2018 (3) TMI 1236 - AT - Central Excise

Refund of interest - interest paid for the intervening period - Compounded Levy Scheme - Held that - As the appellant was not required to pay duty, therefore, demand of interest for the intervening period does not arise - whatever interest paid by the appellant during the intervening period is to be refunded to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of interest paid by the appellants denied - Duty payment under Compounded Levy Scheme - Appellant's obligation to pay duty on 5th day of the following month - Challenge before Hon’ble Delhi High Court - Entitlement to refund of interest.

Analysis:
The appellants appealed against the denial of refund of interest paid, which was imposed due to their duty payment obligations under the Compounded Levy Scheme. The issue revolved around the timing of duty payment, specifically whether it should be paid on the 5th day of the month in which the machine is in operation or installed later. The Revenue contended that duty should be paid at the beginning of the month, leading to interest payments by the appellants for delayed duty payment. However, it was established that duty was actually required to be paid on the 5th day of the following month, a fact the appellants adhered to. Consequently, the appellants sought a refund of the interest paid during the intervening period.

The appellant's counsel argued that since the duty payment timeline was clarified and the appellants complied with the correct schedule, the interest paid during the intervening period should be refunded. On the contrary, the Revenue's representative contended that the decision regarding the duty payment timeline was under challenge before the Hon’ble Delhi High Court, thus the appellants were not entitled to a refund of the interest paid.

After hearing both parties and evaluating the submissions, it was determined that since the appellants were not obligated to pay duty during the intervening period, the demand for interest did not hold ground. Consequently, the interest paid by the appellants during this period was deemed refundable. Therefore, the impugned orders denying the refund were set aside, and the appeals filed by the appellants were allowed with consequential relief. The judgment was pronounced in open court, providing a favorable outcome for the appellants.