 [Qualcomm India Private Limited Versus Union

of India & Others] decided on 21.05.2021 it was submitted that on the

expiry of the period of three months from the receipt of the application

for refund, the appellant would be entitled to receive interest till the

amount is received by it. It was submitted that the refund application

dated 15.04.2015 preferred by the appellant under Rule 5 of the Cenvat

Credit Rules was received by the respondent on 17.04.2015. Hence, on

CEL 2-21 8 Judgment

the expiry of the period of three months from that date, the appellant

would be entitled to receive interest.

On behalf of the respondent it was submitted that since the

claim for refund was found to be inadmissible there would be no occasion

to award interest from the period of three months on receipt of the

application as prayed for. In any event, the amount of interest would

have to be calculated by the concerned Authority and no directions in that

regard need to be issued by the Court.

8. On hearing the learned counsel for the parties on the

additional substantial question of law we find that this issue stands

concluded by the judgment of the Hon'ble Supreme Court in Ranbaxy

Laboratories Limited (supra). This very question as regards

commencement of the period for the purposes of paying interest on

delayed refund under Section 11BB of the said Act was considered

alongwith the aspect as to the date from which the entitlement to interest

arises. It has been held in clear terms that the liability of the Revenue to

pay interest under Section 11BB of the said Act commences from the date

of expiry of three months from the date of receipt of the application for

refund under Section 11B(1) of the said Act and not on the expiry of the

period from the date on which the order of refund is made. This decision

has thereafter been consistently followed and hence it is now a settled

CEL 2-21 9 Judgment

position that the entitlement to interest on delayed refund would

commence on the expiry of the period of three months from the date of

receipt of the application for refund till the date of payment of refund. In

that view of the matter the contention raised on behalf of the respondent

that since this Court has now held the appellant entitled for refund under

Section 11B of the said Act, the payment of interest under Section 11BB

would be governed by such adjudication.

In the decision relied upon by the learned counsel for the

appellant in Commissioner of Central Excise, Hyderabad (supra) the rate

of interest was applied at 12% per annum. However in the subsequent

decision in Ranbaxy Laboratories Limited (supra), the jurisdictional Excise

Officer had been directed to determine the amount of interest under

Section 11BB of the said Act and make the payment thereafter. This

course has been subsequently followed by this Court in Alfa Packaging

and Qualcomm India Private Limited (supra). We are therefore inclined

to follow the same course. The additional substantial question of law is

accordingly answered by holding that since the appellant is found

entitled for refund under Rule 5 of the said Rules the amount of

refund would carry interest under Section 11BB of the said Act on the

expiry of three months from 17.04.2015 on which date the refund

application was received by the respondent till actual payment of the

amount of interest.

CEL 2-21 10 Judgment

9. In the light of the answers to the aforesaid substantial

questions of law, the following order is passed:

(I) The order dated 11.02.2021 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (Regional Bench) in Excise Appeal No.86434/2016 is set aside.

(II) It is held that the appellant is entitled to refund under Rule 5 of the Cenvat Credit Rules for the amount of Rs.96,53,590/- which has been verified by the Deputy Commissioner CGST and Central Excise, Division Hingna by the communication dated 26.07.2021.

(III) The aforesaid amount of refund shall be paid with interest in terms of Section 11BB of the Central Excise Act, 1944. The amount of interest shall be calculated by the Authority that has issued the show cause notice dated 12.05.2015 in the light of the observations made hereinabove. That amount be calculated and paid to the appellant within a period of eight weeks from today.

10. Central Excise Appeal No.2 of 2021 is allowed in aforesaid

terms leaving the parties to bear their own costs.

             (G.A. SANAP, J.)                (A.S. CHANDURKAR, J.)


APTE