2019 (4) TMI 9 - AT - Central Excise

Demand of interest - Refund of the pre-deposit - Section 35 FF of CEA - Held that - The interest would be paid only if amount was not refunded within three months from the date of communication of the order. In the instant case, the amount was refunded within three months - appeal dismissed.

Summary

Issues:
- Appeal against dismissal of refund claim for interest on refunded amount
- Interpretation of Section 35FF of the Act regarding payment of interest on refunded amount

Analysis:
1. The appeal was filed to challenge the dismissal of a refund claim for interest on an amount refunded by the Adjudicating Authority. The appellant sought interest on the refunded amount of ?87,17,359, which was initially deposited as per the Tribunal's order. The Commissioner (Appeals) rejected the claim for interest, stating that the refund was granted within three months of the Tribunal's order, as per Section 35FF of the Act.

2. The records revealed that a show cause notice was issued to the appellant, leading to confirmation of demand and imposition of penalty by the Commissioner, Central Excise. Subsequently, an appeal was filed before the Tribunal, which directed a tax deposit, reduced by the Delhi High Court, and ultimately remanded the matter to the Adjudicating Authority for fresh adjudication.

3. Following the Tribunal's direction, the appellant filed a refund claim for the pre-deposit amount, which was rejected by the Adjudicating Authority. However, the Tribunal, through a miscellaneous application, directed the Adjudicating Authority to grant the refund with interest as per the law. In compliance with this direction, the Adjudicating Authority sanctioned the refund but did not grant interest on the refunded amount.

4. The Commissioner (Appeals) upheld the decision of not granting interest, citing that the refund was sanctioned within three months of the Tribunal's order, as per Section 35FF of the Act. The provision mandated the payment of interest only if the refunded amount was not returned within three months from the date of communication of the order, which was not the case here.

5. The Department's representative argued that as per the provision of Section 35FF of the Act before 6 August 2014, no interest was payable to the appellant. The section specified that interest would be paid if the amount was not refunded within three months from the date of communication of the order, which did not apply in this scenario where the refund was granted within the stipulated timeframe.

6. In conclusion, the Tribunal found no error in the decision of the Commissioner (Appeals) to deny interest on the refunded amount, as it was refunded within three months of the Tribunal's order. Therefore, the appeal was dismissed based on the interpretation of Section 35FF of the Act and the timely refund of the amount in question.