P. Rajyalakshmi vs. The Addl. C.I.T. Range 6

HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU …

OWP No. 137/2011

Reserved on: 31.08.2023 Pronounced on:04.10.2023

M/S A. M. Industries, A proprietorship concern, Phase-II, SIDCO Industrial Complex, Bari Brahmana, Jammu, Through Proprietor Smt. Rashmi Singalb aged 40 years W/O Sh. Rakesh Singal R/O 183/1 Trikuta Nagar, Jammu.

……Petitioner(s)

Through: Mr. Manik Dutt, Advocate.

Vs.

…..Respondent(s)

Through: Mr. Jagpaul Singh, Advocate.

CORAM: HON’BLE MR JUSTICE SANJEEV KUMAR, JUDGE

HON’BLE MR JUSTICE RAHUL BHARTI, JUDGE.

JUDGEMENT Sanjeev Kumar-J

1 Though a short but an interesting question of seminal importance arises in this writ petition for determination:-

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“Whether an unspent amount lying in the current account (PLA) of an assessee is merely an advance amount for payment of excise duty or is actually or shall be deemed to be „Excise Duty‟ for the purpose of claim of refund and interest under Section 11B and 11BB of the Central Excise Act 1944 [ „the Act‟].” 2 Before we embark upon the discussion, we deem it appropriate to notice few facts as are germane to the decision of the question and disposal of the writ petition. Factual matrix: 3 The petitioner is a registered concern under the Act vide Registration No. AGLPS0219axm001. The petitioner is engaged in manufacture of coffee and tea premixes and was paying the central excise duty. However, the petitioner was availing exemption by way of refund of excise duty in terms of Notification No. 56/2002-CE dated 14.11.2002 as amended. 4 The said exemption notification had laid down a mechanism for availing the benefit of exemption by providing that the manufacturer shall first deposit the excise duty from available CENVAT Credit and in case thise remains some balance to be paid, the same shall be paid by debit from Current Account (PLA). After payment of duty as aforesaid, the manufacturer/assessee shall file refund claim and the same would be paid to it through cheque. 5 Indisputably, the excise duty on the subject goods manufactured by the petitioner came to be withdrawn with effect from 01-03-2008 and on this date, an amount of Rs. 75,01,664/- was lying in Current Account (PLA) of the assessee-petitioner.

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6 Since no amount was anymore required to be kept in the Current Account due to withdrawal of excise duty of the goods manufactured by the petitioner, as such the petitioner on 04.04.2008 had filed an application for refund of unspent amount lying in Current Account. 7 As is the stand of the revenue, the payment of unspent amount in PLA was subject to determination of previous self credit refund claims of the petitioner which were running in dispute. It was only on 06-05- 2010, the jurisdictional Commissioner determined the disputed self credit refund claims and as a result refund of unspent amount in PLA was sanctioned in favour of the petitioner vide order dated 27-07- 2010. 8 Since, admittedly, the refund was sanctioned beyond period of three months from the date of application, as such, the petitioner lodged a claim for payment of interest envisaged under Section 11BB of the Act. 9 The Assistant Commissioner Central Excise Division Jammu i.e. Respondent No.2, rejected the claim on the ground that the refund contemplated under Notification No. 56/2002-CE is not on account of excess payment of duty by the manufacturer but designed only to give effect to exemption. Relying on a decision of CESTAT Mumbai in the case of M/S Navdeep Packaging Industries vs. Commissioner of Central Excise, Ahmadabad-II, 2007 (210) E.L.T.417 (Tri. Mumbai), it was held by the respondent No.2 that unspent amount lying in Account Current (PLA) is not „duty‟ and refund thiseof is covered by Rule 9(1A) and 173G (1A) of the Central Excise Rules, 1944 [„the

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Rules‟], and that the provisions of Section 11B and Section 11BB are not applicable. 10 Feeling dissatisfied and aggrieved, the petitioner directly approached this Court invoking its extraordinary writ jurisdiction vested by Article 226 of the Constitution of India. 11 The respondents have taken the plea of an alternative remedy under the Act. We, however, are inclined to reject the plea of an exhaustion of alternate remedy for the reason that there are already judgments of various Tribunals in support of the view taken by respondent No.2 and the appeal, if any, filed by the petitioner is not likely to entail a different view on the subject. Having regard to the question raised and availability of view of the CESTAT, we have decided to entertain this petition, the availability of alternate remedy notwithstanding. 12 Heard learned counsel for the parties and perused the material on record. Submissions of learned counsel for the petitioner: 13 Short and crisp is the argument of learned counsel for the petitioner that unspent amount lying in PLA is in the nature of „advance duty‟ paid, which, of course, is liable to be appropriated towards actual duty payable at the time of removal of exciseable goods. He, thisefore, urges that unspent amount in PLA is nothing but excise duty paid in advance and, thus, its refund would be governed by Sections 11B and 11BB of the Act. 14 Attention of this Court is also invited to the proviso to Section 11B (2) to steer clear the stand of the respondents. Learned counsel urges us to

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take a holistic view of the matter and hold the petitioner entitled to interest under Section 11BB by declaring „unspent amount in PLA‟ as duty of excise for the purpose of refund under Section 11B of the Act. Submissions on behalf of the respondents: 15 Per contra, Mr. Jagpaul Singh, the learned counsel for the Revenue argues that the refund envisaged under Notification No. 56/2002-CE is not on account of any excess payment of duty by the manufacturer/assessee but is basically designed to operationalise exemption. He submits that unspent amount lying in Current Account (PLA) is an amount belonging to the manufacturer, kept in PLA only to pay the excise duty as and when due without any hassles. He vehemently urges this Court to draw a distinction between „the amount for payment of duty‟ and „the amount of duty actually paid‟ on the removal of excise goods from manufacturing unit. He submits that such amount lying in the PLA belongs to the manufacturer whise as „duty of excise‟ goes to the coffers of the Excise Department. He concludes his arguments by reiterating his submission that refund claim in respect of unspent amount in PLA was not covered under Section 11B and Section 11BB of the Act and, thisefore, respondent No.2 was perfectly justified to reject the claim of the petitioner for interest under Section 11BB of the Act. He places reliance on the following judgments:- (i) 2007 (210) E.L.T 417 M/S Navdeep Packaging Industries v. Commissioner of Central Excise, Ahmadabad-II, (CESTAT- Mumbai). (ii) Excise Appeal No. 60112/2022M/S Reckitt Benckiser Healthcare India v. Commissioner of Central Goods & Excise (CESTAT-Chandigarh)

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(iii) Excise Appeal No. 88127/2019 M/S Hariwansh Packing Products v. Commissioner of CGST & Central Excise (CESTAT-Mumbai). (iv) 2016(340) E.L.T.79 (P&H) Shreewood Products Pvt. Ltd. V. Commissioner of Central Excise.

Discussion and analysis:

16 Having given our thoughtful consideration, we deem it necessary to set out relevant provision of the Act (now repealed) to understand the scheme of levy, payment and refund of excise duty and also the significance and purpose of putting money in advance in Account Current to meet future demands of excise duty. 17 Levy and collection of excise duty is dealt with in Chapter II of the Act, Section 3 whiseof (relevant extract only) reads thus:- “3. Duty specified in the First Schedule to be levied—

(1) Thise shall be levied and collected in such manner as may be prescribed: (a) duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods [excluding goods produced or manufactured in specific economic zones] specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule;

Provided that the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred per cent export oriented undertaking and brought to any othis place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any othis law for the time being in force, on like goods produced or manufactured outside India if imported into India, and whise the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any othis provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 (51 of 1975). ...................................................................”.

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18 As is evident from bare reading of Section 3, in particular sub-section 1 thiseof, duty of excise is leviable on all excisable goods which are produced or manufactured in India in the manner prescribed and at the rates set forth in Fourth Schedule. It is, thus, crystal clear that event of levy and collection of duty of excise is the production and manufacture of the excisable goods though, as prescribed, the duty is actually paid by the manufacturer at the stage of removal of excisable goods from the manufacturing unit or production house as the case may be. Relevant extract of Rule 9 of the Central Excise Rules, 1944, [ „the Rules of 1944‟ for short] substantiates this position and is thus reproduced hiseunder:- “9. Time and manner of payment of duty :- (1) No excisable goods shall be removed from any place whise they are produced, cured or manufactured or any premises appurtenant thiseto, which may be specified by the Commissioner in this behalf, whethis for consumption, export or manufacture of any othis commodity in or outside such place, until the excise duty leviable thiseon is determined and indicated on each application in the proper form or on each gate pass, as the case may be, presented to the proper officer at such place and in such manner as is prescribed in these rules or as the Commissioner may require, and except on presentation of an application in the proper form and on obtaining the permission of the proper officer in the form;

Provided that such goods may be deposited without payment of duty in a store-room or othis place of storage approved by the Commissioner under rule 27 or rule 47 or in a warehouse appointed or registered under rule 140 or may be exported under bond as provided in rule 13:

Provided furthis that the molasses produced in a khandsari sugar factory may be removed without payment of duty leviable thiseon and the duty of excise leviable on such molasses shall be paid by the procurer, as if such molasses has been manufactured by such procurer, on the date of receipt of such molasses in his factory:

Provided also that the goods falling under Chapter 62 of the First Schedule to Central Excise Tariff Act, 1985 (5 of 1986) produced or manufactured by a job worker may be removed without payment of duty leviable thiseon and the duty of excise leviable on such goods shall be paid by the person referred to in rule 7AA, as if such goods have been produced or manufactured by him, on the date of removal of such goods from his premises registered under rule 174: .......................................................................................”

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19 From careful reading and understanding of the Rule, it clearly comes out that excise duty must be paid by manufacturer latest when he removes excisable goods from manufacturing or production Unit. It is, in this context, we need to examine and analyze Rule 173-F and 173-G, which for facility of reference is set out below:-. “173-F. Assessee to determine the duty due on the goods and to remove them on payment thiseof :- Whise the assessee has complied with the provisions of rules 173B,173D, and, whise applicable, 173C, he shall himself assess the duty due on the excisable goods intended to be removed and shall not, except as othiswise expressly provided in these rules, remove such goods unless he has paid the duty so determined.

173-G. Procedure to be followed by the assessee- (1) Every assessee shall keep an account current with the Collector separately for each excisable goods falling under different [Chapters of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) in such form and manner as the Collector may require, of the duties payable on the excisable goods and in particular such account ( and also the account in Form R.G.23, if the assessee is availing of the procedure prescribed in rule 173-K) shall be maintained in triplicate by using indelible pencil and double-sided carbon, and the assessee shall periodically make credit in such account current, by cash payment into the treasury, [so as to keep the balance, in such account current] sufficient to cover the duty due on duty determined by him for each consignment by debit to such account-current before removal of the goods: Provided that- (i) the duty due on the goods consumed within the factory in a continuous process may be so paid at the end of the factory day, except that in the case of cellulosic spun yarn and cotton yarn in respect of which duty is payable in accordance with provisions of Sub-rule (1) of rule 49A, the duty due may be paid by the manufacturer in accordance with the provisions of the said rule; (ii) the proper officer may allow an assessee, who removed more than 3,000 consignments in the previous calendar year, to make a consolidated debit in the account-current at the end of the day towards payment of the duty; (iia) the proper officer may allow an assessee who manufactures one or more of the declared excisable goods, irrespective of the number of consignments removed by him in the previous calendar year, to make consolidated debit in the account-current at the end of the day towards payment of duty; (iii) in respect of clearances of any excisable goods as samples in such small quantities as the Commissioner may approve in respect of any commodity and clearly marked as such on the invoice, the assessee may pay the duty on all such samples cleared during a month by a single debit to his account-current on the last working day of the month;

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(iv) the Collector may, in circumstances of an exceptional nature, by an order in writing, require an assessee or class of assessees manufacturing or warehousing goods to which provisions of Chapter VIIA have been made applicable, to determine the duty and debit the account-current in such manner as may be specified by him in such order. ..................................................................................................... ....................................................................................................." 20. As is manifestly clear from Rule 173F, an assessee is supposed to self determine his/its liability for the excise duty due on the excisable goods manufactured or produced by his/it and shall remove such goods only after paying the duty so determined. In short, the assessee is obliged to pay self determined duty of excise payable on the excisable goods manufactured by his/it and the stage of payment of such duty is the removal of such goods from the manufacturing premises. 21. So far as Rule 173-G is concerned, suffice it to point out that it is mandatory of each assessee to keep current account also called PLA (Personal Ledger Account) with Collector of Excise in respect of each excisable good in which an assessee shall periodically make credit by cash payment into the treasury so as to keep balance sufficient to cover the duty due on the goods intended to be removed. 22 Each time, an assessee removes a consignment of excisable goods, he shall pay the duty as self determined by his in terms of Rule 173-F by debit to such current account (PLA). The amount lying in the current account is meant to be utilized only for payment of duty so as to enable the assessee to remove excisable goods in a hassle free process. He may not be required to deposit excise duty in bank to get a challan each time he has to remove a consignment of excisable goods.

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23 As we find further from clause (1-A) of the Rule, the amount lying in PLA is subject to the control and under the dominion of Collector and shall be released in favour of the assessee only on an application moved by him and after recording reasons for permitting withdrawal requested by the assessee. Such is the nature of the current account where the amount lying belongs to the assessee but control and dominion is exercised by the Collector. 24 Viewed thus, it becomes abundantly clear that amount credited into the current account (PLA) by an assessee is, in a way, prospective excise duty to be utilized by the assessee at the stage of removal of excisable goods from his manufacturing unit from time to time. 25 Contextually, when we appreciate the controversy in the light of the discussion made above, it becomes clear to us that the unspent amount lying in the current account (PLA) of the assessee is „duty of excise‟ for the purpose of Section 11B and Section 11BB of the Act. To appreciate the issue better, we reproduce Section 11B and Section 11BB hiseunder:-

“11B. Claim for refund of 2 [duty and interest, if any, paid on such duty.— (1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of [one year] from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or othis evidence (including the documents referred to in Section 12-A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty and interest, if any, paid on such duty] had not been passed on by him to any othis person:

Provided that whise an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub- section (2) as substituted by that Act:

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Provided furthis that the limitation of [one year] shall not apply whise any [duty and interest, if any, paid on such duty] has been paid under protest. If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:

Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to— (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Commissioner of Central Excise (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the [duty of excise and interest, if any paid on such duty] paid by the manufacturer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty] to any othis person; (e) the [duty of excise and interest, if any paid on such duty] borne by the buyer, if he had not passed on the incidence of such [duty and interest, if any, paid on such duty] to any othis person; (f) the [duty of excise and interest, if any paid on such duty] borne by any othis such class of applicants as the Central Government may, by notification in the Official Gazette, specify: Provided furthis that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of [duty and interest, if any, paid on such duty] has not been passed on by the persons concerned to any othis person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any othis provision of this Act or the rules made thiseunder or any othis law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) Every notification under clause (f) of the first proviso to sub- section (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting, within seven days of its reassembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thiseafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thiseunder. (5) For the removal of doubts, it is hiseby declared that any notification issued under clause (f) of the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette.

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11BB. Interest on delayed refunds.— If any duty ordered to be refunded under sub-section (2) of Section 11-B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, thise shall be paid to that applicant interest at such rate, [not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed [by the Central Government, by notification in the Official Gazette,] on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty: Provided that whise any duty ordered to be refunded under sub-section (2) of Section 11-B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, thise shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.”

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Section 11B read with Rule 173G, both reproduced above. Such refund in terms of proviso to Section 11B (2) is required to be made by tendering payment directly to the applicant-assessee. 29. The judgments relied upon by learned counsel for the Revenue are all passed by CESTAT, without adverting to and considering the provisions of proviso to Section 11B (2). The view we have taken is fortified by the judgment of Supreme Court in Commissioner of Income Tax-II vs. Modipon Limited, (2018) 13 SCC 426. 30 In the above matter, the issue before the Apex Court was, “whether an asseessee is entitled to claim deduction under S.43-B of the Income Tax Act 1961 in respect of excise duty paid in advance in the personal ledger account ( „PLA‟ for short). 31. Before we look for the answer given in the judgment, we would like to extract Section 43-B of the Income Tax Act, 1961: 43B. Certain deductions to be only on actual payment.— Notwithstanding anything contained in any othis provision of this Act, a deduction othiswise allowable under this Act in respect of— (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any othis fund for the welfare of employees, (c) any sum referred to in clause (ii) of sub-section (1) of section 36. (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution 6 [or a State financial corporation or a State industrial investment corporation], in accordance with the terms and conditions of the agreement (e) any sum payable by the assessee as interest on any 9 [loan or advances] from a scheduled bank 10[or a co-operative bank othis than a primary agricultural credit society or a primary co-operative agricultural and rural development bank] in accordance with the terms and conditions of the agreement governing 11[such loan or advances], 12[or] 12[ (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his 13[employee, or]] 14[ (g) any sum payable by the assessee to the Indian Railways for the use of railway assets,] 1. 243 shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year

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in which such sum is actually paid by him: 1 [Provided that nothing contained in this section shall apply in relation to any sum 2 *** which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in whichthe liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. Explanation [1].—For the removal of doubts, it is hiseby declared that whise a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him:] [Explanation 2.—For the purposes of clause (a), as in force at all material times, “any sum payable” means a sum for which the assessee incurred liability in the previous year even though such sum might not have been payable within that year under the relevant law.]

“14. In the present case, the assessee had no option, but to keep the account, in respect of each excisable product (evident from the mandate in Rule 173G that it "shall keep an account current"). The latter part of the main rule makes it clear beyond any doubt that the assessee has no choice in the obligation, and cannot remove the goods manufactured by it, unless sufficient amounts are kept in credit:

...and the assessee shall periodically made credit in such account- current, by cash payment into the treasury, so as to keep the balances, in such account-current sufficient to cover the duly due on the goods intended to be removed at any time, and every such

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assessee shall pay the duty determined by him for consignment by debit to such account-current before removal of the goods The revenue's contention that the amounts in credit also relate to goods not manufactured, and thisefore not relatable to any "liability incurred" is, in the opinion of this Court, without any basis. The arrangement prescribed by the rule is both a collection mechanism - dictated by convenience, as well as mandatory. It is convenient, for the reason that if the assessee were to be asked to pay the exact amount, through some othis method, by deposit, as a precondition for clearance, that would have been cumbersome to it as well as the revenue; it would also have led to problems of storage of goods, and slow down their supply and distribution. The Rule makers pragmatically directed that "sufficient" amounts ought to be maintained in the account, to cover the removals. Thisefore, at any given point of time, thise had to be an excess in the account, if the assessee were to remove the goods. Each clearance mentions the quantum of goods, and the duty amount, which is apparently reconciled at the end of the period, and shortfalls if any are appropriated from the account. The excess credit is likewise adjusted for the next day's clearances. The point to be underlined is that thise is no choice, and the amounts relate to the assessee's duty liability, falling within the description under Section 43B. The consequence of not allowing the amounts as deductions, are vividly brought out in the decision of the Allahabad High Court in C.L. Gupta (supra), whise it was held that: 10. In the case in hand, admittedly, the amount of customs duty of Rs. 3,56,451 was paid by the assessee in March, 1987, and, thisefore, in terms of Section 43B it is deductible only in the year in which it is actually paid, i.e., for the assessment year 1987-88, irrespective of the year in which the assessee incurred the liability on the basis of the method of accounting regularly adopted by him and, thisefore, in view of the clear provisions of law, the deduction cannot be allowed in the assessment year 1988-89. In our view, both the learned Income Tax Appellate Tribunal as well as the Commissioner of Income Tax (Appeals) fell in error in holding that since the assessee-firm debited the cost of goods imported including the duty paid on delivery of goods in the trading account in April, 1987, and before the actual delivery of the goods, the value of the goods and customs duty paid thiseon was shown in the balance-sheet as document in hands, thisefore, the deduction should be allowed in the assessment year 1988-89, is contrary to the prescription of law. Section 43B in clear terms provides that the deduction claimed by the assessee in respect of any sum paid by way of tax, duty, cess or fee, shall be allowed only in computing the income referred to in Section 28 of that previous year in which it was actually paid, irrespective of the previous year in which the liability was incurred for the payment of such sum as per the method of accounting regularly employed by the assessee. For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction under Section 43B of the Act. In this view of the matter, the appeal deserves to be allowed.

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As a result of the above discussion, the first question is answered in favour of the assessee, and against the revenue.

(underlined by me)

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manufactured or produced excisable goods from the manufacturing or production unit. 36 When we clearly understand the raison d‟etre for mandatory keeping of current account with the Collector in the manner it has been explained by Delhi High Court and Hon‟ble Supreme Court in cases (supra), we are left with no manner of doubt that the money lying in the current account (PLA) represents duty qua the excisable goods manufactured by an assessee and the said amount is to be actually paid by an assessee by debit to PLA on removal of each consignment of goods from his/its unit. It is, because of such understanding, the legislature has provided, by engrafting proviso to Section 11B(2) of the Act, that such amount of duty excise which is relatable to the unspent amount in PLA is to be paid to the asseessee. In such a matter, thise would be no question of passing on of the duty to the consumer that may attract the doctrine of unjust enrichment. We hope that we have unequivocally answered the question formulated. 37. Once we hold that the unspent amount in „PLA‟ is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid.. 38. The judgments relied upon by Mr. Jagpaul are contrary to the view taken by Hon‟ble the Supreme Court in Modipon case (supra). CESTAT Benches in the cases relied upon have not adverted to proviso to Section 11B(2) and the Rule 174-G have erroneously come to a conclusion that unspent amount lying in PLA is money belonging to assessee kept in

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advance for payment of „duty of excise‟ and not the „excise duty‟ actually paid and, thisefore, outside the preview of Section 11B. 39. We also see no good reason to subscribe to the view that current account was created to give effect to exemption under Notification No. 56/2002-CE. The Notification only provided incentive to the manufacturing units set up in the specified areas by providing refund of excise duty actually paid on clearance/removal of excisable goods from their industrial units and was not intended to supplant the provisions of Excise Act and Rules framed there under. The plea that unspent amount lying in PLA was payable subject to determination by competent authority, which took almost two years to do so, is also without substance. When Section 11B gives three months time to make refund, any time spent beyond three months is at the peril of the Revenue and has to be accounted for. Conclusion: 40. For the foregoing discussion and reasons assigned hereinabove, we allow this writ petition and direct the respondents to pay to the petitioner interest at the rate of 6% per annum from the date of application till the order of refund within a period of two months from today.

( Rahul Bharti) (Sanjeev Kumar) Judge Judge JAMMU: 04.10.2023 Anil Raina, Addl. Registrar/Secy

Whether the order is reportable: Yes