Adjudicating Authority cannot reassess/ re-quantify the amount of duty that is to be refunded as per Appellate order without challenging the same
Commissioner of Customs & Central Excise Vs. Samtel Color Ltd. [(2014) 49 taxmann.com 238 (Allahabad)]
Samtel Color Ltd. (the Assessee) is engaged in manufacturing colour picture tubes falling under Heading No.40.11 of the Central Excise Tariff Act, 1985. Some of the picture tubes were found to be defective at the customer's end and accordingly were returned to the manufacturer for reconditioning/reprocessing under Rule 173L of the erstwhile Central Excise Rules, 1944 (the Excise Rules). Accordingly, the Assessee filed a declaration in Form-D3 with regard to the receipt of the defective colour picture tubes and after reprocessing/ reconditioning, the Assessee cleared the reprocessed goods upon payment of duty and, subsequently, claimed refund of duty paid under Rule 173L of the Excise Rules.
The Adjudicating Authority passed an order rejecting the refund claim. Being aggrieved, the Assessee filed an appeal before the Commissioner (Appeals) where the refund claim was allowed to the Assessee. On the basis of the appellate order, the Assessee filed an application for refund. However, the Adjudicating Authority while granting refund,reduced the amount by Rs.27,003/- on the ground that the refund claim was partly barred by time, which was further upheld by the Commissioner (Appeals). Being aggrieved, the Assessee filed an appeal before the Hon'ble Tribunal, where the order of the Adjudicating Authority as well as the Appellate order was set aside. Thereafter, the Department , being aggrieved, preferred an appeal before the Hon'ble High Court of Allahabad.
The Hon'ble High Court of Allahabad held that since in first round, the Appellate Authority held that the Assessee was entitled for refund, it was not open to the Adjudicating Authority to reassess or re-quantify amount of duty that was to be refunded in second round. It was further held that since earlier Appellate order had become final, it was not open to the Adjudicating Authority to digress from that order and pass a fresh order denying refund. Hence, refund was allowed to the Assessee.
The Hon'ble High Court further allowed interest on delayed refund under Section 11BB of the Central Excise Act, 1944 holding that interest becomes payable on expiry of 3 months from date of receipt of application for refund.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email : bimaljain@hotmail.com)
Tribunal can extend waiver of pre-deposit beyond 365 days by a speaking order when delay in disposing appeal is not attributable to assessee
Commissioner of Central Excise Ahmadabad-I Vs. Sharp Engineers [(2014) 49 taxmann.com 161 (Gujarat)]
In the instant case, the Hon'ble CESTAT, Ahmedabad passed an order extending waiver of pre-deposit/stay of demand beyond the total period of 365 days from the date of grant of initial stay, without passing any speaking order. The Commissioner of Central Excise challenged the same as violation of statutory provisions contained in 3rdproviso to Section 35C(2A) of the Central Excise Act, 1944 (the Excise Act) brought into force vide the Finance Act, 2013.
The Hon'ble High Court of Gujarat held that if non-disposition of appeal within 365 days (total) from date of grant of first stay is not attributable to the assessee, then, the Tribunal may extend stay even beyond 365 days. However, any such extension may be granted only after passing a reasoned/speaking order.Since in the instant case, speaking order was not passed, the Hon'ble High Court remanded the matter to the Hon'ble Tribunal with a direction to pass speaking order.
Our Comments: Important to note changes brought in by the Finance (No. 2) Act, 2014
Effective from August 6, 2014, the Finance (No. 2) Act, 2014 substituted new Section 35F of the Excise Act, which is also applicable for Service tax vide Section 83 of the Finance Act, 1994 and for Customs vide Section 129E of the Customs Act, 1962 prescribing a mandatory fixed pre-deposit of:
a) 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing of appeal before the Commissioner(Appeals) or the Tribunal at the first stage; and
b) 10% of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, for filing second stage appeal before the Tribunal.
However, the amount of pre-deposit payable is subjected to a ceiling of Rs 10 Crore.
The said amendment has done away with the requirement of filing stay applications for waiver of pre-deposit, thereby, the controversy regarding extension of stay beyond 365 days from the initial grant of stay in terms of Section 35C(2A) of the Excise Act loses its significance. However, it is to be noted that all pending appeals/ stay applications would be governed by the statutory provisions prevailing at the time of filing such appeals/ stay applications.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email : bimaljain@hotmail.com)
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