2011-TIOL-162-HC-MAD-CX

IN THE HIGH COURT OF MADRAS

WP No.4705 of 2010

M/s OMPLAS SYSTEMS
REP. BY ITS MANAGING PARTNER
MR C BALASUBRAMANIAN,
OLD NO.1/192, NEW NO.1/226, ANNA ROAD,
GERUGAMBAKKAM, CHENNAI 602 101

Vs

1) THE COMMISSIONER OF CENTRAL EXCISE,
CHENNAI IV COMMISSIONERATE,
M H U COMPLEX, 692, ANNA SALAI,
NANDANAM, CHENNAI 600 035

2) THE JOINT COMMISSIONER OF CENTRAL EXCISE,
CHENNAI IV COMMISSIONERATE,
M H U COMPLEX, 692, ANNA SALAI,
NANDANAM, CHENNAI 600 035

3. THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE,
CHROMPET DIVISION, III FLOOR, GUNABUILDING,
445, ANNA SALAI, CHENNAI 600 018

Vinod K Sharma, J

Dated : February 7, 2011

Appellant Rep by: Mr Joseph Prabakar
Respondents Rep by: Mr P Mahadevan

Central Excise - Refund of deposit made prior to issue of Show Cause Notice - Pending appeal in Tribunal no ground for not granting refund - Refund ordered with interest: The only defence raised by the learned Government Advocate is that it was due to the pendency of the appeal that the amount was not refunded. Section 11-BB of the Central Excise Act casts a statutory duty on the respondents, to refund the amount within a period of three months. The statutory period of three months for refund the amount has already expired. A writ in the nature of mandamus is issued directing the respondent to refund the amount of Rs.5,05,759 /- along with interest at the rate of 6% interest per annum with effect from 07.12.2009 till the date of payment.

JUDGEMENT

Per: Vinod K Sharma:

The petitioner firm is manufacture of Wear resistance, Corrosion resistance over laid parts and welding related services for valves and other industrial applications classifiable under Chapter Heading No.84814000 of the First Schedule to the Central Excise Tariff Act, 1985 and is registered with Central Excise Vide No.ECC No.AAAFO8838LXM001.

2. The petitioner availed Cenvat on certain inputs, namely, Stellite powder and Deloro 50 for their job work for the manufacture of Wear resistance and corrosion resistance parts. The officers of Head Quarters Preventive Unit of the first respondent visited the factory of the petitioner on 27.06.2007 and disputed the availing of Cenvat credit on the inputs used for job work. As per the direction of the Head Quarters Preventive Unit, the petitioner deposited a sum of Rs.5,00,000/- and thereafter deposited an additional amount of Rs.5,760/-. The amount demanded by the respondents was claimed to be without any authority of law, as there were no order of the competent authority, to claim this amount from the petitioner, as the show cause notice was received by the petitioner on 02.01.2008. The petitioner contested the show cause notice. The competent authority, being dissatisfied with the explanation given by the petitioner, confirmed the demand of Rs.5,05,759/- as depicted in the show cause notice.

3. The case of the petitioner is that the petitioner, being aggrieved by the order, filed statutory appeal before the Commissioner of Central Excise, (Appeals), Chennai. The appeal was accepted on 08.09.2009 and the Appellate Authority held that the petitioner was entitled to avail the Cenvat credit on inputs used in job work.

4. Though the impugned order is challenged by the Revenue before the Tribunal, however, no stay has been granted. The petitioner has approached this Court, seeking refund of the amount, on the ground that it was the duty of the respondents to refund the amount within three months of passing of an order, as envisaged under Section 11-BB, of the Central Excise Act, 1944, which reads as under:-

"11BB. Interest on delayed refunds

If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, 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 Gazettee], on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty:

PROVIDED that where any duty ordered to be refunded under sub-section (2) of section 11B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.

Explanation: Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal [National Tax Tribunal] or any court against an order of the Assistant Commissioner of Central Excise [or Deputy Commissioner of Central Excise], under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, by the court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section.]"

5. The reading of Section 11BB of the Central Excise Act shows that the petitioner is entitled to refund along with interest not below five per cent and not exceeding thirty per cent per annum as may be fixed by the Central Government in the Official Gazette. Notification of the Government has paid the interest at 6.% per annum. The petitioner is entitled to interest at the rate of 6% per annum on the amount of Rs.5,05,759/-, in view of the order dated 08.09.2009 passed by the Commissioner of Central Excise (Appeals), Chennai.

6. Section 11-BB of the Central Excise Act casts a statutory duty on the respondents, to refund the amount within a period of three months. The statutory period of three months for refund the amount has already expired.

7. The Hon'ble Delhi High Court in the case of Commissioner of Central Excise Vs. Modern Industrial Enterprises reported in 2008 (226) E.L.T. 695 (Del.), was pleased to lay down that mere pendency of an appeal by the revenue cannot be a ground to withhold the amount which is due to the assessee. The order passed by the Hon'ble Division Bench of Delhi High Court reads as under:-

"[Order]. By this application, the Assessee seeks refund of the amount, which he had deposited as a pre-condition for hearing of the appeal before the Customs, Excise and Service Tax Appellate Tribunal ('The Tribunal').

2. Notice was issued and an opportunity was given to the Revenue to file a reply on 11th December, 2007 but they have chosen not to file any reply to the application.

3. The case before the Tribunal was decided in favour of the Assessee and, therefore, the Assessee is entitled to return of the amount that he had pre-deposited before the Tribunal.

4. Merely because the Revenue has preferred an appeal and a substantial question of law has been framed does not mean that the Revenue can hold back the amount, which was pre-deposited by the Assessee pursuant to an order passed by the Tribunal.

5. It may be mentioned also that the application for stay being CM No.6684/2006 filed by the Revenue was dismissed on 2nd May, 2007. Under the circumstances, the application is allowed. The Assessee will be entitled to return of the pre-deposited amount of Rs.30 lakhs. The Revenue will ensure that the payment is made to the Assessee within a period of six weeks.

6. The application stands disposed of."

8. The only defence raised by the learned Government Advocate is that it was due to the pendency of the appeal that the amount was not refunded.

9. The facts stated above would show that the respondents have failed to perform the statutory obligation of refund of the amount, in spite of the order of the Commissioner of Central Excise (Appeals), Chennai, dated 08.09.2009.

10. Consequently, this writ petition is allowed. A writ in the nature of mandamus is issued directing the third respondent to refund the amount of Rs.5,05,759/- along with interest at the rate of 6% interest per annum with effect from 07.12.2009 till the date of payment. The amount be refunded within three months of the receipt of certified copy of this order. No costs.