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Judgment
A Show Cause Notice dated 07.04.2006 was issued alleging clandestine removal, etc., and thereby proposing a duty demand of Rs. 23,13,850/- with applicable interest and penalty on the assessee who is the appellant herein. The appellant filed an application before the Settlement Commission as provided under the Central Excise Act for settlement of disputes and the Settlement Commission after considering the plea of the appellant, responded Revenue and after going through the case records, vide its Final Order dated 14.11.2006 settled the duty liability at Rs. 17,25,518/-. It also granted immunity from interest in excess of simple interest at 10% p.a. to be calculated by the Revenue for the period when the duty liability arose till the date of actual payment, to be communicated to the appellant within 15 days from the date of receipt of its order; a further immunity was also granted from penalty and prescription under Central Excise Act, 1944. The Settlement Commission also held that the appellant was entitled for refund of the amount paid in excess since the appellant had during the investigation paid an amount of Rs. 20,41,632/-, the refund due was also calculated in the worksheet attached to its final order.
It appears that the appellant thereafter shot a letter dated 21.12.2006 requesting the Commissioner of Central Excise for adjustment towards interest liability, if any, from the refund due to it and also requesting for the refund of the amount in excess, after such adjustment. The Revenue without bothering to reply to the above request and without adhering to the directions of the Settlement Commission as well, however, chose to file a writ petition before the Hon'ble High Court of Judicature at Madras, seeking stay of operation of the order of the Settlement Commission supra. Hon'ble High Court of Judicature at Madras was pleased to grant an ad-interim order of stay as prayed for by the Revenue, vide its order dated 09.04.2007 and further, vide its order dated 11.09.2007, the Hon'ble High Court was pleased to pass an order granting absolute stay as regards refund amount was concerned. The above order of the Hon'ble High Court was enjoyed by the Revenue upto 22.10.2018 on which date the Hon'ble High Court dismissed the above writ petition of the Revenue at the request of the Revenue.
3.1 The appellant vide another letter dated 03.05.2019 requested for refund to which it was entitled, in response to which a show cause notice dated 28.05.2019 was issued proposing interalia to reject the refund claim as time barred under Section 11 B of the Central Excise Act. A perusal of the show cause notice indicates that the Revenue had no disputes as to the payment of Rs. 20,41,632/- during investigation on various dates ie., from October 2005 to December 2005, it also takes note of the order of the Settlement Commission settling the duty at Rs. 17,25,518/-, there is also a mention of interest worked out under Section 11 AA of the Act at 10% as ordered by the Settlement Commission from 01.09.2004 at Rs.2,04,226/-, it also notices that after adjusting the above interest against the refund due to the appellant (of Rs.3,16,114/-), the appellant's entitlement to a refund of Rs.1,11,888/-. The above points are part of paragraph-3 of the show cause notice. In paragraph-5, however, the Dy. Commissioner appears to have seen that the amount paid in the year 2006 was a voluntary payment in the course of department's investigation, which is in contrast with his own admission at paragraph-03 (ii) wherein he himself has given date-wise payments, ending in December, 2015 itself.
3.2 Further, Dy. Commissioner also records that the order of the Settlement Commission was on 14.11.2006, it was the department which went on appeal etc., and that effectively the assessee was entitled to seek refund in the year 2006, but the assessee had chosen to seek refund only in the year 2019, thus the refund claim arising consequent to the said order of the Settlement Commission which should have been filed before one year from the relevant date as specified in explanation B (ea) to Section 11 B of the Central Excise Act, 1944. [sic (ec)], is barred by time.
3.3. Finally the Dy. Commissioner proposes to reject the refund claim as time barred. Vide Order-in-Original dated 23.09.2019, the adjudicating authority after considering the explanation of the appellant, however, rejects the refund claim which order also came to be upheld vide impugned order of the Commissioner (Appeals) No.21/2020 dated 14.02.2020, against which the present appeal has been filed before this forum.
Today when the matter was taken up for hearing, Shri N. Viswanathan, learned Advocate appeared for the assessee and Shri Arul C. Durairaj, Superintendent, appeared for the revenue, I have heard the rival contentions and gone through the pleadings and documents placed on record.
The Settlement Commission settled the duty liability vide its Final order dated 14.11.2006 thereby granting 15 day's time to work out interest liability, if any, and to communicate the same to the appellant herein, which apparently has not at all been complied with. A writ petition was filed by the Revenue and the Hon'ble High Court of Judicature at Madras was pleased to grant ad- interim order which was thereafter made absolute, which order continued for nearly 11 years. Which means, the Revenue having obtained a stay of the refund order of the Settlement Commission, was in the driver's seat. These facts apparently have been side-lined in issuing show cause notice dated 28.05.2019, Order-in-Original and also in the Order-in-Appeal. Even if the relevant date is taken as the date of final order of the Settlement Commission for the purposes of computing the period of limitation, as pointed out at paragraph-5 (i) of the show cause notice, one year would expire on 13.11.2007 by which date the Revenue had already obtained an absolute stay against order of refund from the Hon'ble High Court. Another point which is noteworthy, is that the Revenue's treatment of the appellant's first request for refund dated 21.12.2006, whereby the appellant also requested for adjustment of interest from the refund due to it; refund having been worked out by the Settlement Commission itself. This aspect has been ignored in the show cause notice as well as in Order-in-Original, but however, even though the Commissioner (Appeals) in the impugned order has observed the appellant's above letter, still no order has been made thereon. Both the authorities chose to act on the subsequent request of the appellant dated 03.05.2019, which is only a reminder of the refund legally due, to it. Had there not been the request for refund dated 21.12.2006, then perhaps the appellant had no case.
In view of my above observations, I have no hesitations in holding that the appellant's rightful request for refund dated 21.12.2006 which is very much on the record of the Revenue has not at all had been acted upon or rather ignored deliberately and nowhere do I find any denial by the Revenue as to its existence. Hence, I do not subscribe to the reasons given in the impugned order which has only upheld the Order-in-Original for rejecting the refund claim. I also find that the above refund claim of the appellant is very much in order, within the prescribed time and therefore, the impugned order deserves to be set aside. Accordingly, the same is set aside and the appeal is allowed with consequential benefits if any, as per law.
(Order pronounced in the Open Court on 30.03.2021)