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2024 DIGILAW 1231 (GUJ)

Jord Engineers India Ltd. v. Union of India

2024-06-13

BHARGAV D.KARIA, NIRAL R.MEHTA

body2024
ORDER : Bhargav D. Karia, J. 1. By way of this petition under Article 226 of the Constitution of India, the petitioners have prayed for the following prayers :- “(A) Your Lordships be pleased to direct the respondent authorities by way of an appropriate writ, order or direction or appropriate writ of Mandamus, or any such other writ order or direction, to immediately calculate and grant interest @ 12% from the date of deposit of Rs.12,90,000/- i.e. 7-4-199, till date, within 30 days and failing which to grant 9% interest therefrom, till its actual payment. (B) Any other reliefs deem fit, proper and incidental in the facts of the present case may kindly be granted 2. The brief facts of the case are as under:- 2.1 An intelligence search was conducted on 6.4.1999 by the officer of the DGCEI at the premises of the petitioners alleging that the petitioners have received certain raw materials based on purchase invoices, without actually physically receiving any material and availed Cenvat credit. However, no discrepancy whatsoever was found on the physical stock verification vis-a-vis statutory records maintained by the petitioner. 2.2. It is case of the petitioners that the petitioners were constrained to deposit an amount of Rs.12,90,000/- from their PLA Cenvat Account vide entry No. 2 dated 7.4.1999 and from their Cenvat Credit A/c. vide entry No. 23 by the officers of DGCEI. 2.3 The show cause notice dated 7.10.1999 was issued seeking to recover an amount of Rs.48,44,855/- towards Modvat/Cenvat Credit availed along with interest and penalty from the petitioners. The show cause notice reads as under:- “23. Now therefore, M/s. JEIL are hereby required to show cause to the Commissioned of Central Excise (Adjudication), Mumbai, having his office situated at New Central Building, 5th floor, M.K. Road, Church gate, Muinbal-400020, as to why : (a) modvat amounting to Rs.48,11,855/- (Rupees forty eight lakh eleven thousand eight hundred fifty five only) being the credit taken on their Inputs, which were taken as detailed in Annexure Al of the Show Cause Notice should not be disallowed and recovered from them under clause (i) read with clause(ii) of Rule 57 1(1) of the Central Excise Rules 1944. (b) penalty equal to the amount of modvat credit determined to be disallowable and recoverable, should not be demanded and recovered from them under the provision of Rule 57 1(4) ibid; (c) interest at the rate of 20% on the amount of Modvat credit determined to be disallowable and recoverable, should not be demanded and recovered from them under the provision of Rule 571(5) ibid; (d) why the amount of RS. 12,90,000/- (Rupees twelve lakh ninety thousand only) paid by them through their P.L.A. Entry No. 2 dated 7.4.99 and through their modvat account Entry No. 23 dated 7.4.99 should not be appropriated against the demand; (e) why the land, building, plant, machinery, material conveyance or any other things used in connection with the manufacture/production, storage, removal or disposal of such goods or nah other excisable goods of such land or in such building or produced or manufactured with such plant, machinery, material of things should not be confiscated under Rule 173-Q(2) of Central Excise Rules, 1944.” 3. After considering the reply to the show cause notice, the same was adjudicated vide order dated 26.8.2004 and the amount deposited by the petitioners on 7.4.1999 was appropriated towards the demand raised in the order in original which reads as under:- “1. I hereby, disallow and order recovery of the modvat credit amounting to Rs.48,11,855/- (Rupees Forty eight lakh eleven thousand eight hundred fifty five only) wrongly availed from M/s. Jord Engineers India Limited, Village Ishwarpura, Asoj, Halol Road, Vadodara under clause (i) read with clause (1) of Rule 571 of the Central Excise Rules, 1944. I appropriate the amount of Rs.12,90,000/- (Rupees Twelve lakh ninety thousand only) paid by them through their P.L.A. Entry No. 2 dated 07.04.99 and through their modvat account Entry No. 23 dated 07.04.99 against the liability determined above.” 4. Being aggrieved by the Order-in-Original, the petitioners filed an appeal before the Commissioner (Appeals) who by order dated 25.2.2005 remanded the case for fresh adjudication before the adjudicating authority in view of the reliance placed only on retracted statement and since the principle of natural justice were not followed while passing the order in original. 5. After the remand, the adjudicating authority passed an Order-in-original dated 31.3.2007 reiterating the original order confirming the entire demand with interest and penalty. 6. 5. After the remand, the adjudicating authority passed an Order-in-original dated 31.3.2007 reiterating the original order confirming the entire demand with interest and penalty. 6. The petitioners therefore filed appeal before the Commissioner (Appeals) who again remanded the matter vide order dated 30.10.2008 for fresh adjudication and the Assistant Commissioner Excise, Vadodara again passed an order on 30.10.2008 confirming the demand along with interest and penalty. 7. The petitioner therefore was constrained to file an appeal for the 3rd time before the Commissioner (Appeals) which was rejected vide order dated 30.11.2017. 8. The petitioner being aggrieved preferred an appeal before CESTAT who by order dated 30.11.2017 remanded the case to the adjudicating authority with certain directions. 9. The adjudicating authority by order dated 15.1.2021 again reconfirmed the demand and recovery of the Cenvat credit with interest and penalty. 10. The petitioners thereafter for the fourth time preferred an appeal before the Commissioner (Appeals) who by order dated 28.10.2021 allowed the same with consequential reliefs by quashing the entire demand and quashing the order in original dated 15.1.2021. 11. After the aforesaid order was passed, the petitioners filed application for refund of the amount deposited by the petitioners on 7.10.1999 which was paid under protest and pressure with interest from 1999 till the date of payment of the refund, in view of the allowing the appeal by the Commissioner (Appeals). 12. Learned advocate Mr.Hasit Dave has tendered the draft amendment placing the said application dated 10th November, 2021, which was made to grant the refund after adjustment of the amount of pending dues. The same is allowed in terms of draft. To be carried out forthwith. 13. The respondent No.2 by order dated 28.10.2021 allowed the refund application but granted interest from the date of the order of the Commissioner (Appeals) till the date of refund for 252 days on the amount of Rs. 12,90,000/- and refused to grant the refund from the date of deposit by the petitioners from 7.10.1999 onwards. 14. The petitioners therefore being aggrieved for non payment of interest from 7.10.2011 on amount of Rs.12,90,000/- by the respondent No.2, has preferred this petition with the aforesaid prayers. 15. Learned advocate Mr. 12,90,000/- and refused to grant the refund from the date of deposit by the petitioners from 7.10.1999 onwards. 14. The petitioners therefore being aggrieved for non payment of interest from 7.10.2011 on amount of Rs.12,90,000/- by the respondent No.2, has preferred this petition with the aforesaid prayers. 15. Learned advocate Mr. Hasit Dave for the petitioners submitted that the petitioners are entitled to interest of Rs.12,90,000/- from 7.10.1999 as the Commissioner (Appeals) has deleted the entire addition by the order dated 28.10.2021 and therefore the amount which was collected coercively by the officers of DGCEI during the search on 7.10.1999 by compelling the petitioners to pay Rs.12,90,000/- by debiting the PLA and Cenvat credit account is required to be paid with interest to the petitioners from the date of deposit. 15.1 It was submitted that the respondent-authority has only granted the interest from 28.4.2021 till 28.12.2021 for 252 days amounting Rs.53,438/- on Rs.12,90,000/- relying upon CBIC Circular No. 984 dated 16.9.2014. It was submitted that the reliance placed by the respondent No.2 on the aforesaid Circular is not applicable in the facts of the case. There was no question of any pre-deposit at the relevant time to be made by the petitioners and therefore, the petitioners are entitled to the interest from the date of deposit of Rs.12,90,000/- from 7.10.1999 till 28.10.2021 as such amount was withheld without any authority by the respondent - department. 15.2. In support of his submission, reliance was placed on the decision of the Hon’ble Supreme Court in case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-I, Pune reported in 2006 (196) ELT 257 (SC) wherein, it is held that the assessee is entitled to delayed payment of interest which is withheld by the the authority by way of the compensation. It was submitted that therefore, the petitioners were entitled to interest from 7.10.1999 as the petitioners were not liable to pay any amount in view of the order passed by the Commissioner (Appeals) dated 28.10.2021 and accordingly, the respondent-authority withheld such amount without any rhyme or reason from 1999 onwards and therefore, the petitioners are entitled to compensation for depriving utilization of such amount by the petitioners. 15.3. Learned advocate Mr. Dave also referred to and relied upon the decision of the Hon’ble Madras High Court rendered in case of Calcutta Iron & Steel Company Vs. 15.3. Learned advocate Mr. Dave also referred to and relied upon the decision of the Hon’ble Madras High Court rendered in case of Calcutta Iron & Steel Company Vs. CESTAT, Chennai reported in 2017 (350) ELT 327 (Mad.) wherein, the Hon’ble Madras High Court in the facts of the said case held that the DRI could not have jurisdiction to demand and collect any amount from the assessee during the course of search as the officers were not vested with powers of an Assessing Officer. It was submitted that in the facts of the present case also the officers of DGCEI had no power or authority to compel the assessee to deposit the amount during the course of search on 7.10.1999 as they were not having the power of Assessing Officer. It was therefore submitted that since the amount deposited by the petitioners under was under coercion, the petitioners are entitled to interest from the date of deposit. 16. Having heard Mr. Hasit Dave, learned advocate for the petitioners, the facts narrated hereinabove clearly shows that the petitioners have paid the amount of Rs.12,90,000/- during the course of search. The said amount was adjusted towards the outstanding demand by the adjudicating authority while passing the Order-in- Original dated 26.8.2004. 17. At this stage, we have found that at “Annexure “B” in the memo of petition is referred an order dated 26.8.2004 whereas the order dated 30th October, 2007 passed by the adjudicating authority after the remand made by the Commissioner (Appeals) vide order dated 25.2.2005 is annexed at page No.58 of the paper book. In view of wrong order being annexed we are unable to proceed further. The petition is therefore not entertained only on this ground, and the same is dismissed with a liberty to file fresh petition.