2011 (1) TMI 675 - AT - Central Excise

Interest on Refund - Section 11BB of the Central Excise Act - the rate of interest notified by the Central Government under Section 11BB of the Act is @ 6% p.a. vide Notification No. 67/2003-C.E. (N.T.), dated 12-9-2003. The Commissioner is liable to pay interest only at this rate to the party.

Summary

Issues:
1. Modification of order directing return of pre-deposit amount with interest.
2. Applicability of Section 35FF of the Central Excise Act.
3. Determination of the rate of interest on pre-deposit amount.

Analysis:
1. The Revenue filed an application seeking modification of the order directing the Commissioner to return the pre-deposit amount to the respondent with interest. The Revenue argued that interest should be calculated from the date after three months from the 'date of receipt of the remand order' by the Commissioner, not from the 'date of the remand order' itself. It was contended that the Tribunal cannot determine interest rates beyond statutory provisions. The Tribunal, after considering the submissions, agreed to modify the rate of interest. However, it found that the objection regarding the date of receipt of the remand order by the Commissioner was not raised earlier and thus could not be considered. The Tribunal concluded that the rate of interest prescribed by the Central Government under Section 11BB of the Act at 6% p.a. should be applied, and the Commissioner is liable to pay interest at this rate to the party.

2. The appellant argued that Section 35FF of the Central Excise Act, referred to in the application, came into force on 10-5-2008 and cannot be applied retroactively to their case, as the remand order was passed earlier. The Tribunal agreed with this argument, stating that Section 35FF could not be made applicable to the instant case due to the timeline of events. It was clarified that Section 11BB, which governs the payment of interest, is indeed applicable to cases of return of deposits made under Section 35F, contrary to the appellant's claim. The Tribunal upheld that the rate of interest specified under Section 11BB, set at 6% p.a. by the Central Government, must be followed in this scenario.

3. The Tribunal ultimately disposed of the application with a limited modification of the original order, adjusting the rate of interest to be paid on the pre-deposit amount by the Commissioner to 6% p.a. as prescribed under Section 11BB of the Central Excise Act. The decision clarified the applicability of statutory provisions and rejected the appellant's arguments regarding the retroactive application of Section 35FF, emphasizing the importance of adhering to the prescribed interest rate set by the Central Government in such cases.