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2017 (5) TMI 34 - AT - Central ExcisePre-deposit - Entitlement to interest - delayed payment of refund - case of Revenue is that the assessee is not entitled for the interest as it is not a pre deposit as per Section 35F of the Act and it is pre deposit in terms of Section 35(N) of the Act - whether the assessee is required to file an application for refund claim to the order of Hon ble Apex Court on 11.12.1996 or not? - Held that - In terms of the CBEC Circular 8/12/2004, the assessee is not required to file any application for refund - decided in favor of assessee. Whether the amount paid by the assessee under Section 35 (N) of the Act is a pre deposit or not? - Held that - the amount of pre deposit paid by the assessee under Section 35N is equivalent to the amount paid under Section 35 (F) of the Act and the same is to be treated as pre-deposit accordingly - decided in favor of assessee. Whether the assessee is entitled to claim interest after three months from the date of the order of the Hon ble Apex Court dated 11.12.1996 till its realization or not? - Held that - This issue has been considered by the Hon ble High Court in the case of Madura Coats Ltd. 2012 (7) TMI 512 - CALCUTTA HIGH COURT and held that although the provisions of Rule 35 (FF) of the Act are not in the statute book during the relevant time but the same are applicable for interest for delayed refund - the assessee is entitled for interest after three months from the date of 11.12.1996 till the amount of refund is realised - decided in favor of assessee. Appeal allowed - decided in favor of assessee.
Issues:
1. Whether the assessee is required to file the application for refund claim consequent to the order of the Hon'ble Apex Court dated 11.12.1996? 2. Whether the amount paid by the assessee under Section 35(N) of the Act is a pre-deposit or not? 3. Whether the assessee is entitled to claim interest after three months from the date of the order of the Hon'ble Apex Court dated 11.12.1996 till its realization? Analysis: Issue No. 1: The CBEC Circular No.802/35/2004-CX dated 08.12.2004 clarifies that the pre-deposit amount must be refunded within three months from the date of the order passed by the Appellate Tribunal or Court, without the need for a separate refund application. As there was no stay on the order dated 11.12.1996 by the Hon'ble Apex Court, the assessee was not required to file a refund application, as per the circular. Therefore, the issue is decided in favor of the assessee. Issue No. 2: The High Court held that any pre-deposit made during the pendency of an appeal is to be treated as a pre-deposit under Section 129E of the Act, equivalent to a pre-deposit under Section 35(F) of the Act. The amount paid by the assessee under Section 35(N) is considered a pre-deposit and treated accordingly. The Revenue's objection to this issue was dismissed, and it was ruled in favor of the assessee. Issue No. 3: The assessee is entitled to claim interest after three months from the date of the order of the Hon'ble Apex Court dated 11.12.1996 till the realization of the refund amount. The CBEC Circular clarified that interest is payable if there is a delay in refund after three months from the order of the Appellate Court. The decision of the Hon'ble High Court in a similar case supported the entitlement of interest at a specified rate. The provisions of Rule 35(F) were found applicable for interest on delayed refunds, even though they were not in the statute book at the relevant time. Therefore, the assessee is entitled to interest at a specified rate until the refund amount is realized, as per the decision of the Hon'ble High Court. The appeal by the assessee was allowed, and the appeal by the Revenue was dismissed.
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