CX - SC & HC have inherent powers to grant interest but Tribunal being creature of statute cannot grant relief not prescribed under said Act - Claim of interest @12% in respect of refund of pre-deposit not acceded to: CESTAT
By TIOL News Service
MUMBAI, JULY 22, 2016: IN an appeal filed before the CESTAT, the appellant made a pre-deposit u/s 35F of CEA, 1944. Later, they won their case and hence pre-deposit became due for refund from 12.7.2004.
The refund was granted on 14.7.2007 but without any interest. So, the appellant filed an appeal before the Commissioner (Appeals) who directed the original authority to grant the interest on refund in respect of delay.
The Assistant Commissioner complied and allowed the interest @6%as payable in terms of Notification No. 67/03-CE dated 12.9.2003 issued u/s 11BB of CEA, 1944.
Again the appellant challenged this order claiming that interest should have been paid to them @ 12%. This appeal was rejected by the Commissioner (Appeals) and, therefore, the appellant is before the CESTAT.
It is submitted that in the case of ITC Ltd. - 2004-TIOL-112-SC-CX-LB the Supreme Court had allowed interest @ 12% and a similar ruling was also passed by the Calcutta High Court in the case of Madura Coats Pvt. Ltd. – 2011-TIOL-507-HC-KOL-CX which decision was upheld by the apex Court. The Tribunal decisions in Sheela Foam Pvt. Ltd. – 2003-TIOL-241-CESTAT-DEL-LB and LML Ltd. – 2014-TIOL-1524-CESTAT-DEL are also relied upon.It is further argued that at the material time there was no rate of interest prescribed for refund of pre-deposit and in these circumstances, the rate of interest prescribed under Section 11BB should not be followed but the rate of interest as granted by Supreme Court in the case cited.
The AR countered the submission of the appellant by relying upon the decision of the Tribunal in the case of Bajaj Auto Ltd. – 2016-TIOL-917-CESTAT-MUM where it is held that Tribunal is the creature of Central Excise Act and has no power to grant interest where none has been prescribed.
The Bench observed –
"4. … I find that at the material time while the rate of interest for refund under Section 11B was prescribed, no provision for grant of interest existed at the material time in respect of refund of pre-deposit. I find that Hon'ble Supreme Court in the case of ITC Ltd. (supra), in view of the proposed Circular of CBE&C had granted the interest @12%. It was a relief specific to that case and cannot be considered as a law laid down for the general implementation. Similarly, in the case of Madura Coats (supra), Hon'ble High Court of Kolkata had followed the decision of ITC Ltd. and observed as under:-
"x x x "
4.1 It is seen that both the Hon'ble High Court and the Apex Court have inherent powers to grant interest. Tribunal being a creature of Central Excise Act cannot grant the relief, not prescribed under the said Act. I find that this argument regarding inability of Tribunal to act beyond the powers/relief available under the Central Excise Act was not raised in the Sheela Foam Ltd. (supra) and LML Ltd. (supra). The contention that the relief granted by Hon'ble High Court of Kolkata and Hon'ble Apex Court cannot be treated as a precedent has also not been raised before the Tribunal in the case of Sheela Foam Ltd. (supra) and LML Ltd. (supra). I find that the Tribunal in the case of Bajaj Auto Ltd. (supra) has observed…”
Holding that the Bench is in agreement with the observations of the Tribunal in the case of Bajaj Auto Ltd., the appeal was dismissed.
(See 2016-TIOL-1815-CESTAT-MUM)
