1. M/s. Sachin Textiles Pvt. Ltd. had filed Appeal No. E/1215/94-D along with stay petition No. E/Stay-696/94-D.S. In disposal of the stay application, the appellants were directed to deposit a sum of Rs. 5 lakhs as a precondition to hearing of the appeal. Later, vide Order No.664/96-D, dated 6-11-96 [2000 (126) E.L.T. 1168 (Tri.)] the appeal was allowed. On 16-12-96, the appellants requested the Department to refund the pre-deposit. The jurisdictional Asstt. Commissioner rejected the claim on the ground that it was barred by limitation. The Commissioner (Appeals) set aside the order holding that the amount deposited in pursuance of CEGAT's order would not fall under the provisions of Section 11B of the Central Excise Act, 1944. The appellants on 18-11-98 once again lodged the refund claim. After substantial correspondence and agitation finally on 23-4-99 the claim was sanctioned and the cheque was issued on 24-5-99. The appellants then requested for interest at 15% per annum on the belated refund quantifying the amount at Rs. 2,41,028/-. The Asstt. Commissioner dismissed this application.
The dismissal was upheld by the Commissioner (Appeals) on the ground that the issue was not covered under the provisions of Section 11BB of the Act. Against this order of the Commissioner, the assessees have filed Appeal No. E/404/2000/Mum. which was posted for disposal out of turn.
2. In this case, in terms of the interim order of the CEGAT, the appellants had deposited a sum of Rs. 10 lakhs on 15-2-99 as precondition to hearing of their appeal. The appeal was allowed vide Order No. C-II/1846-1847/99-WZB, dated 2-8-99 [2000 (118) E.L.T. 139 (Tri.)]. The assessee requested for refund of the amount pre-deposited on 15-2-99. The refund was sanctioned on 26-5-2000. The assessee demanded interest at the belated refund. The jurisdictional Asstt.
Commissioner rejected this claim stating that the refund was made within the reasonable time. The assessee filed this application seeking direction to be issued to the Revenue for the payment of interest.
Since the subject matter of the appeal and the Misc. application is the same, these were heard together. Since the issue is of universal interest, the counsels who were not representing the present appellants and applications were also invited to state their views.
3. We have heard Shri Mondal, Consultant for M/s. Sachin Textiles P.Ltd. and Shri R.D. Wagley, C.A. for M/s. Malti Art Pvt. Ltd. We have also heard Shri Nambirajan, advocate and Shri J.C. Patel, advocate. The revenue was represented by Smt. Reena Arya.
4. A very strong reliance has been placed by S/Shri Mondal and Wagley on the number of decisions given by various Benches of the Tribunal where in similar circumstances, the Tribunal had directed payment of interest. Some of the citations are as below :ITC Bhadmchalam Paper Boards Ltd. v. CCE, Hyderabad - 2000 (39) RLT 710 (CEGAT);Sawhney Export House (P) Ltd. v. CC, New Delhi -1999 (113) E.L.T. 81 (Tri);Konark Cement & Asbestos Ltd. v. CCE - 2000 (120) E.L.T. 634 (CEGAT).Commissioner of Central Excise, Delhi v. M.F. Rings & Bearing Races Limited - 2000 (39) RLT 628 (CEGAT) the Tribunal directed cost of Rs. 10,000/- to be awarded to the as-sessee for wrongful retention of the amount by the Department.
6. The Central Administrative Tribunal created under the Administrative Tribunal Act 1985 exercises powers to award interest. This power arises from the enabling provisions under Section 14 thereof which vests the Tribunal with all powers that stood vested in all High Courts before the CAT was formed. Thus the power to award such interest on equitable grounds also seems to have been vested in them.
7. As against that we find that there are orders made by the Tribunal as well as by the High Courts holding that the power to award interest does not vest in the CEGAT. The Tribunal in the case of Skantrons (P) Ltd. v. CC, New Delhi - 1994 (70) E.L.T. 635 (Tri.) had held that the Tribunal was a creature of the statute, that it could not go beyond the provision of the parent Act and therefore was not competent to grant interest on the belated refund. In another judgment, the Tribunal had set aside the orders of confiscation of certain cargo. The goods in the meanwhile had been disposed of. Certain compensation was paid. The Tribunal enhanced the amount of compensation payable to the as-sessee appellants. The powers of the CEGAT came up for examination before the Orissa High Court in the case of C.C. Ex. & Cus. v. Golden Hind Shipping (India) Pvt. Ltd. -1993 (68) E.L.T. 739 (Ori). The High Court examined whether the power to make such an order arose from the provisions of Section 129B(1) of the Customs Act which reads as under :- "129B. Orders of Appellate Tribunal (1) The Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passes such decision or order with such direction as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary." The Hon'ble High Court compared these powers with those vested in the Income Tax Appellate Tribunal vide Section 254 (1) which reads as under :- "The Appellate Tribunal may, after giving both the parties in the appeal an opportunity of being heard, pass such order thereon, as it thinks fit." 8. On comparing the two provisions, the Hon'ble High Court came to the conclusion that the powers vested in the ITAT were far wider than those vested in the CEGAT. In terms of the limited power, the High Court did not uphold the CEGAT order. In the judgment, in paragraph 20, the High Court examined the claim or contention that the CEGAT had inherent power to make orders as were made in the disputed order. The High Court's observations read as follows:- "The Tribunal has, however, referred to its inherent power in passing the impugned orders which, according to it, has been done to do complete justice. As to this, it may be pointed out that the Tribunal being a creature of statute can exercise such powers only which have been conferred by the statute. And what is the scope and ambit of the statutory power have been dealt above. It is only a court of plenary jurisdiction, which the Tribunal is not, which has inherent powers. Reference in this connection may be made with profit to Section 482, Cr.P.C. which speaks about the inherent powers of the High Court. It is well settled that what the High Court can do under Section 482 Cr.P.C. cannot be done even by a court of session, to bring home which is enough to state that though the High Court can quash a criminal proceeding in exercise of powers under Section 482, Cr.P.C. a Sessions Judge cannot. As to the award of the amount in question to do complete justice, it may be stated that the power to pass appropriate order to do complete justice inheres in the apex court of the country only, of which mention has been made in Article 142 of the Constitution. This power is not available even to High Courts, as pointed out recently by a Full Bench of this Court in Krishna Chandra v. Union of India - AIR 1992 Orissa 261 (see paragraphs 20 and 21). Because of these, we would state that the Tribunal could not have awarded the sum in ques-tion-in-original or revised - either in exercise of its inherent power or with a view to do complete justice between the parties." 9. We also find similar view expressed by the Allahabad High Court in the case of Prestige Engineering (India) Pvt. Ltd. v. U.O.I. -1991 (51) E.L.T. 255 (All.). The issue before the Hon'ble High Court was the same as is involved in the present proceedings viz. power of the Tribunal to grant interest. The High Court observed that the power to grant such interest vested in the High Court on equitable grounds. In examining the power of the Tribunal, the High Court in paragraph 9 of their judgment observed as under :- "The Act and the Rules made thereunder do not provide for payment of interest in case of refund of duty. We must presume that Parliament advisedly did not provide for the same, while enacting Section 11B in 1978. The fact that Section 243 and 244 of the Income-tax Act provide for payment of interest by the Government on tax refunded shows that where the Parliament wanted to provide for such interest, it did provide therefor expressly. The omission to provide for interest under this Act must, therefore, be held to be deliberate.
This legislative intention, in our opinion, is equally relevant in examining whether interest should be awarded on general principles of equity - of which more later. The authorities under the Act - it goes without saying - have to operate within the four corners of the Act and the Rules made thereunder (Of course, if any other enactment or Rule is made applicable by the Act - Rules - or if any other statutory provision applies proprio vigore to the proceedings under the Act, same have to be followed). Since the Act or the Rules do not provide for grant of any interest, the authorities under the Act, including the CEGAT, have no power to award interest. This position was not initially contested before us, though at a later stage of arguments the Counsel for the petitioner urged that even the authorities under the Act must be held to possess the power to award such interest. We cannot, however, agree with this proposition. The authorities under the Act are not Civil courts, nor is the proceeding for refund before them a suit. They have no inherent power to award interest. They have to act within the four corners of the Act and the Rules. In the absence of any guidance in the Act or Rules in that behalf, with respect to the period, rate and other matters, the matter cannot be left to the pleasure of the authorities. Accordingly, it must be held that the authorities under the Act have no power to award interest on any principle whatsoever.
The question is whether this Court in a writ petition should award such interest, more so in the light of - What we have called - the deliberate omission of Parliament to provide for such interest." 10. Even the writ jurisdiction of the High Courts on equitable grounds and their awarding of interest has come in for review by the Supreme Court in the case of U.O.I. v . Merck (India) -1998 (97) E.L.T. 218 (S.C.).
11. The combined reading of the judgments shows that for making orders directing payment of interest, the authority must arise from the statute. Tribunal is a creature of the statute. In the absence of specific delegation, the Tribunal is not vested with this authority.
12. When this view was so expressed, the ld. Counsels and Consultants relied heavily on Rules 40 & 41 of the CEGAT (Procedure) Rules, 1982.
The extract reads as under :- "Rule 40 - Control over departmental authorities in certain matters - The Tribunal shall exercise control over the departmental authorities in relation to all matters arising out of the exercise of the powers or of the discharge of the functions of the Tribunal.
" Rule 41 - Orders and directions in certain cases. - The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice." 13. Rule 40 would seem to subordinate the Revenue authorities to the jurisdiction of the Tribunal to the extent they are concerned with a particular appeal before the CEGAT. Rule 41 enables and requires the Tribunal to make such orders which are necessary or expedient to give effect to their orders made. Thus the shortfall arising out of the language of the Section 129B(1) of the Customs Act or Section 35 of the Central Excise Act would seem to have been bridged to an extent by this provisions in subordinate legislation. The authority for making this regulation rests in CEGAT itself in terms of the enabling provision in the 3 parent Acts viz. Customs Act, 1962, Central Excise Act, 1944 and the erstwhile Gold (Control) Act, 1968. We have referred to the Judgment in the case of Golden Hind Shipping where the High Court have held that Section 129B did not confer any inherent power upon the Tribunal. Therefore, such power cannot be derived from an offspring of that Section.
14. We have gone a little beyond the powers vested in CEGAT under the Customs Act and other allied Acts to assess whether any powers vest in us under any other Act. We have seen the provisions of Interest Act 1978. Section 2(a) of the said Act declares a Tribunal as the Court.
Section 3 empowers the court to allow interest to a person entitled to the debt or damages or to a person making such a claim. Sub-section 3 of the Section removes from the coverage of the Act the situation where there is an agreement between the parties. On this ground it would appear that the Supreme Court in their judgment in the case of Living Media India Ltd. v. U.O.I. -1998 (104) E.L.T. 3 (S.C.) observed that the provisions of the Interest Act did not apply to the same. However, on cursory reading of the Act, it is doubtful whether the Tribunal would be entitled to grant interest thereunder in terms of Section 2(c) of the Act. We have also seen certain case laws where a taxpayer who got the refund of tax wrongly paid was held as not eligible for claim of interest. Of course, these judgments are prior to the enactment of the present Act and their applicability to the present cases will also have to be examined.
15. Article 265 of the Constitution of India rules that no tax shall be levied or collected except by authority of law. Article 14 enshrines equality before the law as also equal protection of laws. Thus, the tax which wrongly computed and wrongly collected would need to be refunded without any delay by the tax collectors. The related provisions of the 2 Acts viz. Section 35L of the Central Excise Act, 1944 and Section 129 make the orders of the Tribunal as final subject to the appeals before the Supreme Court. In the eye of the finality of the orders and in terms of the Supreme Court judgment in the case of U.O.I. v. Kamlakshi finance Corpn. Ltd. -1991 (55) E.L.T. 433 (S.C.), it is necessary and mandatory for the Revenue Authorities to obey the judgments of the Tribunal including the judgments awarding refund. The CEGAT faces problem where such orders made by them are not honoured by the Revenue Authorities in spite of clear orders made either in the earlier orders or in the follow up orders. It is true that the powers vested under Rule 40 of the CEGAT (Procedure) Rules would enable the Tribunal to direct the Revenue to comply with their directions. Unfortunately, the Revenue Officers are always under the obligation and compulsion of earning additional revenue. These officers would rather give priority to this requirement than the obligation to follow the law. In that case, in the absence of any enforcement authority, the Tribunal even if it makes any specify direction is helpless in the face of lack of enforcement.
16. In view of the analysis made by us above and in view of the orders of the Two High Courts negating the ratio of the decisions given in a number of judgments by the Tribunal, we are unable to proceed with the disposal of the appeals and also the application. However, the issue is of paramount importance and needs to be settled at the earliest. We, therefore, request the Hon'ble President to constitute a Larger Bench and place the various issues brought out in our discussions above before the Larger Bench of the Tribunal for final disposal.
17. The Registry may transfer the papers to the Central Registry at Delhi.