2010 (8) TMI 341 - HC - Central Excise

Interest - on the National Saving Certificates by way of security for holding L5 licence - Excise authorities can grant interest only in accordance with the provisions of the Central Excise Act - appellant was entitled to interest from the date of recovery of excise duty till the date of refund has not been considered by the Tribunal Tribunal directed to consider the case of the appellant for grant of interest from the date of recovery

Summary

Issues:
Claim for interest on National Saving Certificates withheld by excise authorities.

Analysis:
The appellant provided National Saving Certificates as security for an L5 license, which were not released by the excise authorities even after the L5 license was abolished. The certificates were encashed in 2000 to recover excise dues, but the appellant sought a refund with interest from the date of maturity. The Assessing Officer allowed the refund but denied interest, stating that withholding the certificates did not amount to recovering excise duty. The CESTAT upheld this decision, leading to the current appeal.

The appellant argued that the excise authorities wrongfully withheld the certificates and should pay interest. They cited relevant judgments to support their claim for interest from the date of maturity. However, the Court found no merit in this argument. The Court agreed with the Tribunal that withholding the certificates did not equate to recovering excise duty, hence no interest was due for that period.

The Court noted that the certificates were encashed to realize the demand against the appellant, and the refund was granted without interest. The Court clarified that if any interest were to be paid, it would be from the date of recovery, not before. The Court emphasized that interest can only be granted as per the provisions of the Central Excise Act, which were not considered by the Tribunal in this case.

The Court found the cited judgments by the appellant irrelevant to the present case as they did not address the grant of interest under the Central Excise Act. Consequently, the Court set aside the CESTAT's decision and directed them to reconsider the appellant's case for interest from the date of recovery till the refund, in accordance with the law. The appeal was disposed of accordingly.