1. The present appeal of the Revenue is against order dated 27-2-2006 passed by the ld. Commissioner (Appeals) raising only one question that whether interest recovered from the assessee which was not recoverable in terms of order dated 28-1-2005 as held (sic)(by the) ld.Commissioner (Appeals) in Appeal case No. V(2) 24/Appeal/BBSR-I/04 when refundable shall meet scrutiny of Section 11B of the Central Excise Act, 1944. According to the Revenue, the ld. Commissioner (Appeals) has erred to direct refund of the balance interest amount of Rs. 3,65,394/- which was part of the total earlier interest amount of Rs. 4,32,789/- and refund of such amount is covered by limitation as well as inadmissibility. Therefore Revenue's appeal be allowed reversing the first appellate order.
2. The ld. Counsel appearing for the Respondent submitted that although neither appeal nor Cross-Objection was filed by the Respondent he has right to assail Revenue's Appeal on the principal ground that there was total disregard by Revenue to the appellate order dated 28-1-2005 and without appeal by Revenue against that order, they have denied Respondent's right to refund which is confiscatory in nature. According to him, the order dated 26-8-2003 levying interest amount of Rs. 4,32,789/- was reversed in appeal by the ld. Commissioner (Appeals) in appeal case No. C No.-V (2)/24/Appeal/BBSR-I/04 on 28-1-2005 categorically holding that interest was not required to be paid by the present Respondent. The operative part of the appellate order read as under: Accordingly, I hold that the contention of the lower authority is not maintainable and interest is not required to be paid by the appellant in the instant case. Since the interest is not warranted, the dispute with regard to the period of calculation of interest needs no collaboration. However, the amount of interest paid by the appellant is refundable subject to the provisions of Section 11B of the Central Excise Act, 1944.
3. On the above premises the first appellate order dated 28-1-2005 neither challenged by Revenue in any appeal nor such order was stayed by any forum for which that was reached finality and doctrine of judicial sanctity cannot be disturbed. Therefore he submitted that because order of the ld. first appellate authority was not acceptable to Revenue, they should not have come out with a further order dated 30-5-2005 denying refund of part of the interest to the tune of Rs. 3,65,394/- while they virtually agreed to refund Rs. 67,395/- when nothing was payable in terms of order dated 28-1-2005 and such an action of Revenue is totally in contravention of the law of land laid down in Kamalakshi Finance Corporation limited case reported in 1991 (55) E.L.T. 433 (S.C.) and Para 6 of the said judgment reads as under: 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual main fides but with the fact that the officers, in reaching their conclusion, bypassed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collector and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.
4. It was further submitted by the ld. Counsel for the Respondent that when no interest was at all payable, the question of limitation does not arise and this being the settled position by order dated 28-1-2005 by the ld. Commissioner (Appeals). Revenue should by no stretch of imagination unsettle the settled position in terms of order dated 30-5-2005. There should have been no controversy as to the refund of the unrealisable interest and they should have acted fairly without any hesitation. He further submitted that failure to carry out order of the ld. Commissioner (Appeals) which was passed on 28-1-2005 has compelled by him to approach the ld. first appellate authority again in appeal case No. C. No. V(2)/XAP-88/BBSR-I/05 which was disposed on 27-2-2006 directing refund of the unrealisable interest amount in compliance to the earlier first appellate direction. Also he submitted that when the Department does not dispute refund of Rs. 67,395/- which was an integral part of the entire refund of Rs. 4,32,789/-, then the act of sitting over judgment of appellate authority by a subordinate would be tyranny. Therefore the whole order passed on 30-5-2005 by the ld.Assistant Commissioner was misconceived and was in fragrant violation of law as well as earlier direction dated 28-1-2005. Further, order dated 30-1-2005 demonstrates that the ld. Assistant Commissioner has sat over the appellate authority to replace appellate decision by his own decision when the interest was not at all required to be collected from the Respondent and such high headedness should be brought to an end without allowing that to prevail because innocent public shall be the worst sufferer for the mischief of such Authority and that should be deterred to secure end of justice.
5. Perusal of the record reveals that entire submission of the ld.Counsel for the Respondent has substance while the ld. DR was fair enough to submit that the matter how the litigation developed and ended was only before him without any further description to his defence. It is categorically clear from entire record that when nothing was liability of the assessee towards interest amounting Rs. 4,32,789/- as held by the ld. Commissioner (Appeals) by order dated 28-1-2005, there should not have been disregard to the appellate direction when Revenue did not seek appeal against that appellate order. Furthermore, when part of the amount i.e. Rs. 67,395/- was refunded out of the total interest of Rs. 4,32,789/- which was not at all collectible from the assessee, withholding of Rs. 3,65,394/- was uncalled for. In such circumstances, without dilating the matter further, following the ratio laid down by Apex Court in the case of Commissioner of Central Excise, Mumbai v. Bigen Industries Limited reported in 2006 (197) E.L.T 305 (S.C.) and Kamalakshi Finance as aforesaid, it can be ordered that the directions made by the ld. Commissioner (Appeals) on 28-1-2005 should be carried out forthwith and also the appellate direction made on 27-2-2006 by the selfsame authority be complied with utmost regard.
Consequently, Revenue's appeal fails and is dismissed and the first appellate order dated 27-2-2006 is upheld.