2017 (9) TMI 1376 - HC - Central Excise

Entitlement of interest - delayed refund of Excise duty - Section 35FF of the Central Excise Act, 1944 - Held that - A composite reading of unamended Section 35FF and amended Section 35FF of the Act reveals that in respect of an amount deposited prior to the commencement of the Finance Act No. 25 of 2014, interest on the refunded amount is payable only if it is not refunded within three months of the communication of the order of the appellate authority entitling the refund and that too after the expiry of three months of the communication of the order. In the present case, the amount was deposited on 24.04.2014 and 28.04.2014, the appeal entitling the refund was allowed on 03.08.2016 and the refund was actually made on 28.11.2016 - All the aforesaid dates are earlier to 06.08.2016, the date of enforcement of Finance Act No. 25 of 2014. Thus, in view of the proviso to the amended Section 35FF of the Act, the payment of interest to the petitioner would be governed by the unamended Section 35FF of the Act. The application for refund was moved by the petitioner on 05.09.2016 and therefore, in the absence of any date of communication of the order, the date of the application would be recognized as the date of communication of the appellate order. There is no merit in this petition to direct for payment of any interest on the amount refunded in the absence of any specific provision providing for payment of interest for the entire period, the amount had remained in custody of the Revenue - petition dismissed - decided against petitioner.

Issues:
1. Entitlement to interest on excise duty refunded.
2. Interpretation of Section 35FF of the Central Excise Act, 1944.
3. Applicability of interest payment provisions pre and post amendment.
4. Claim for interest on the refunded amount.
5. Consideration of legal precedents on interest payment.
6. Calculation of the period for refunding the amount.
7. Finality of the order on refund without interest.

Analysis:
1. The petitioner sought direction for interest on the excise duty refunded by the Assistant Commissioner. The duty was deposited following interim orders, and the appeal was allowed later, entitling the refund. The petitioner claimed interest under the amended Section 35FF of the Act.

2. Section 35FF provides for interest on delayed refunds. The amended provision post-Finance Act No. 25 of 2014 allows interest on the refunded amount for the entire period it remained deposited. However, a proviso states that pre-amendment deposits are governed by the unamended provision, requiring interest only if not refunded within three months of the appellate order.

3. The dates of deposit, appeal allowance, and refund in this case fall before the amendment, making the unamended Section 35FF applicable. Therefore, interest, if payable, would be for the period post three months from the communication of the appellate order.

4. The petitioner argued for interest despite the absence of an express provision. Citing a previous case, it was contended that interest is due when an amount is wrongly detained and refunded. However, in this instance, the deposit was made following tribunal orders, not due to any unauthorized collection.

5. Legal precedents highlight that interest is payable as compensation for delays in refunds. In this case, as the refund was processed within three months of the appellate order, no undue delay was observed, negating the need for interest payment.

6. The computation of the three-month refund period is crucial, starting from the date of communication of the appellate order. In the absence of this date, the application date was considered as the communication date.

7. The final order on refund without interest was accepted by the petitioner without objection or appeal. As the order became final and unchallenged, no further relief, including interest payment, was deemed necessary in the absence of a specific provision mandating interest for the custody period.

In conclusion, the writ petition was dismissed as no merit was found in directing interest payment on the refunded amount due to the absence of a specific provision for such payment for the custody period under the Central Excise Act.

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