IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.12.2010 CORAM: THE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN W.P.NOS.21308 AND 21309 OF 2010 AND M.P.NOS.1 AND 1 OF 2010 M/s Estee Auto Pressings(P)Ltd., ...Petitioner in both W.Ps. Vs. 1.The Commissioner of Central Excise Chennai-II Commissionerate 26/1, Mahatma Gandhi Road, Chennai 600 034. 2. The Additional Commissioner of Central Excise Chennai III Commissionerate 121, Nungambakkam High Road, Chennai 600 034. 3. The Assistant Commissioner of Central Excise Hosur-II Division 67/A, SIPCOT Industrial Complex, Hosur 635 126. ...Respondents W.P.NO.21308 OF 2010: Petition filed under Article 226 of the Constitution of India praying to issue a writ of Mandamus directing the third respondent to pay to the petitioner a sum of Rs.3,05,910.72 (Rs.2,49,965/- being the balance due after appropriation of (Rs.77,736 from Rs.3,26,701) + Rs.55,945,725 towards interest thereon from 14.11.2006 till the date of this writ petition and further interest till the date of refund. W.P.NO.21309 OF 2010: Petition filed under Article 226 of the Constitution of India praying to issue a writ of prohibition prohibiting the third respondent officer from proceeding further with the impugned SCN dated 09.06.2010 bearing reference C.No.V/85/18/86/2010-RF. For petitioner : Mr.C.Saravanan For Respondents: Mrs.Bhuvaneswari https://hcservices.ecourts.gov.in/hcservices/ O R D E R In W.P.No.21308 of 2010, the petitioner has sought for a Writ of Mandamus, directing the third respondent to pay to the petitioner, a sum of Rs.2,49,965/-, being the balance due after appropriation towards the liability of the petitioner and a further sum of Rs.55,945.725 towards interest thereon from 14.11.2006 till the date of writ petition and further to pay interest till the date of refund. 2. In W.P.No.21309 of 2010, the petitioner has sought for a writ of prohibition, prohibiting the third respondent officer from proceeding further with the impugned Show Cause Notice dated 09.06.2010 bearing reference C.No.V/85/18/86/2010-RF. 3. The petitioner herein made a claim for refund of the predeposit amount paid in the appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chennai under Section 11B of the Central Excise Act, 1944, consequent on the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chennai on 14.11.2006, resulting in the cancellation of the order of demand and thereby remanding the matter back to the Joint Commissioner concerned for fresh consideration. It is seen that by order dated 05.09.2005, in Stay Order No.707 of 2005 in Appeal No.556/05, the CESTAT directed the petitioner to pre-deposit the amount of Rs.50,000/-, considering the fact that the petitioner had already deposited Rs.26,201/- during investigation, as a condition for admitting the appeal under Section 35 of the Customs and Excise Act, 1944. Thus, the petitioner had complied with the condition and remitted the said amount as stated above. In view of the order passed in the appeal by the CESTAT dated 14.11.2006, the petitioner sought for refund of the pre-deposit amount made by the petitioner before the second respondent, contending that the CESTAT had passed the final order on 14.11.2006 granting relief to the petitioner as regards the shortage in weighment noted as not significant and the shortages and excessive supplies are adjusted in a ledger in terms of value as regards various supplies and as regards other claims and remanded the same for de novo consideration. 4. It is stated that consequent on the remand order, the second respondent passed a fresh order on 28.11.2007 and the demand raised has already been remitted by the petitioner. However, when the petitioner sought for refund of the pre-deposit amount, the same was rejected by the respondents herein on the ground that the claim was belated, under Section 11B of the Central Excise Act, 1944. The contention of the petitioner herein is that being in the nature of pre-deposit, Section 11B of the Act could not be invoked and the return of deposit should be made in terms of Section 35F of the Act. https://hcservices.ecourts.gov.in/hcservices/ 5. In this connection, learned counsel for the petitioner placed reliance on the decision of the Apex Court reported in 2005 (179) E.L.T. 15 (CCE, Hyderabad Vs. I.T.C. LTD.), and circular dated 02.01.2002 in F.No.225/37/2K - CX 8A by the Central Board of Excise and Customs, New Delhi and the Circular dated 08.12.2004 in Circular No.802/35/2004-CX wherein the Commissioners of Central Excise were directed advise the officials to order the refund of pre-deposit amount in terms of Section 35F of the Act. The circular referred to the decision of the Supreme Court directing return of the pre-deposit amount within three months of the disposal of the appeals in the assessee's favour. 6. It is seen from the compilation of the decisions of the Apex Court that in the decision in Commissioner of Central Excise, Hyderabad Vs. I.T.C. Ltd., reported in 2005 (179) E.L.T. 15, the Apex Court considered the similar issue and after referring to the draft circular on the issue of refund of pre-deposit amount, directed payment of interest on the pre-deposit commencing from three months' period. 7. Learned counsel for the petitioner placed reliance on the decisions reported in 2007 (218) E.L.T. 493 (UOI Vs. TATA SSL Limited) as well as the decision in Union of India Vs. Suvidhe Ltd., reported in 1997 (94) ELT A 159, wherein, the Apex Court confirmed the decision of the Bombay High Court in Suvidhe Ltd., Vs. Union of India reported in 1996 (82) E.L.T. 177 (Bombay) that Section 11B of the Act can never be invoked to cases of pre-deposit of duty in compliance of Section 35F of the Act for maintaining the appeal before the Appellate Tribunal, since the pre-deposit condition is not payment of duty, but it is only pre-deposit for availing the right of appeal. Learned counsel for the petitioner further placed before this Court the circular of the Central Board of Excise and Customs, New Delhi dated 02.01.2002. After referring to the decision of the Supreme Court in Suvidhe Ltd., Vs. Union of India reported in 1996 (82) E.L.T. 177 (Bombay) and Mahavir Aluminium Ltd. Vs. Collector of C.E. Jaipur reported in (1999) (114) E.L.T. 371, the circular states: " In order to attain uniformity and to regulate such refund it is clarified that refund application under Section 11B(1) of the Central Excise Act,1944 or under Section 27(1) of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit requesting the return of the amount, along with an attested Xerox copy of the Order-in-appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or https://hcservices.ecourts.gov.in/hcservices/ Customs, as the case may be, will suffice for the purpose. All pending refund applications already made under the relevant provisions of the Indirect Tax Enactment for return of such deposits and which are pending with the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees executed in lieu of cash deposit shall also be refunded." 8. In terms of the circular dated 8.12.2004 and in the light of the decision of the Apex Court confirming the view of the Bombay High Court, the pre-deposit to maintain the appeal is not to be equated to the payment of duty to invite the provisions of Section 11B of the Act. Learned counsel for the petitioner submits that the order now passed invoking Section 11B of the Act is unsustainable. 9. On notice, the respondents have filed a counter reiterating the contentions as to the applicability of Section 11B of the Act. I do not think that the view taken by the respondents merits any consideration, in the face of the understanding of the Department shown in the circular dated 02.01.2002 as well as the decision of the Supreme Court. 10. In the circumstances, going by the admitted fact that the pre-deposit was made in terms of Section 35F of the Act, the question of invoking Section 11B of the Act to reject the claim of the petitioner as time barred, does not arise. As pointed out in the circular dated 02.01.2002, when the claim can be made even by a simple letter along with attested xerox copy of the order in appeal, the question of the Department further adjudicating the matter invoking Section 11A of the Act, hence, does not arise. The Circulars of the Board are binding on the respondents who have the responsibility of respecting the same. More so, in the context of the decision of the Apex Court, the question of re-agitating the issue now does not arise. In the circumstances, accepting the case of the petitioner, the writ petitions are allowed. The respondents are directed to refund the amount within a period of eight weeks from the date of order along with interest at 6% per annum from the date of receipt of the order till the date of payment. No costs. Consequently, M.P.Nos.1 and 1 of 2010 are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar VJY https://hcservices.ecourts.gov.in/hcservices/ To 1. The Commissioner of Central Excise Chennai-II Commissionerate 26/1, Mahatma Gandhi Road, Chennai 600 034. 2. The Additional Commissioner of Central Excise Chennai III Commissionerate 121, Nungambakkam High Road, Chennai 600 034. 3. The Assistant Commissioner of Central Excise Hosur-II Division 67/A, SIPCOT Industrial Complex, Hosur 635 126. 1 cc To Mr.C.Saravanan, Advocate, SR.85628 1 cc To Mr.P.Buvaneshwari, Advocate, SR.85519 W.P.Nos.21308 and 21309 of 2010 and M.P.Nos.1 and 1 of 2010 gv(co) pmk.11.1.2011 https://hcservices.ecourts.gov.in/hcservices/