2018 (1) TMI 303 - AT - Central Excise

Interest on delayed refund - interest to be paid in net value or otherwise? - Held that - The appellants would be rightly entitled to the interest on the entire amount of ₹ 2 crore - The adjustment if any of redemption fine and confirmation demand can be done only after calculating and granting interest on the entire value of ₹ 2 crores - appeal allowed.

Summary

Issues:
Denial of interest on refund sanctioned to Tien Yuan India P. Ltd.

Analysis:
The appeal was filed by Tien Yuan India P. Ltd. against the denial of interest on a refund sanctioned to them. The appellants had deposited ?2 crores during an investigation related to the availment of cenvat credit. A demand of ?22,13,22,732/- was confirmed by the Commissioner, out of which ?2 crores were appropriated towards confirmation of cenvat credit. The Tribunal confirmed a demand of ?3,93,778,240/- against the appellants' unit in Jammu but set aside the demand of ?22,13,22,732/-. The Tribunal also confirmed certain amounts against the appellants and upheld the confiscation of goods and imposition of redemption fine. The appellants filed a refund of ?2 crores along with interest, but the revenue ordered a refund of the net amount after adjusting the demand confirmation and redemption fine. The interest was paid only on the net amount sanctioned, not on the full ?2 crores. The appellants sought interest on the entire ?2 crores and challenged the grant of interest only on the net value after adjustments. The High Court directed that interest should be granted on the entire ?2 crores. The Tribunal, after considering the submissions, held that the appellants were entitled to interest on the entire amount of ?2 crores from 04.01.2007 onwards till 27.04.2015, as per the High Court order. The adjustment of redemption fine and confirmation demand could only be done after calculating and granting interest on the full ?2 crores. Consequently, the appeal was allowed.

This judgment highlights the importance of granting interest on the full amount of refund sanctioned, as directed by the High Court. It clarifies that interest should be calculated on the entire sum deposited by the appellants, and adjustments can be made only after interest on the full amount is granted. The Tribunal's decision emphasizes adherence to the High Court's order and ensuring that the appellants receive their entitled interest on the entire refund amount.