DDT question
Last week's question was whether interest paid was refundable and under what law.
DDT received a very interesting mail from an enlightened reader
In Bhoruka Textiles Ltd Vs Asst. Commissioner reported in 2004(167) ELT556 Commr (A) the Commissioner(Appeals) allowed consequential relief to the assessee who paid the duty and interest before filing appeal. In Konark Cement & Asbestos Ltd Vs Commissioner reported in 2000(120)ELT 634(Trib-Kol) it was held by the Tribunal that the appellate orders should be followed by the subordinate authorities lest it amounts to judicial indiscipline and stern action can be taken in terms of Rule 41 of CESTAT (PROCEDURE) Rules, 1982. In view of this, disciplinary action can be taken against the Assistant Commissioner for not following the Appellate authority's order.
There is no doubt that Section 11B speaks of only refund of duty but this duty is paid on demand or otherwise in terms of various provisions of Sec 11A and as per explanation 2 of Sec 11A interest is payable under Sec 11AB for payments made under this section either voluntarily or on demand. When interest is paid along with the duty naturally it is eligible for refund along with duty though Section. 11B explicitly does not provide for the same. Unfortunately the department acts tough while collecting duty with interest and hides under a facade of illusion while it comes to refund of the same.
We had carried an order of the Bangalore Bench of the CESTAT recently, 2004-TIOL-948-CESTAT-BANG wherein it was held that:-
It is a fact on record that consequent to the order-in-appeal, the demand has been set aside in its entirety and the appellant is entitled to refund of all the adjudication levies paid irrespective of the fact whether or not there is a specific provision for refund of interest. The amount, which is not due to the Government, cannot be retained by the exchequer. Therefore, the appellant is rightly entitled to the interest paid.
It was also held in 1993 (68) ELT 638, that "interest is not duty, but when the interest has been collected, when it is not to be recovered, that is to be refunded under the normal law". The Kerala High Court had remarked it in simple arithmetic terms. If Principal is zero, interest is also zero.