By TIOL News Service

MUMBAI, JULY 24, 2017: THE appellant is a merchant exporter who purchased various consignments of Pan Masala, from one M/s. Gitanjali Industries , who is a manufacturer located in the State of Jammu & Kashmir.

The said manufacturer had paid the excise duties including NCCD, AED and Education Cess (EC) on the goods sold and had also availed benefit of exemption notification No. 56/2002-CE.

Upon export of the goods, the appellant filed a refund claim for the duties paid on exported goods.

SCN was issued seeking to disallow the rebate claim to the extent of NCCD, AED and EC on the ground that the manufacturer located in J & K had taken Self Credit of the elements of NCCD, AED and EC under the scheme of Notification No. 56/2002-CE.

The AC restricted the rebate claim to the duties of BED and SED. In appeal, the Commissioner(A) held that the appellant could not be denied the rebate of the duties of NCCD, AED & EC. Thereafter, the AC granted the rebate even in respect of these duties and which orders were accepted by the Revenue.

As the claims were filed in February 2006 and April 2006 and the rebate in respect of the above three elements of excise duties were paid only in June 2009, a formal application/claim for interest on delayed refund was made u/s 11BB of the CEA, 1944.

The AC allowed the interest claim of Rs.13,67,445/-.Aggrieved, Revenue filed an appeal but did not issue any SCN to recover the interest paid .

The Commissioner(A) held that there was no delay on the part of the department to grant the rebate as the claims were sanctioned on the basis of ‘retrospective' amendment of Rule 18 vide Section 87 of the Finance Act, 2008.

Being aggrieved by this order, the appellant is in appeal before the CESTAT.

The appellant submitted that the entire exercise undertaken by the Revenue is only academic since no SCN has been issued seeking recovery of the interest paid. Moreover, there is no provision to recover ‘interest paid by the department', the appellant emphasized. So also, in view of the retrospective provisions, there has been a delay and interest is payable. In support of the above submissions, reliance is placed on the decisions in Shree Ram Steel & Rolling Industries - 2004-TIOL-663-CESTAT-MUM, Jayanta Glass Ltd. - 2004-TIOL-355-CESTAT-DEL-LB, Madhura Coats Pvt. Ltd. - 2015-TIOL-2293-CESTAT-MAD, Hindustan Petroleum Corporation Ltd. – 2016-TIOL-361-CESTAT-MAD.

The AR submitted that since in the present case the issue relates to the grant of interest on rebate in respect of export of goods, as per Section 35B of CEA, 1944, the jurisdiction lies with the Revisionary Authority and not before the Tribunal. Moreover, the present appeal could not be heard by Single Member Bench for the reason that issue relates to the rate of duty of excise in terms of the Notif. No. 56/2002-CE. Reliance is placed on the judgement in Bharat Box Factory Ltd. - 2008-TIOL-407-HC-J&K-CX. Furthermore, the refund of all the three duties arose only due to the amendment made by Section 87 in the Finance Act, 2008 by amending Rule 18 and, therefore, it cannot be said that there is a delay in sanctioning the rebate.

After considering the submissions, the Bench observed thus -

Jurisdiction:

+ From the decision of the Tribunal (in Madura Coats Pvt. Ltd.) it is clear that Section 35B(1) Clause (b) excluded the appeals against orders relating to rebate of duty of excise. However, as regard interest on rebate there is no exclusion provided in the said Section, therefore, this Tribunal has jurisdiction to decide the appeal on the issue of interest on delayed payment of rebate therefore the objection of the AR, in this regard is hereby rejected.

Whether Single Member can hear the case:

+ On careful perusal of the entire case paper, I find that the issue involved in the present case is limited to the grant of interest on the refund which has already been sanctioned, there is no issue of rate of duty or interpretation of Notification No. 56/2002-CE is involved in the present case. Therefore, I do not find anything in the order to suggest that the issue involved is of rate of duty or interpretation of notification. Being the issue involved is confined to interest on rebate already sanctioned, the single member bench has jurisdiction to hear this case, accordingly this objection raised by the Ld. AR is also rejected.

Merits:

After reproducing section 88 of the FA, 2008, and the Sixth Schedule to the FA, 2008, the Bench noted –

++ From the above retrospective amendment it can be seen from Sub-Section (2) of Section 88 the amendment is effective for all the purpose during the period 1.3.2002 to 7.12.2006. In view of this, the rebate sanctioned by the department was payable during the said period. Therefore, since there is delay beyond three months from the date of filing of application the interest is clearly payable to the appellant. I am also of the view that for whatever reason, if there is delay in sanction of rebate in terms of Section 11B the interest is payable to the assessee.

++ As per the plain reading of the above Section 11BB, it is clear that the interest is payable after expiry of three months from the date of filing of refund application. No exception was provided under Section 11BB, where the interest is not payable to the assessee. Therefore for whatever reason the delay has occurred in sanctioning the rebate claim, the interest is unavoidably payable to the assesee.

After adverting to the decisions in Ranbaxy Laboratories Ltd. - 2011-TIOL-105-SC-CX & Focus Contrade Pvt. Ltd. - 2012-TIOL-662-HC-MUM-CX, the Bench concluded that the appellant is entitled to interest in terms of Section 11BB of the CEA, 1944.

The impugned order was set aside and the order-in-original was upheld.

The appeal was allowed.

(See 2017-TIOL-2556-CESTAT-MUM)