AGLOWMED LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, VAPI

JUDGEMENT

(1.) The appellant is engaged in the manufacture of medicaments falling under Chapter 30 and during the period December, 2001 to November, 2002 cleared physicians samples on payment of duty on the sale price in terms of Rule 8 of Valuation Rules, 2002. However, subsequently they claimed refund of Rs. 35,40,900/ - on 26 -12 -2002 on the ground that there was excess payment of duty on the clearances of physician samples, in terms of the Boards circular No. 643/34/2002 -CX. Such refund claimed was rejected by the original Adjudicating Authority on the ground of valuation. However, Commissioner (Appeals) has set aside the said order by holding that free distribution of physician samples enhances the sale and assessable value has to be adopted in terms of the Boards clarification. Thereafter appeal filed by the Revenue before Tribunal was rejected vide order dt. 25 -7 -2006. As a result, the appellants refund application was required to be allowed.

(2.) THE dy. Commissioner in his subsequent proceedings sanctioned refund of Rs. 17 lakhs (appx.) and rejected the balance amount of Rs. 18 lakhs on the ground that the Boards circular relied upon by the appellant was effective only from 1 -7 -2002 and the refund for the prior period cannot be sanctioned. The appellant filed an appeal before Commissioner (Appeals), who held that inasmuch as the Tribunals decision was not appealed against and was accepted by the Department, the same has to be given effect in full. Accordingly, he sanctioned the remaining portion of the refund amount of Rs. 18.15 lakhs. However, he rejected the appellants claim for interest on the ground that the matter was involved under litigation most of the time. As such, the only dispute in the present appeal is as regards the appellants claim of interest.

(3.) THE application for refund of duty was made by the applicant on 26 -12 -2002. The period of 3 months expired on or around 26 -3 -2003. As such, the sanction of the refund after the said date would attract interest in terms of the provisions of Section 11BB. The fact that the same was initially rejected by the authorities and the issue was under litigation and was finally held in favour of the assessee by the subsequent decisions of the higher appellate forum, cannot be taken as a ground for denial of interest after the expiry of period of 3 months from the date of final of refund claim. As held by the Honble Rajasthan High Court in the case of M/s. J.K. Cement Works v. AC, CE&C [2004 (170) E.L.T. 4 (Raj.), the liability to pay interest is not tagged to adjudicative decision and if the refund is ultimately found payable, the interest would get attracted, after expiry of 3 months from the making of application of refund. Inasmuch as in the present case, admittedly the refund stands sanctioned after the expiry of 3 months from the date of making of refund application, we hold that the appellants are entitled to interest in terms of Section 11BB from the said date of expiry of 3 months. Appeal of the assessee is allowed on this ground and the matter is remanded to the Original Adjudicating Authority for quantification of interest amount.