2018 (1) TMI 424 - AT - Service Tax

Entitlement of interest - interest on the amount of refund of pre-deposit debited through cenvat account - interpretation of statute - Held that - statute itself provides for an interest on refund of an amount deposited in furtherance of Sec. 36F consequent on the order of the Appellate Authority from the date of payment of the amount till the date of refund of such amount. The said Section does not differentiate between the deposits made in cash or by debit in cenvat account - denial of interest to appellant under Section 35FF for only for the reason that there is no loss that has occurred to appellants which needs compensation is unsustainable findings - It is settled law that Section of the statute needs to be interpreted as they are. Interest has to be paid to the appellant as per Sec. 35FF of the CEA, 1944 - appeal allowed.

Summary

Issues:
Denial of interest on the amount of refund of pre-deposit debited through cenvat account.

Analysis:
The appeal was directed against a specific order dated 31/03/2015. The issue in question revolved around the denial of interest on the refund of a pre-deposit amount debited through the cenvat account. The appellants had filed a refund claim for a pre-deposit amount of ?2,19,233. The Additional Commissioner of Service Tax confirmed an amount of ?29,23,113, which was later set aside by the Commissioner (Appeals), leading to a remand of the case for fresh consideration. During this period, the appellants filed a refund claim for the pre-deposit amount, which was deposited while filing the appeal. The adjudicating authority sanctioned the refund but denied the claim for interest, citing the absence of a provision for interest on debits made in the cenvat account.

The First Appellate Authority rejected the appeal for interest on the credited amount, relying on a Tribunal Circular to clarify the definition of a deposit for appeal purposes and asserting that the appellant would not be disadvantaged by the lack of interest. However, the Member (Judicial) noted that the First Appellate Authority failed to appreciate Section 35FF of the Central Excise Act, 1944, which mandates interest on delayed refunds of amounts deposited under Section 35F. The Section specifies that interest is payable on the refund amount from the date of payment till the date of refund, without differentiation between cash deposits and cenvat account debits. The Member emphasized that the statute's language is clear and unambiguous, and the denial of interest based on the absence of loss to the appellants was unsustainable.

The Member further highlighted that the reliance on a previous case by the First Appellate Authority was misplaced as the legal question addressed in that case differed from the issue at hand. Ultimately, the Member concluded that interest must be paid to the appellant as per Section 35FF of the Central Excise Act, 1944. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the need to interpret statutory provisions as they are written. The judgment was pronounced on 9.11.2017.