2016 (3) TMI 1134 - AT - Central Excise

Entitlement of interest on delayed refund - Held that - I find that in the subsequent decision in the case of I.T.C. Bhadrachalam 2015 (8) TMI 534 - SUPREME COURT the Honourable Supreme Court have held that where duty is paid under protest, the interest has to be paid from the date of payment, to the date of grant of refund. Following the same I allow the appeal with a direction to the adjudicating authority to grant interest from the date of payment to the date of grant of refund, within a period of 60 (sixty) days from the date of receipt of a copy of this order - appeal allowed - decided in favor of assessee.

Summary

Issues Involved:
1. Reversal of Cenvat credit on inputs in stock.
2. Denial of interest on refund of duty paid under protest.

Issue 1: Reversal of Cenvat credit on inputs in stock:
The appellant, engaged in manufacturing Welding Electrodes, availed benefits under Notification No. 08/2003-CE and Cenvat credit on inputs, input services, and capital goods. The Revenue demanded reversal of unutilized Cenvat credit when the appellant started availing full exemption in the new financial year. Despite the appellant's protest, they reversed the credit under pressure. A show cause notice was issued, disallowing the credit, imposing interest, and penalty under CCR. The Order-in-Original was contested, with the joint Commissioner disallowing the credit and imposing penalties. The Commissioner (Appeals) confirmed the demand with interest but reduced the penalty. The Tribunal allowed the appeal, holding that the appellant was not required to reverse the Cenvat credit balance on availment of exemption in the new financial year.

Issue 2: Denial of interest on refund of duty paid under protest:
The appellant filed for a refund of duty paid under protest, following a recent decision in a similar case where interest was granted on refund. The appellant argued that interest should be granted from the date of payment to the date of refund. The Revenue cited a High Court case stating interest is payable only after three months from the date of application for refund. The Tribunal, following the Supreme Court's decision in a similar case, held that interest should be paid from the date of payment to the date of grant of refund. The appeals were allowed with a direction to grant interest within 60 days from the date of the order.

This judgment addresses the issues of reversal of Cenvat credit on inputs in stock and the denial of interest on the refund of duty paid under protest. It clarifies the applicability of Cenvat credit rules and the entitlement to interest on refunds in cases of duty paid under protest, providing a detailed analysis of relevant legal precedents and decisions.