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2018 (6) TMI 77 - AT - Central ExciseRefund of pre-deposit u/s 35FF of CEA - Period of limitation - Interest on delayed refund - time limitation u/s 11AB - calculation of period - Held that - Section 35FF of the Act provides that where an amount of deposit by the Respondent in pursuant of an Order passed by the Commissioners (Appeals) or Appellant Tribunal under the first proviso of Section 35F is required to be reviewed consequent upon the Final Order of the Appellant Authority and such amount is not reviewed within three months from the date of communication of such Order to the Adjudicating Authority, the interest at the rate specified in Section 11BB after the expiry of three months from the date of communication of the Order till the date of the refund should be paid along with the refund of deposit - Section 35FF would apply to all refunds of pre-deposit pending on the date of its insertion and as it itself states that liability to interest starts three months from the Order of Appellate Authority, the relevant date is not the date when Section 35FF was inserted, but the date of the Order of the Appellate Authority. Tribunal in the matter of Commr. of C. Ex. & S.T., Panchkula versus Sainsons Paper Industry Limited 2016 (2) TMI 288 - CESTAT NEW DELHI has held that it can be said that prior to 10/05/08, i.e. before introduction of 35FF, the Respondent was entitled to get refund of pre-deposit, as per Board Circulars even without submitting an application and was also entitled to interest for delayed refund. Interest allowed - appeal dismissed - decided against Revenue.
Issues:
1. Liability of the Appellant to pay interest on delayed sanction of pre-deposited amount. 2. Refund claim of pre-deposit of ?50 lakh along with interest. 3. Interpretation of Sections 35F and 35FF of the Central Excise Act, 1944. 4. Application of Circulars dated 2/1/2002 and 8/12/2004 by CBEC. 5. Applicability of interest provisions pre and post insertion of Section 35FF. Issue 1: Liability of the Appellant to pay interest on delayed sanction of pre-deposited amount: The appeal questioned the liability of the Appellant to pay interest on a delayed sanction of ?50 lakh pre-deposited by the Respondent. The Tribunal's Final Order dated 23/3/06 required the pre-deposit, and subsequent delays in refund led to the interest claim by the Respondent. The Commissioner (Appeals) allowed the Respondent's appeal, stating that interest under Section 35FF applies to all refunds, including pre-deposits made before its introduction. The Tribunal concurred, emphasizing that the interest liability starts from the date of the Appellate Authority's order. Issue 2: Refund claim of pre-deposit of ?50 lakh along with interest: The Respondent sought a refund of the pre-deposited amount of ?50 lakh along with interest. The Department initially denied the refund, citing limitation under Section 11B of the Act. However, the Commissioner (Appeals) allowed the refund, stating that Section 11AB provisions do not apply to refunds of pre-deposits. The Tribunal upheld this decision, emphasizing the entitlement to interest after three months from the date of the Appellate Authority's order. Issue 3: Interpretation of Sections 35F and 35FF of the Central Excise Act, 1944: Section 35F mandates the deposit of duty demanded or penalty levied pending appeal. Section 35FF addresses interest on delayed refunds of amounts deposited under Section 35F. The Tribunal emphasized that Section 35FF applies to all refunds, including pre-deposits made before its insertion, and the interest liability commences from the date of the Appellate Authority's order. Issue 4: Application of Circulars dated 2/1/2002 and 8/12/2004 by CBEC: Circulars dated 2/1/2002 and 8/12/2004 by CBEC clarified the refund process for pre-deposits. These circulars streamlined the refund application procedure, stating that a simple letter along with necessary documents would suffice for refund claims. The Tribunal considered these circulars in the context of the present case. Issue 5: Applicability of interest provisions pre and post insertion of Section 35FF: The Appellant argued that since Section 35FF was inserted on 10/05/08, it should not apply to pre-deposits made before its introduction. However, the Tribunal held that the principles under Section 35FF apply to all cases where amounts are wrongfully withheld, even before its insertion. Precedents such as Madura Coats Pvt. Ltd. v. Commissioner supported the entitlement to interest on delayed refunds of pre-deposits even before the introduction of Section 35FF. In conclusion, the Tribunal dismissed the appeal, affirming the entitlement of the Respondent to a refund of the pre-deposit amount along with interest, as per the provisions of Sections 35F and 35FF, and in alignment with relevant CBEC Circulars and legal precedents.
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