Thursday, August 05, 2010

REFUND OF PRE DEPOSIT


 

By


 

K. VIJAY KUAMR

MA,BL,MBA,B.Ed.

SUPERINTENDENT OF CENTRAL EXCISE


 


 

In a much maligned department as ours, where we are always accused of being harsh, unfair and unjust in retaining any amount collected as duty or otherwise, I would like to draw the attention of ELT readers to a welcome refreshing and assessee friendly Trade Notice issued by Rajkot Commissioner. 200(121)ELT T8.


 

There has been a doubt in the department whether pre – deposit is duty and so is covered by Section 11B and whether refund of such deposit, when the demand is quashed or set aside and the matter is remanded, is to be made only after a claim under Section 11B or not. Judicial opinion has been consistent that such deposits are not covered within the scope of Section 11B. In K.S Steel works v UOI – 1996(83) ELT .29(All.) , the Tribunal declined to order return of pre deposit when the case was remanded. In writ, the party went to High Court and the honourable High Court held that once the impugned order is quashed, no demand existed and so the pre deposit was ordered to be refunded.


 

In another case Voltas v UOI – 1999(112)ELT 34, the CEGAT
while remanding the case to the original adjudicating authority refused the prayer of the appellant for return of pre deposit and directed that the amount of pre deposit may be retained until a fresh order was passed. The hon'ble High court of Delhi held that there is no provision in the law requiring retention of pre deposit pending finalisation of adjudication proceedings and the department was directed to refund the deposit within four weeks.


 

In Suvidhe Ltd v Union of India – 1996(82)ELT 177(Bom), the Bombay High Court held that the doctrine of unjust enrichment has no application to such deposit. In this, the Show cause Notice issued by the department for forfeiture of the pre deposit was quashed by the hon'ble high Court.


 

Very recently in Steelco Gujarat Ltd v CCE, Vadodara- 2000(122) ELT67(Trib), the Tribunal referring to the Supreme Court order in Mahaveer Aluminium Ltd v Commissioner – 1999(114) ELT371(SC), while directing refund of the pre deposit, observed, "While we accept that it is the function and it is the duty of the Commissioner to safeguard the department's revenue, that duty must be performed with due regard to the law and the rights of the assessees."


 

Every assessee who had made a pre deposit pending an appeal, on winning the appeal must have faced this problem of getting back the deposit from the department. We are usually doubly careful while granting refunds, fear of audit, err on the right side, falling revenue – are all concepts influencing this care. We hardly realise that we are here to collect legitimate revenue for the Government – not a paisa more not a paisa less. So the pre deposit in a lost case is not ours and fairly we should return it. In spite of strong judicial decisions, such deposits are not promptly returned.


 

In such a situation the Rajkot Trade Notice comes as a whiff of fresh air into an otherwise congested atmosphere. The Trade Notice makes it very clear that no refund claim is required for getting back such pre deposits, a simple letter would do. In fact the Trade Notice does not use the word 'refund'; it talks of 'return'. Yes we are returning the money which was pre deposited as a pre condition for appeal and once the appeal is quashed, we have no right to retain that money. The Trade Notice further states that all refund claims already filed will be treated as simple letters and processed accordingly. That means in those cases, questions like unjust enrichment will not be raised. As per recent judicial pronouncements, this Trade notice is applicable in other Commissionerates too. As one good deed should lead to another, I request the authorities to return the pre deposits wherever refund of pre deposit is an issue, so that all pending litigation on this issue can be closed. Let it be taken as the law of the land that when the order is quashed or set aside, the pre deposit made to enable appeal would be returned with in a week of an application in a simple letter. I am sure this kind of gestures would improve the image of the department.


 

The author can be reached at vijayoffice2001@yahoo.com


 


 

EXCISE LAW TIMES – 15.02. 2001 – A 21

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