Ravi R. Tripathi, J.@mdashThis petition is filed by a company incorporated under the Companies Act, having its registered office at the address mentioned in the cause title. The 2nd petitioner is the Manager of the 1st petitioner company (hereinafter referred to as "the petitioner" or "the petitioner company"). The petitioner company is in the business of manufacture of "Nycil" prickly heat powder at its factory in Umbergaon, Gujarat.
1.1 The petitioner classified the said goods under the Tariff Heading No. 30.03 of the Central Excise Tariff Act. It is the case of the petitioner company that the Central Excise Range at Surat, in-charge of the petitioners'' factory, incorrectly sought to classify the said goods under Chapter Heading No. 33.04. The Central Excise Department recovered a sum of Rs. 4,78,45,990.30 towards excise duty on the said goods on the basis of the said goods being classified under Chapter Heading No. 33.04.
2. The petitioner company challenged the classification of the said goods before the Delhi High Court. The Delhi High Court by its judgment and order dated 20.05.1999, classified the said goods as a drug under Heading No. 30.03. The petitioner company filed Refund Claim dated 30.12.1999 for the excise duty paid by the petitioner of Rs. 4,78,45,990.30. It is the case of the petitioners that the petitioners were entitled to claim interest on the said amount in terms of the provisions of the Central Excise Act, 1944, in the event of delay beyond three months in the settlement of the said Refund Claim. It is the case of the petitioners that the petitioners reserved their right to claim interest in terms of Section 11BB of the Central Excise Act, 1944.
3. The Central Excise Department issued a show cause notice dated 07.04.2000 and called upon the petitioners to show cause as to why their Refund Claim should not be rejected on the ground that the petitioners had already passed on the burden of incidence of duty to its buyers. The petitioners filed a detailed reply to the said show cause notice along with all the necessary evidence to show that they had only one customer, viz. Heinz India Limited and that the burden of the excise duty illegally recovered from the petitioners had not been passed on to its customer.
3.1 The concerned Assistant Commissioner of Central Excise at Daman passed order dated 21.12.2001 and rejected the petitioners'' Refund Claim on the ground of ''unjust enrichment''.
4. The petitioners challenged the aforesaid order (dated 21.12.2001) before the Commissioner of Central Excise (Appeals) at Surat, who passed order dated 01.10.2003, whereby the order passed by the Assistant Commissioner was reversed and the Refund Claim filed by the petitioners was allowed.
4.1 The Central Excise Department challenged the aforesaid order of refund passed by the Commissioner (Appeals) before the CESTAT. The department also filed a Stay Application. The CESTAT by order dated 01.03.2004 dismissed the Stay Application filed by the department.
5. It is the case of the petitioners that despite the order passed by the Commissioner (Appeals) and an order refusing the stay by the CESTAT, the department did not refund the amount of Rs. 4,78,45,990.30 and therefore, the petitioners have become entitled to interest as statutorily provided u/s 11BB of the Central Excise Act, 1944 from the expiry of three months from the date of filing its application for refund. The petitioners filed cross objection to the said appeal filed by the department before the CESTAT. In the said cross objection, the petitioners set out in detail the calculation of interest up to 15.02.2004, which amounted to Rs. 2,13,36,689.84.
6. It is the case of the petitioners that as the Central Excise Department did not comply with the order of refund passed in favour of the petitioners by the Commissioner (Appeals) and though the CESTAT had rejected the Stay Application filed by the department, the petitioners were constrained to file a writ petition before this Court being Special Civil Application No. 8375 of 2004 seeking compliance of the said refund order. It is also the case of the petitioners that in the said writ petition, the petitioners had claimed, inter alia, interest for the delayed period of refund. However, by order dated 11.10.2004 (Annexure-C), this Court was pleased to dismiss the said petition holding that, "the same was pre-mature on account of pendency of the department''s appeal before the CESTAT." (emphasis supplied), but was pleased to order expeditious disposal of the department''s appeal.
7. The learned senior advocate for the petitioners submitted that the decision of the Delhi High Court on the issue of classification of the product, which was in favour of the petitioners, was challenged by the department before the Hon''ble Supreme Court of India. The Hon''ble Supreme Court of India by its judgment and order dated 01.11.2004 dismissed the department''s Civil Appeal. The learned advocate for the petitioners submitted that thus, the classification of the goods, as claimed by the petitioners, stood approved by the Hon''ble Supreme Court of India.
8. It is the case of the petitioners that pursuant to the order of this Court in Special Civil Application No. 8375 of 2004, whereby the department''s appeal pending before CESTAT against the order of Commissioner (Appeals) dated 01.10.2004 was expedited, an early hearing was granted by the CESTAT. The CESTAT by order dated 12.01.2005 confirmed the findings of the Commissioner (Appeals) and dismissed the department''s appeal. The cross objections filed by the petitioners claiming interest on the delayed refund were also disposed of.
8.1 The case of the petitioners is that the Commissioner (Appeals) by its order dated 01.10.2003 had allowed the appeal filed by the petitioners praying for refund of Rs. 4,78,45,900/- ''with interest''. (emphasis supplied); that the CESTAT, by confirming the order passed by the Commissioner (Appeals) and disposing of the cross objections filed by the petitioners, confirmed the refund of Rs. 4,78,45,900/- ''with interest''.
9. It is the case of the petitioners that thereafter from time to time, as set out in para-12 of the petition memo, the petitioners called upon the Central Excise Department to refund the amount of Rs. 4,78,45,990.30 together with interest thereon, but then the department on one pretext or the other did not refund any amount to the petitioners. The petitioners were therefore constrained to file Misc. Application bearing No. E/MA(Ors)/996/05 in March 2005 seeking directions from the CESTAT calling upon the Central Excise Department to refund the said amount together with interest to the petitioners.
10. The learned senior advocate for the petitioners submitted that during the pendency of the Misc. Application before the CESTAT, the department filed an appeal before this Court being Tax Appeal No. 588 of 2005, challenging order dated 12.01.2005 passed by the CESTAT in favour of the petitioners. This Court was pleased to dismiss the said appeal by order dated 18.07.2005.
11. The learned senior advocate for the petitioners submitted that it is only thereafter that the Central Excise Department paid to the petitioner the principal amount of refund of Rs. 4,78,45,990.30 in or about July /August 2005. The learned senior advocate for the petitioners submitted that the department did not pay any interest whatsoever to the petitioners.
12. The case of the petitioners is that when the aforesaid Misc. Application filed by the petitioners came up for hearing before the CESTAT, the petitioners were orally informed by the Tribunal that since Gujarat High Court was pleased to dismiss the department''s appeal by order dated 18.07.2005, the petitioners ought to have approached the Gujarat High Court for seeking an order in respect of the interest amount which had not been paid by the department. The Misc. Application filed by the petitioners was disposed of by the CESTAT by observing that, "the Commissioner (Appeals) or the Tribunal in the order had not granted interest".
13. The learned senior advocate for the petitioners submitted that even at the cost of repetition, he is to reiterate that in fact, by order dated 12.01.2005, CESTAT confirmed the findings of the Commissioner (Appeals) and dismissed the department''s appeal, the CESTAT had also disposed of the cross objections filed by the petitioners claiming interest on the delayed refund; that the Commissioner (Appeals) by its order dated 01.10.2003 had allowed the appeal filed by the petitioners praying for refund of Rs. 4,78,45,900/- ''with interest''. (emphasis supplied). The learned senior advocate for the petitioners submitted that as the Commissioner (Appeal) had allowed the appeal filed by the petitioners and had granted refund of Rs. 4,78,,45,900/- with interest, the CESTAT had confirmed the order passed by the Commissioner (Appeals) and disposed of the cross objections filed by the petitioners, is to be construed to have confirmed the order of refund with interest.
14. On perusal of record, it is noticed that this petition was filed on 10.10.2005, affirmed on 07.10.2005. At the time of filing of the petition, following prayers were made:
24. (a) That this Hon''ble Court be pleased to declare that the Petitioner is fully entitled to recover and the Department is bound and liable to pay to the Petitioner the statutory interest amounting to Rs. 2,53,81,156.02 as more particularly set out in Annexure ''H'' hereto and further prohibit the Respondent from denying such legitimate statutory interest to the Petitioner;
(b) That this Hon''ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate writ, order or direction, calling for the papers and proceedings pertaining to the course of action herein and after enquiring into the legality and propriety of the same, to compel the Central Excise Department to pay to the Petitioner the said statutory interest amount of Rs. 2,53,81,156.02.
(c) That this Hon''ble Court be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus, or any other appropriate writ, order or direction, directing the Respondents to (a) refrain from their illegal actions in denying the Petitioner legitimate statutory amounts and (b) forthwith pay to the Petitioner the said statutory interest amount of Rs. 2,53,81,156.02 as more particularly set out in Annexure ''H'' hereto.
(d) That pending the hearing and final disposal of this Petition, this Hon''ble Court may be pleased by an Order and injunction to call upon the Respondent to forthwith pay to the Petitioner the said total amount of Rs. 2,53,81,156.02 by way of statutory interest as set out in the Petition on such terms and conditions as this Hon''ble Court may deem fit and proper in the facts and circumstances of the case;
(e) For ad interim relief in terms of prayer (c) above;
(f) for costs of the Petition and orders thereon; and
(g) for such further and other reliefs, as this Hon''ble Court may deem fit and proper in the nature and circumstances of the case.
15. Thereafter, Civil Application (for amendment) No. 1402 of 2007 was filed, wherein this Court (Coram: Hon''ble Mr. Justice J.M. Panchal & Hon''ble Smt. Justice Abhilasha Kumari) passed order on 21.02.2007, pursuant to which paragraphs 15(1) and 15(B), grounds (L) to (X) and prayer 24(cc) were added. For ready perusal, order dated 21.02.2007 is reproduced hereinbelow:
1. Rule. Mr. Harin Raval, learned Assistant Solicitor General of India, waives service of notice on behalf of the respondents. Having regard to the facts of the case, the application is heard today.
2. By filing the instant application, the applicants have prayed to permit them to amend the memorandum of Special Civil Application No. 21462 of 2005 by adding paragraphs 15(A) and 15(B) as well as grounds (L) to (X) and prayer clause 24(cc).
3. This Court has heard the learned Counsels for the parties. In view of the averments made in the application, this Court is of the opinion that the prayer to amend the petition and the prayer clause deserves to be granted. Hence, the prayer made in paragraph 23(B) of the application is granted. The petitioners are directed to carry out the amendment in the memorandum of Special Civil Application No. 21462 of 2005 on or before February 28, 2007.
4. It is clarified that it will be open to the respondents to file reply to the amended petition and contend that the challenge to the order passed by the CESTAT on August 22, 2005, is not maintainable in the instant petition. Subject to the abovereferred to clarification, Rule is made absolute. There shall be no orders as to costs.
16. The petitioners filed yet another Civil Application _ for Amendment being Civil Application No. 2738 of 2007 in Special Civil Application No. 21462 of 2005 which was allowed by this Court (Coram: Hon''ble Mr. Justice J.M. Panchal & Hon''ble Smt. Justice Abhilasha Kumari) by order dated 21.02.2007 and paragraphs 15(C) to 15(G), grounds (Y) to (ZD) and prayer clause 24(ccc) were added. For ready perusal, order dated 21.02.2007 is reproduced hereinbelow:
1. Rule. Mr. Harin Raval, learned Assistant Solicitor General of India, waives service of notice on behalf of the respondents. Having regard to the facts of the case, the application is heard today.
2. By filing the instant application, the applicants have prayed to permit them to amend the memorandum of Special Civil Application No. 21462 of 2005 by adding paragraphs 15(C) to 15(G) as well as grounds (Y), (Z), (ZA), (ZB), (ZC) and (ZD) and prayer clause 24 (ccc).
3. This Court has heard the learned Counsels for the parties. In view of the averments made in the application, this Court is of the opinion that the prayer to amend the petition and the prayer clause deserves to be granted. Hence, the prayer made in paragraph 27(B) of the application is granted. The petitioners are directed to carry out the amendment in the memorandum of Special Civil Application No. 21462 of 2005 on or before February 28, 2007.
4. It is clarified that it will be open to the respondents to file reply to the amended petition and contend that the challenge to the order passed by the CESTAT on October 5, 2006, is not maintainable in the instant petition. Subject to the abovereferred to clarification, Rule is made absolute. There shall be no orders as to costs.
17. As the record shows, the amendment was carried out on 27.02.2007, incorporating paragraphs 15(A) to 15(G), grounds (L) to (ZD) and prayer clauses 24(cc) and 24(ccc). For ready perusal, prayer clauses 24(cc) and (ccc) are reproduced hereinbelow:
24 (cc) That this Hon''ble Court would be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ order or direction quashing and setting aside the order dated 22nd August 2005 at annexure G to the Petition passed by the CESTAT to the extent it refused to give any direction to the adjudicating authority for grant of statutory interest.
24 (ccc) That this Hon''ble Court would be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other approached writ order or direction quashing and setting aside the order dated 5th October, 2006 at annexure "CC" to the Petition passed by the CESTAT to the extent it dismissed the Misc. Application No. E/MA (Ors)2444/06 refusing to give any direction to the adjudicating authority for grant of interest.
18. This petition is contested by the department by filing affidavit in reply of one Shri Paul J.B. Fernandes, Deputy Commissioner of Central Excise & Customs, Division _ Vapi, Vapi affirmed on 15.12.2005. Another affidavit of one Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi, on behalf of respondent No. 3 affirmed on 15.06.2007 is also filed. The case of the respondent authorities is set out in detail in these affidavits.
19. The department, before dealing with the contents of the petition as originally filed and additional contents placed on record after the amendment pursuant to the orders of this Court dated 21.02.2007 rendered in Civil Application _ for Amendment Nos. 1402 and 2738 of 2007, raised preliminary objections with regard to the maintainability and tenability of the petition. The department relied upon the orders passed by this Court (Coram: Hon''ble Mr. Justice J.M. Panchal & Hon''ble Smt. Justice Abhilasha Kumari) dated 21.02.2007, in both the Civil Applications. The learned Assistant Solicitor General of India _ Mr. Harin P. Raval invited attention of the Court to para 4 of both the orders, which are reproduced hereinabove. He submitted that the Hon''ble Court while allowing the amendment has reserved liberty in favour of the department to (i) reply the amended petition, and also to (ii) contend that the challenge to order passed by CESTAT on August 22, 2005 and on October 5, 2006 is not maintainable in this petition (emphasis supplied). It is the say of the department that the amendment is granted subject to the above clarification and therefore, it is open to the department to raise the preliminary objections regarding maintainability and tenability of the petition. In this regard, contents of paragraph Nos. 5 to 9 of the affidavit filed by Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi are relevant and the same are reproduced for the ready perusal:
5. In view of the abovementioned orders, it is respectfully submitted that the orders rendered by the Hon''ble CESTAT dated August 22, 2005 cannot be made subject matter of challenge in a petition under Article 226 of the Constitution of India. That there is a remedy u/s 35G of the Central Excise Act, 1944 against the order rendered by Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as CESTAT) by way of preferring a tax appeal. Under the circumstances, no writ petition is maintainable to challenge an order rendered by the Hon''ble CESTAT. It is submitted that the said order dated 22.08.2005 was rendered in application No. E/MA (ORS)/996/1742/03 in Appeal No. E/71/04. The order records that Misc. Civil Application dated 01.04.2005 was filed by the appellant, namely, Manisha Pharmo Plast Private Ltd., seeking direction for refund of a sum of Rs. 4,78,45,990.38 ps. being the principal amount along with interest of Rs. 2,13,36,689.84 ps. as calculated upto 15.02.2004 and further interest from 16.02.2004 at the prescribed rate. The order records that another Misc. Civil Application dated 04.07.2005 had been filed by the department requesting to grant extension of time for implementation of the final order dated 12.01.2005 of the tribunal ordering refund. That the Hon''ble CESTAT after hearing both the parties clearly recorded in para-3 the following findings.
It is seen that neither the original authority nor the Commissioner (Appeals) or the Tribunal in their orders have granted interest. From the photocopy of the Hon''ble Gujarat High Court order dated 18.07.2005 it is seen that tax appeal No. 538/2005 filed by the Commissioner of Central Excise has been dismissed along with Civil Application No. 126/2005. None of the aforesaid orders granted interest to the appellants. It is brought to our notice by both the sides that the principal amount has already been refunded to the appellants.
After recording the said finding, vide observations and directions contained in para-4 of the aforesaid order, the Hon''ble CESTAT, after hearing both the sides and perusing the record, clearly found that there was no order of interest by the adjudicating authority, Commissioner (Appeals), Tribunal or the Hon''ble High Court and, therefore, held that the Tribunal cannot give any direction to the adjudicating authority for grant of interest. Therefore, the application of the petitioners seeking interest was dismissed. With regard to the application of the revenue seeking extension of time to comply with the final orders of the Tribunal, the Hon''ble CESTAT held that as regards payment of principal amount, refund was already granted, there was no necessity to pass any direction and therefore, the application filed by the petitioners seeking payment of interest was dismissed. A copy of the said order dated 22.08.2005 is hereto annexed and marked as ANNEXURE-R3.
6. The said order though passed as far as back on 22nd August, 2005, was not made subject mater of challenge in the present writ petition as originally filed in October, 2005. That the writ petition as originally filed did not challenge the said order, the above petition as originally filed, was not maintainable and the petitioners, in absence of challenge to the said order, were not entitled to the reliefs as originally prayed for. That despite the petition having been filed on or about 13.10.2005, no steps were taken within a reasonable period of time to seek an amendment in the prayer so as to entitle the petitioners to challenge the said order dated 22nd August, 2005. Therefore, the reliefs as prayed for by the amendment is barred by delay and latches more particularly in light of the fact that C.A. No. 1402/2007 appears to have been prepared in August, 2006 but does not appear to have been even moved and/or filed till January, 2007. That it is by way of prayer prayed in C.A. No. 1402/2007 that the amendment was sought for so as to introduce prayer 24(cc) seeking a relief for quashing and setting aside the order dated 22nd August, 2005. Without prejudice to the contention that the order of the Hon''ble CESTAT cannot be challenged in a writ petition under Article 226 of the Constitution of India, it is submitted that such a challenge at a belated stage is barred by delay, latches and acquiescence. It is respectfully submitted that the petitioners who cannot deny knowledge of law, are very well aware that the tax appeal is maintainable u/s 35G, which is required to be filed within a statutory period of 180 days, such a belated amendment appears to have been filed. That even if a tax appeal was preferred in August, 2006, the same would have been barred by delay and latches and under the circumstances, the petitioners are not entitled to the amended writ as prayed for while challenging the order of the CESTAT dated 22nd August, 2005. I, therefore, respectfully submit that both on the ground of maintainability of a writ petition and on the ground of delay, latches and acquiescence the petitioners are not entitled to the relief notwithstanding that this Hon''ble Court has permitted the petitioners to amend the petition by way of incorporating the relief as contained in para 24(cc) of the petition.
7. That not being satisfied with the dismissal of the earlier application by the CESTAT vide its order dated 22nd August, 2005, the petitioners moved yet another application by way of E/MA(ORS)/2444/06 in Appeal No. E/71/04 seeking an order from the CESTAT to direct the department to comply with the order dated 12.01.2006 (which already stood complied with as observed by the Hon''ble CESTAT in its earlier order dated 22.08.2005 when earlier application stood dismissed) to the extent that statutory amount of interest claimed by the petitioners was allegedly due on the refund sanctioned amounting to Rs. 2,53,81,156.02 ps. with a further direction that the same be ordered to be paid to the applicants.
8. That the Hon''ble CESTAT held that the claim of refund of duty was denied by the lower adjudicating authority. However, the same was allowed by the Commissioner (Appeals) vide his order dated 01.10.2003 against which the revenue appeal was dismissed vide the Tribunal''s order dated January 12, 2005. That the Hon''ble Tribunal held that after the decision of the CESTAT, an application was preferred, which stood dismissed vide order dated 22.08.2005 on the ground that there was no specific order regarding payment of interest either by the adjudicating authority or the appellate authority or the Tribunal or the Hon''ble High Court and, therefore, no direction could be issued for grant of interest. The Tribunal noticing that once again an application was filed stating that the Tribunal had erred in holding that neither the Commissioner (Appeals) nor the CESTAT had specifically granted interest to the petitioners, after considering the arguments including the argument as regards applicability of Section 11BB, the CESTAT considered the argument of the petitioners that grant of interest was mandatory and held that the CESTAT cannot sit in judgment over the findings given by a coordinate bench and, therefore, rejected the plea. As regards the plea of automatic sanction of refund without requiring the applicant _ petitioners to make a specific claim for interest, the CESTAT found that all these facts including the judgement of the Rajasthan High Court and the Board''s circular were in existence prior to the issuance of the Tribunal''s order and were also brought to the notice of the Tribunal at the time of filing of first Misc. application seeking similar relief, which was dismissed on 22.08.2005. The Hon''ble Tribunal held that no new facts have come into existence and under the circumstances, it was held that the applicants should have sought for interest from the department and on their failure to do so, ask for an issuance of an appealable order and should follow the procedure for filing the appeal against denial of interest. The Hon''ble Tribunal clearly held that in the present case, there was no order for payment of interest by the Commissioner (Appeals) or by the Tribunal and since the earlier application stood dismissed, the subsequent application made for the same relief came to be dismissed by order dated 05.10.2006, a copy whereof is hereto annexed and marked as ANNEXURE-R4.
9. I respectfully submit that in view of the aforesaid order, the repeated application stood rejected. That though this order was pronounced on 05.10.2006, no steps were taken to challenge the same by way of filing an appeal u/s 35G of the Central Excise Act, 1944 and, therefore, the said order cannot be made subject matter of a challenge in a writ petition under Article 226 of the Constitution of India. Therefore, in view of the liberty reserved vide order dated 21.02.2007 rendered in Civil Application for amendment No. 2738/2007, it is respectfully contended that the writ petition seeking such a prayer is not maintainable. Such a relief is also barred by delay, latches and acquiescence inasmuch as after unreasonable period the said order is sought to be challenged. I further respectfully submit that the conduct of the petitioners has also disentitled itself to the grant of such a relief since knowing fully well that earlier no such relief was granted by the Tribunal at the time of rendering the first order in the main appeal pronounced on 12.01.2005, the petitioners moved an application which came to be rejected on 22.08.2005. That the petitioners permitted the said order to become final and for the very same relief approached the Tribunal once again, which is impermissible in law. This application appears to have been filed to counter argument of delay, latches and acquiescence and, therefore, the conduct of the petitioners has disentitled itself to the grant of such a relief as is prayed for in the petition both on merits, on maintainability and even on the ground of delay, latches and acquiescence. Under the circumstances, the writ petition deserves to be dismissed.
20. So far as the petition as originally filed is concerned, the deponent has set out the case of the authorities in paragraph Nos. 10 and 11. The same are also reproduced for the ready perusal:
10. With respect to the prayers prayed for in the petition as originally filed, I respectfully beg to submit that such a relief is not maintainable in view of the fact that the Tribunal had not granted such a relief at the time of disposal of the main appeal vide its judgement and order dated 12.01.2005. That it is submitted that though the order was very much within the knowledge of the petitioners, they have chosen not to challenge the said order and, therefore, the relief is barred on the principles of acquiescence. In view of the above order and the same having been confirmed by the Hon''ble High Court by way of dismissal of tax appeal No. 588/2005 and no relief of interest having been granted by this Hon''ble Court, the relief as prayed for in the petition is not maintainable. That the Commissioner (Appeals) vide his order dated 01.10.2003 did not grant any relief qua interest and therefore, the petitioners having failed to challenge the said order in so far as it did not grant any relief as regards interest, are not entitled in law to the prayers as prayed for in the present petition. I submit that the petitioners, for the first time, after the judgement of the Hon''ble Delhi High Court in May, 1999 rendered in Civil Writ Petition No. 1320/1998, filed an application dated 30th December, 1999, which was received on 17th January, 2000 praying for grant of refund. That within a period of three months from the date of receipt of the application, a show-cause notice dated 7.4.2000 was issued calling upon the petitioners to show-cause as to why the refund claim should not be rejected u/s 11B of the Central Excise Act, 1944 as well as calling upon to show-cause why it should not be rejected u/s 11D read with Section 12B of the Act and further calling upon the petitioners to show-cause as to why it should not be rejected u/s 11B(1) of the Act on the ground as the petitioners failed to file the refund claim within the prescribed period of six months as prescribed in Section 11B(1) of the Act. That reply was filed by the petitioners in defence to the show-cause notice only on 28.9.2000.
11. It is submitted that the decision of the Hon''ble Delhi High Court was dated 20.05.1999 and the application was received only on 17.1.2000 as stated hereinabove. That personal hearings were held on the following dates, viz. 20th April, 2000, 15th May, 2000, 14th June, 2000, 5th July, 2000 and 5th October, 2000. Thus, reply was filed after four dates of hearing had gone by. After the last hearing held on 05.10.2000, the petitioners'' representative made request for time to file written submissions, which was filed on 25.10.2000. That by an order dated 21.12.2000 finding that grant of refund to the petitioners would unduly enrich them while sanctioning the refund, it was ordered to be transferred to Consumer Welfare Fund only. The said order was set-aside only on 01.10.2003 by the Commissioner (Appeals) and he allowed the appeal filed by the petitioners. That on appeal being allowed, the petitioners approached the office of the Assistant Commissioner on 31.10.2003. Immediately on 11.11.2003 the Assistant Commissioner, Central Excise, Vapi Division informed the petitioners that since the claim of refund had arisen out of the order in appeal dated 01.10.2003, the petitioners were called upon to file refund claim in terms of provisions of Section 11B of the Act along with necessary enclosures as per para-2 of the Chapter 9, Part-7 of the Central Excise Manual. It was informed that in absence thereof, letters dated 31.10.2003 cannot be entertained as the claim of refund u/s 11B of the Act and the letter in original was returned to the petitioners. That in the meantime, the revenue has challenged the order by way of preferring an appeal No. E/71/04 which came to be dismissed only on 12.01.2005 against which the department, in terms of Section 35G preferred tax appeal No. 588/05, which was dismissed on 18th July, 2005. The finality of the order of the Tribunal is therefore, on 18th July 2005. That ultimately refund has been sanctioned and paid to the petitioners. That vide an order dated 25.05.2005 bearing Order in Original No. Vapi/Div/Refund/02/05-06 dated 25.05.2005, the Assistant Commissioner, Central Excise and Customs Division, Vapi, sanctioned and ordered to pay to the petitioners a sum of Rs. 4,78,45,990/- u/s 11(B) of the Act by way of payment in cash/cheque to tune of Rs. 3,23,04,628/- and by way of allowing credit in the Cenvat Credit account to the tune of Rs. 1,55,41,36/. A copy of the said order is hereto annexed and marked as ANNEXURE-R5. The said order did not grant any interest. The said order is an appealable order and the petitioners were informed by way of statement contained in the said order that the same was an appealable order. The petitioners have chosen not to challenge the said order by way of an appeal and, therefore, the petitioners have acquiesced in the said order to only grant refund but not interest. Under the circumstances, the petitioners are disentitled to the reliefs prayed for. It be stated that consequent upon the said order dated 25.05.2005, the petitioners have already been paid the amount. Under the circumstances, in view of the above facts, the petitioners are not entitled to any relief as prayed for in the petition and the petition deserves to be dismissed.
21. Coming to law, the learned senior advocate for the petitioners submitted that the law is very clear on the point. The learned senior advocate for the petitioners submitted that u/s 11BB of the Central Excise Act, it is mandatory to pay interest on delayed refund made by the department. Section 11BB 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 Gazette] 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 on such duty:
Provided 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.
21.1 The learned senior advocate for the petitioners submitted that on plain reading of the Section, payment of interest on delayed refund is not only automatic but it is also mandatory and therefore, the department is required to be directed to pay the amount of interest as prayed for in this petition. The learned senior advocate for the petitioners also submitted that the amendment having been allowed, the orders of CESTAT dated 22.08.2005 and 05.10.2006 are required to be quashed and set aside. The learned senior advocate for the petitioners submitted that looking to the sequence of events which have taken place in this litigation, it will be in the interest of justice to order payment of interest on the delayed refund in a time bound frame and with such orders which may take care of the injustice done to the petitioners and for the agony they have undergone in pursuing this litigation right up to this Court.
22. The learned senior advocate for the petitioners relied upon a decision of this Court in the matter of Afrique Tradelinks Pvt. Ltd. v. Union of India reported in 2004 (61) RLT 726 (Guj.). The learned senior advocate for the petitioners invited attention of the Court to paragraphs Nos. 9 to 12 of the decision. The learned senior advocate for the petitioners submitted that as was directed in that case in para-12, the respondents be directed to pay the petitioners interest at the rates applicable and with a specific direction that the amount of interest shall be calculated within one month from the date of receipt of the writ of this Court and the actual payment of interest so calculated shall be made within one month thereafter, i.e. within two months from the date of receipt of the writ of this Court. The learned senior advocate for the petitioners submitted that similar direction as was given in that decision be also issued in this case, whereby liberty was reserved in favour of the petitioners to move this Court for claiming interest on interest.
22.1 The learned senior advocate for the petitioners also relied upon a decision of the Rajasthan High Court in the matter of
22.2 The learned senior advocate for the petitioners also relied upon a decision of the Hon''ble the Apex Court in the matter of
23. As against the aforesaid submissions on law, Mr. Harin P. Raval, learned Assistant Solicitor General of India, relied upon a decision of the Hon''ble the Apex Court in the matter of
23.1 The Hon''ble the Apex Court reversed the judgment of the High Court and stated that:
4. ... there is no statutory or legal basis for making the claim of interest indicated in the writ petition to furnish a ground for issuance of a writ of mandamus. We may also add that the Tribunal''s order did not by itself indicate the precise liability of the revenue to refund any specific amount to the respondent so as to give rise thereby to a liability to refund any specified amount on the date of the Tribunal''s order.
24. Having heard the learned Counsel for the parties and having perused the pleadings of the parties, including the affidavits in reply filed by the respondent authorities, the first question which arises for consideration of this Court is as to whether the department is liable to pay interest on delayed payment of refund and second question is that if the answer to the first question is in affirmative, form which date the interest on refund is to be allowed.
25. Taking the first question for consideration, so far liability to pay interest is concerned, Section 11BB of the Central Excise Act, 1944 is clear. It provides for payment of interest to the applicant in whose favour there is an order of refund of the duty paid by him and which is not refunded within three months from the date of application under Sub-section (1) of Section 11B.
25.1 The decision of the Hon''ble the Apex Court in the matter of Union of India v. E. Merck (India) (supra) is in Civil Appeal No. 6033 of 1993 was rendered on 08.12.1994, i.e. prior to insertion of Section 11BB by the Finance Act (22 of 1995) Section 75 on 26.05.1995. In that case, the question which arose for consideration of the Hon''ble the Apex Court was, ''the High Court to issue a writ of mandamus, directing the revenue to pay interest on the amount of excess duty refund to the respondent''. The Hon''ble the Apex Court has observed as under in paragraph No. 3:
3. Admittedly, there is no statutory basis for the claim of interest made by the respondent in its writ petition inasmuch as there is no provision in the statute imposing an obligation on the revenue to pay interest on the amount refunded. The respondent''s claim for interest was also not based on any other statutory provision.
25.2 Similarly, observations of the Hon''ble Apex Court in para-4 are also relevant, which are as under:
4. In short, there is no statutory or legal basis for making the claim of interest indicated in the writ petition to furnish a ground for issuance of a writ of mandamus. We may also add that the Tribunal''s order did not by itself indicate the precise liability or the revenue to refund any specific amount to the respondent so as to give rise thereby to a liability to refund any specified amount on the date of the Tribunal''s order.
25.3 For our purpose, observations made by the Hon''ble the Apex Court in para-5 are also relevant, which are as under:
5. In other words, in the facts and circumstances of this case, there is no basis on which a legal obligation of the revenue to refund a specific sum of money on a particular date is shown to have arisen to provide foundation necessary for issuance of a writ of mandamus. It is, therefore, unnecessary to examine in the present case the larger question urged on behalf of the respondent that the liability of payment of interest on the amount of excess duty refunded may, in a given case, give rise to a legal obligation providing foundation for issuance of a writ of mandamus to direct payment of interest also on the amount refunded.
26. The learned senior advocate for the petitioners submitted that the aforesaid observations suggest that it was only in absence of a specific provision in the statute that the Hon''ble the Apex Court had held that the High Court has no power to issue a writ of mandamus directing the payment of interest on the ''refund'' amount. He submitted that these observations should be construed to mean that now when Section 11BB is placed on the statute Book, it is not only open to the High Court to issue a writ of mandamus for the payment of interest on refund amount but a writ of mandamus will be required to be issued to serve the ends of justice.
27. The learned senior advocate for the petitioners submitted a decision of the CESTAT, Principal Bench, New Delhi in the matter of Commissioner of Customs, Kolkata (Port) v. Rishi Electronics Ltd., wherein it is laid down that the rate of interest of refund from time to time has to be on the basis of the statutory rate of interest and interest cannot be awarded at a flat rate. This judgment was submitted by the learned senior advocate for the petitioners by note dated 27.03.2008, a copy of which was served to the learned Assistant Solicitor General of India Mr. Harin P. Raval. The learned senior advocate for the petitioners submitted that there, it was the plea of the revenue itself that interest payable after the expiry of three months from the date of application for refund has to be on different rates for different periods, as fixed by different notifications and the said plea was accepted by the CESTAT. The learned senior advocate for the petitioners submitted that accepting the aforesaid plea of the revenue, the CESTAT was pleased to rectify its earlier order.
28.1 The calculation at various rates is also furnished by the learned senior advocate showing the difference after the interest is calculated at a flat rate of interest at 9% and after it is varied from time to time for different period blocks.
29. The learned Assistant Solicitor General of India submitted that the challenge to order dated 22.08.2005 passed by the CESTAT is required to be turned down in view of the submissions made by the revenue.
29.1 As stated earlier, the revenue has filed affidavit of one Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi. The learned Assistant Solicitor General of India invited attention of the Court to the contents of para-5 to 8 of the said affidavit which are reproduced at length in the earlier part of this judgment. Taking into consideration the said averments, this Court is of the opinion that the challenge to order dated 22.08.2005 passed by the CESTAT is not maintainable in the present petition because the earlier application was dismissed and the Tribunal had held that no new facts have come into existence and that the applicants ought to have approached the department for interest and on department denying the same, should have obtained an order which would have been appealable order and thereafter should have followed the procedure for filing appeal against the denial of interest.
30. The learned Assistant Solicitor General of India next submitted that so far as challenge to order dated 05.10.2006 is concerned, on the ground set out in para-9 of the aforesaid affidavit filed by Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi, which too is reproduced in the earlier part of this judgment, the same is required to be turned down.
30.1 It is not in dispute that order dated 05.10.2006 was not challenged by the petitioners by filing an appeal u/s 35-G of the Central Excise Act, 1944 at the relevant time and it is only belatedly that the same is made a subject matter of challenge in a writ petition under Article 226 of the Constitution of India. This Court is of the opinion that in view of the liberty reserved by order dated 21.02.2007, passed in Civil Application No. 2738 of 2008, it is open for the revenue to question the maintainability to the challenge to order dated 05.10.2006 in a writ petition. To allow the challenge to order dated 05.10.2006 by amendment in a pending petition will amount to do away with the bar created by delay, latches and acquiescence. A fact which cannot be denied by the petitioners is that order dated 05.10.2006 was not challenged by then until the same was sought to be challenged by moving amendment in a pending petition in the year 2007. This Court is conscious of the fact that while allowing the application for amendment by order dated 21.02.2007, the Court reserved liberty in favour of the revenue to question the challenge to the said order before this Court. Allowing to challenge either order dated 22.08.2005 or order dated 05.10.2006 will amount to doing away with the statutory period prescribed for filing an appeal against such order, which is 180 days.
31. Coming to the crux of the matter, what is required to be seen is that the petitioners filed application for refund on 30.12.1999; on the said application, an order was passed on 21.12.2001, whereby the department admitted the refund, but transferred the amount to Consumer Welfare Fund; being aggrieved by that order, the petitioners filed an appeal before the Commissioner (Appeals), which was allowed by order dated 01.10.2003 holding that there was no unjust enrichment on the part of the petitioners; against this order, the department filed an appeal before the CESTAT; in the said appeal, the petitioners filed cross objections; the CESTAT by order dated 12.01.2005 dismissed the appeal filed by the department and allowed the cross objections; against that order, the department filed before the High Court and that appeal was finally dismissed by the High Court on 18.07.2005. That being so, the petitioners finally became entitled to refund on 18.07.2005, whereas the department has already paid refund amount to the petitioners on 26.06.2005. That being so, the interest which can be allowed to be paid to the petitioners is only from the final adjudication in the matter (as the decision of the High Court was not carried further in appeal), i.e. from 18.07.2005, whereas the department has already paid the amount of refund to the petitioners on 26.06.2005 and therefore, there is no question of passing any order of payment of interest to the petitioners. Otherwise also, for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department.
32. In the result, the petition fails. The petitioners are not entitled to receive any interest amount on the refund amount, as after the High Court dismissed the appeal of the department''s appeal on 18.07.2005, the finality was achieved by the controversy, whereas the department had already refunded the amount on 26.06.2005 and therefore, no relief can be granted to the petitioners.
32.1 As discussed earlier, the challenge to orders dated 22.08.2005 and 05.10.2006 also fails. As discussed hereinabove, in view of the order passed by this Court on the applications for amendment, it was open for the department to question the maintainability of challenge to these orders and relying upon the averments of paras-5 to 9 of the affidavit filed by the department, the entertainment to the challenge to these two orders will amount to not only condoning the delay, latches and acquiescence on the part of the petitioners but will also amount to rendering nugatory the provisions of filing an appeal within the stipulated period of 180 days. Rule is discharged. No costs.
