Decided on January 22,2015

Commissioner Of Central Excise, Customs And Service Tax Respondents


B.S.V.MURTHY - (1.) DURING the period from 3.7.2001 to 31.3.2002, the appellant who is a manufacture of aluminium extrusion and parts of electric meters had availed CENVAT credit of Rs. 14,53,805/ - on the materials rejected by the customers and returned to the factory for refining, reprocessing, etc.
(2.) In fact, the event happened when the appellants factory was owned by the Indian Aluminium Company Ltd., which was subsequently taken over by the present appellant. A view was taken by the Revenue that the conditions laid down under Rule 16 of Central Excise Rules have not been fulfilled and as a result, the demand for duty of Rs. 13,93,690/ - being the credit involved was confirmed with interest. The matter travelled to the Tribunal and the Tribunal had directed the appellant to deposit 50% of the amount as pre -deposit and in the Final Order No. 482/2005 dated 24.2.2005 had held that appellants are not entitled to CENVAT credit and appeal was rejected. Since the present appellant was in the process of taking over the unit and the company; and Department did not allow transfer of registration and cancellation of registration, the appellant had to make the payment of balance dues with interest even though the period for filing the appeal before the Hon'ble High Court of Kerala against the impugned order had not expired. Thereafter, appellant filed an appeal before the Hon'ble High Court who in their judgment dated 24.1.2008 held that appellant was eligible for the credit and allowed the appeal. Thereafter the appellant filed a refund claim for Rs. 14,74,012/ - paid in cash by them comprising of inadmissible credit of Rs. 6,96,710/ - and interest of Rs. 7,77,302/ -. As a result of the order of the lower authority and the Commissioner (A), the claim of the appellant for the principal amount paid by them and the interest of more than Rs. 7 lakhs have been held to be admissible. The appellants are before me seeking payment of interest on the interest amount paid by them. The learned counsel vehemently argued that the amount was illegally and forcibly collected from the appellant. Appellant was compelled to pay since the lower level officers refused to cancel the registration of Indian Aluminium Company and make registration in the name of the appellant and to ensure that the transfer of unit from one company to another company takes place smoothly, the appellant had to pay the amount. He submits that the principal and interest were collected illegally and the department is bound to pay the interest.
(3.) LEARNED AR would argue that there was no illegality in the collection of the amount. The matter had travelled up to the level of Tribunal and had been confirmed. The cancellation of registration normally is not allowed unless all the dues are cleared. In this case, the amount collected was a confirmed demand in accordance with law and the matter had already crossed two appellate levels. Therefore, it cannot be said that there was anything illegal in collection. In the absence of stay, it cannot be said that collection was illegal. He submits that the legal provisions relating to payment of interest does not allow interest on interest and therefore, it cannot be said that appellant is eligible to interest on interest.;

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