M/s.A.M. Products vs Commissioner Of Customs

Sl.

No

.","Refund

claim filed

on date","Amount of

refund claim","Period

involved in

refund claim","Amount of claim

sanctioned",O-I-A,"Refund

claim

pursuant to

O-I-A

1.,19.10.2015,"1,12,37,481/-","18.9.2015

To

6.10.2015","Nil vide OIA

No.54/

Abatement/2016

Dated 3.3.2016","25.10.2017

Allowed refund

of

Rs.1,12,37,481/-",16.11.2017

2.,29.12.2015,"1,22,20,520/-","27.11.2015

to

30.11.2015","98,30,387/- vide

OIO No. 60/

Abatement/ 2016

dated 11.03.2016","25.10.2017

Allowed refund

of Rs. 23,90,133/-",-DO-

3.,15.2.2016,"1,50,34,709/-","28.12.2015

to

31.12.2015","1,27,21,677/- Vide

O I O No. 91 /

Abatement/ 2016

dated 07.04.2016","25.10.2017

Allowed refund

of Rs.23,13,032/-",-DO-

,TOTAL,"3,84,92,710",,"2,25,52,064/-","1,59,40,646/-",-DO-

of the Act. The explanation clarifies that even any subsequent order finally allows the refund has to be taken as the order under section 11B itself i.e.,,,,,,

the order as has been passed pursuant to the first application of the assessee vide which he claimed the refund for the first time. Issue is no more res-,,,,,,

integra as has been held by Hon’ble High Court of Rajasthan in the case of J.K . Cement Works proved futile as the Special Leave to Appeal,,,,,,

(Civil) No.21547 of 2004 was dismissed by the Apex Court by order dated 10.02.2004 reported in 2005 (179) E.L.T. A150 (S.C.).,,,,,,

Similarly, the Allahabad High Court in the case of Hamdard (Wakf) Laboratories v. UOI referring Section 11BB of the said Act held as follows:-",,,,,,

From a bare reading of the provisions of Section 11BB of the Act, we find that the legislature by the aforesaid provision has cast a duty",,,,,,

upon the adjudicating authority to decide the claim for refund immediately within three months failing which the liability for interest start,,,,,,

running after excluding the period of three months from the date of the application. Admittedly, in the present case, it is not in dispute that",,,,,,

the claim for refund was made on 25th August, 1999 whereas the order for refund has been passed on 16th November, 2000. Under the",,,,,,

provision of Section 11BB of the Act, interest start running after three months from the date of the application irrespective of the fact as to",,,,,,

whether the order for refund has been made subsequent to the period of three months. As in the present case, the order for refund has been",,,,,,

made on 16th November, 2000 i.e. much after the expiry of period of three months from the date of making the application, therefore, the",,,,,,

respondents are liable to pay interest at the specified rate therein. Liability for payment of interest is statutory and, therefore, it was the",,,,,,

bounden duty of the Assistant Commissioner of Central Excise, Division-I, Ghaziabad to also pay interest from 26th November, 1999 to 16th",,,,,,

November, 2000 at the rate specified under Section 11BB of the Act.â€​",,,,,,

Similarly, the Bombay High Court in the case of C.C.E., Pune-III vs. Ballarpur Industries Ltd. reported in 2008 (229) E.L.T. 498 (Bom.) while",,,,,,

interpreting Sections 11b and 11BB of the said Act held as follows:-,,,,,,

“Perusal of the above provision shows that Section 11BB of the Act comes into operation only after an order for refund has been made,,,,,,

under Section 11B of the Act. It lays down that in case any duty paid is found refundable then if the duty is not refunded within a period of,,,,,,

three months from the date of receipt of the application to be submitted under Section 11B of the Act, then interest on the amount is liable to",,,,,,

be paid on expiry of period of three months from the date of receipt of the application. The Explanation appearing below Section 11BB of,,,,,,

the Act shows that it introduces deeming fiction that where the order for refund of duty paid is made not by the Assistant Commissioner of,,,,,,

Central Excise or Deputy Commissioner of Central Excise but is made by the Commissioner (Appeals), Appellate Tribunal or by the Court,",,,,,,

then for the purpose of this section the order made by the Commissioner (Appeals), Appellate Tribunal or by the Court shall be deemed to be",,,,,,

an order made under sub-section (2) of Section 11B of the Act. Thus, the purpose of introducing explanation was to introduce deeming",,,,,,

fiction that for the purpose of sub-section (2) of Section 11B if the order is made not by the Assistant Commissioner or Deputy Commissioner,",,,,,,

but by the higher authorities, the order made by the higher authorities shall be deemed to be an order made by the Assistant Commissioner",,,,,,

or Deputy Commissioner for the purpose of sub-section (2) of Section 11B of the Act. The explanation has nothing to do with the,,,,,,

postponement of the date from which interest becomes payable under Section 11BB of the Act. Interest under Section 11BB of the Act,,,,,,

becomes payable on expiry of period of three months from the date of the receipt of the application for refund if the amount is not refunded,,,,,,

within three months from the date of receipt of the application. The learned Counsel appearing for respondent also relied in support of his,,,,,,

submission on the judgments of various High Courts. However, in our opinion, the position of law is absolutely clear that the interest is",,,,,,

payable under Section 11BB of the Act on expiry of period of three months from the date of receipt of the application and that Explanation,,,,,,

appearing below Section 11BB of the Act does not have any effect or connection with the date from which interest under Section 11BB of the,,,,,,

Act becomes payable. The only purpose served by the explanation, as observed above, is to introduce a deeming fiction which is relevant for",,,,,,

the purpose of sub-section (2) of Section 11B of the Act.â€​,,,,,,

Recently in the case of Ram Pratap vs. Union of India reported in 2017 (350) E.L.T. 375 ( P & H) the Hon’ble High Court of Punjab &,,,,,,

Haryana held as follows:-,,,,,,

“Demand - Disciplinary action for dropping of demand against Assistant Commissioner of Central Excise - Exercising quasi judicial,,,,,,

function - Allegation that he vacated demands knowing that on same issue department’s appeal to Supreme Court was pending -,,,,,,

However, order was in conformity with legal principle laid down by CEGAT - Order passed on verge of his retirement - HELD : Judicial",,,,,,

view of CEGAT would stand in absence of interim order by Supreme Court - Assistant Commissioner performing quasi judicial functions,,,,,,

was bound by prevalent legal position as enunciated by CEGAT, which was subsequently, affirmed by Supreme Court - Contrary approach",,,,,,

would amount harassment of assessee for failure of officers to give effect to orders of authorities higher in Appellate hierarchy - Also,",,,,,,

record indicated that identical orders were passed by other officers where same orders of CEGAT had been followed - It was not even case,,,,,,

of not safeguarding revenue - Department could not draw adverse inference against Assistant Commissioner as orders were passed on,,,,,,

verge of retirement - Hence, inquiry and penalty quashed. [para 12]â€​",,,,,,

Apparently, the order of Commissioner (Appeals) is much beyond the date of the application of the appellant as was filed under Section 11B of the",,,,,,

Act. Hence, it is mandatory for the Department to sanction interest along with the sanctioned refund claim. The ground as taken by the Commissioner",,,,,,

(Appeals) in para,,,,,,

7 for rejecting the sanctioning of interest is observed to be highly irrational as pursuant to the Order-in-Original dated 24.01.2018 there had been a,,,,,,

written request of appellant dated 23.04.2018 praying for sanction of interest. In view thereof, the order is held not sustainable, accordingly is hereby",,,,,,

set aside. Pursuant thereto appeal stands allowed.,,,,,,

[Order pronounced in the open Court on 03.08.2021],,,,,,