Commissioner Of Customs And Central ... vs M/S. Sanghi Textiles Ltd.,
2024 Latest Caselaw 615 Tel

Telangana High Court

Commissioner Of Customs And Central ... vs M/S. Sanghi Textiles Ltd., on 14 February, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

           THE HON'BLE SRI JUSTICE P. SAM KOSHY
                            AND
           THE HON'BLE SRI JUSTICE N. TUKARAMJI

             CENTRAL EXCISE APPEAL No.40 of 2008

JUDGMENT:

(per Hon'ble Sri Justice P.SAM KOSHY)

The challenge in the instant appeal is to the order passed by

the Customs, Excise and Service Tax Appellate Tribunal (herein

referred to as 'the Tribunal') in Appeal No.E/stay/648/2006 in

E/932/2006 decided on 28.11.2006.

2. Heard Mr. Dominic Fernandes, learned Senior Standing

Counsel for CBIC appearing for the appellant and Mr. A. Rohan,

learned counsel appearing on behalf of Mr. S. Ravi, learned Senior

Counsel for the respondent.

3. Vide the said impugned order, the Tribunal has dismissed

the appeal that was preferred by the appellant affirming the OIA

No.36 of 2006 dated 31.05.2006 passed by the Commissioner

(Appeals) accepting the assessee's plea for grant of interest after

expiry of three (03) months from the date of filing of the claim for

refund.

4. The relevant facts for the purpose of deciding the instant

appeal is that the assessee had moved an application for refund of

claim on 19.04.2003. In terms of the provisions under Section

11BB of Central Excise Act, 1944 (for short 'the Act') the

application ought to have been decided by the authorities ::2::

concerned within an outer limit of three (03) months. However, in

the instant case, the application stood rejected vide Order-in-

Original No.15 of 2004 dated 26.10.2004. It was this order which

was subjected to challenge before the Commissioner (Appeals) in

OIA No.119 of 2005 whereby the Commissioner (Appeals) allowed

the appeal vide order dated 31.05.2005.

5. Subsequent to the order dated 31.05.2005, the assessee

moved a revision application on 20.06.2005 highlighting the fact

that since the appeal stands allowed, he is entitled for refund. The

said refund was however sanctioned only on 19.09.2005, but

interest was not paid. Subsequently, the assessee made a claim for

interest before the Deputy Commissioner of Central Excise

claiming for interest from the date of the application that was

made i.e. on 19.04.2003. The said application stood rejected on

08.02.2006 by the Deputy Commissioner of Central Excise, which

was subjected to challenge before the Commissioner (Appeals) in

OIA No.36 of 2006, which stood allowed on 31.05.2006. It was this

order dated 31.05.2006 which was subjected to challenge before

the Tribunal by the appellant herein.

6. The Tribunal dismissed the appeal affirming the order

passed by the Commissioner (Appeals). The Commissioner

(Appeals) so also the Tribunal had relied upon the decision ::3::

rendered by the larger Bench in the case of Rama Vision Ltd. v.

CCE, Meerut 1.

7. Learned Senior Standing Counsel for CBIC referred to the

provisions of Section 11(b) of the Act and also took the Court to the

"Explanation" which defines "Relevant Date" and also the

"Explanation" given to Section 11BB and contended that for all

practical purposes, the order of payment of refund would be only

from the date 20.06.2005 when the assessee has made the revised

application pursuant to the order passed by the Commissioner

(Appeals) on 31.05.2005.

8. Learned Senior Standing Counsel for CBIC further

contended that pursuant to the revised application being made on

20.06.2005, the refund was subsequently sanctioned on

19.09.2005 and as such it has been decided within a period of

three (03) months from the date the revision application was made.

Thus, there is no delay on the part of the appellant and the order

of the Commissioner (Appeals) to the aforesaid extent and that of

the Tribunal was liable to the set aside.

9. It would be relevant at this juncture to take note of a

decision of the Hon'ble Supreme Court in the case of Ranbaxy

Laboratories Ltd. v. Union of India & Ors. 2 wherein a similar

came up for consideration before the Hon'ble Supreme Court and

2004 (170) ELT 13 (Tri.-LB) 2 2011 (10) SCC 292 ::4::

after considering the factual matrix of the case in paragraph No.9,

it was held as under:

"9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found 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 11B 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. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable."

10. While deciding the said judgment, the Hon'ble Supreme

Court had approved the observation made by the Rajasthan High

Court in the case of J.K. Cement v. Assistant Commissioner of

Central Excise & Customs 3, which for ready reference is being

reproduced herein under:

3 2004 (170) E.L.T. ::5::

"A close reading of Section 11BB, which now governs the question relating to payment of interest on belated payment of interest, makes it clear that relevant date for the purpose of determining the liability to pay interest is not the determination under sub- section (2) of Section 11B to refund the amount to the applicant and not to be transferred to the Consumer Welfare Fund but the relevant date is to be determined with reference to date of application laying claim to refund. The non- payment of refund to the applicant claimant within three months from the date of such application or in the case governed by proviso to Section 11BB, non-payment within three months from the date of the commencement of Section 11BB brings in the starting point of liability to pay interest, notwithstanding the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant needs no interference."

11. In the light of the aforesaid authoritative decision of the

Hon'ble Supreme Court in the case of Ranbaxy Laboratories Ltd.

(supra), we have no hesitation in reaching to the conclusion that

the finding arrived at by the Tribunal affirming the order passed by

the Commissioner (Appeals) granting of interest from the date of

the original application is made seems to be perfectly justified and

specific reasoning's being provided calling for no interference.

12. So far as the decisions referred to by the learned Senior

Standing Counsel for CBIC in the case of M/s. Eastern Coils (P)

Ltd. v. CCE 4 and Commr. of C. Ex. v. I.T.C. Bhadrachalam

Paper Boards Ltd. 5, if we look into those judgements, it would

clearly indicate that those were cases where the claim was not

executed for a refund, but were for a different claim altogether.

Therefore, the law laid down by the Hon'ble Supreme Court in

4 2003 (153) ELT 290 (Cal) 5 2005 (179) ELT 15 (SC) ::6::

those two judgments cannot be applied in a straight jacket formula

to the facts of the present case. Moreover, if we look into the facts

of the case and the relevant dates in the case of Ranbaxy

Laboratories Ltd. (supra), the decision rendered in the said case

appears to be more relevant to the facts of the present case.

13. In view of the same, we do not find any merits in the instant

appeal filed by the appellant and is accordingly, rejected. However,

there shall be no order as to costs. Consequently, miscellaneous

petitions pending if any, shall stand closed.

__________________ P. SAM KOSHY, J

__________________ N. TUKARAMJI, J

Date: 14.02.2024 GSD