2008 (7) TMI 727 - AT - Central Excise

Summary

Issues: Appeal against direction to pay interest on pre-deposited amount refunded.

The judgment pertains to an appeal by the Revenue against the Appellate Commissioner's direction to pay interest on the amount refunded to the respondents. The respondents had made a pre-deposit during investigations, which led to the issuance of a show-cause notice. The dispute was eventually resolved in favor of the party by the Tribunal. The party then filed a refund claim, which was initially partially rejected as time-barred. However, on appeal, the balance refund was granted by the Commissioner (Appeals). Subsequently, the party claimed interest for the delay in refunds, which was initially rejected but later allowed by the Commissioner (Appeals) at a rate of 12% per annum. The present appeal challenges the direction for payment of interest.

Analysis: The Tribunal considered the Larger Bench decision in Sheela Foam Pvt. Ltd. v. Commissioner of Central Excise, Noida, where interest on pre-deposits was ordered to be paid at 12% from the date of expiry of 3 months from the Tribunal's final order. The Tribunal also noted the Apex Court's order in Commissioner of Central Excise, Hyderabad v. I.T.C Ltd., which directed payment of interest at 12% from the date of expiry of 3 months after the final disposal of the dispute. The Board's Circular No. 802/35/2004-CX emphasized the obligation to return pre-deposits within 3 months of the relevant order and to pay interest in case of delayed refunds. In light of these precedents and circular, the Tribunal upheld the lower appellate authority's decision to pay interest and dismissed the appeal.

This judgment underscores the importance of timely refund of pre-deposited amounts and the obligation to pay interest in case of delays, as established by legal precedents and circulars.