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2019 (11) TMI 1197 - AT - Central ExciseInterest on delayed refund - time limitation for calculation of refund amount - appellant claims interest on delayed refund i.e. from the date of deposit till payment thereof - Section 35FF of the Central Excise Act, 1944 - section 243 Income Tax Act, 1961 - HELD THAT - On-going through the provisions of both Income Tax Act, 1961 and Central Excise Act, 1944, the interest on delayed refund is payable after expiry of 3 months from the date of granting refund or from the date of communication of order of the appellate authority, which are pari-materia. The decision of Hon‟ble Apex Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT is law of land, in terms of Article 14 of the Constitution of India which is to be followed, wherein the Hon‟ble Apex Court has answered the issue holding that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refund. Thus, the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization - the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to interest on delayed refund. 2. Applicability of the Sandvik Asia Limited judgment to Central Excise Act cases. 3. Rate of interest applicable to the delayed refund. Detailed Analysis: 1. Entitlement to Interest on Delayed Refund: The appellants challenged the rejection of interest on delayed refunds by the authorities. They argued that they are entitled to interest from the date of deposit until the refund of the principal amount. The counsel for the appellants cited the principle that any amount retained and utilized by the Revenue should compensate the assessee by way of interest for the financial loss suffered. This principle is supported by the Hon’ble Apex Court in the Sandvik Asia Limited case. 2. Applicability of the Sandvik Asia Limited Judgment to Central Excise Act Cases: The appellants relied on the Sandvik Asia Limited decision, which dealt with the Income Tax Act, to argue that the provisions for interest are identical under the Central Excise Act. The Tribunal examined whether the provisions of the Income Tax Act and the Central Excise Act are pari materia. It was concluded that both Acts' provisions regarding interest on delayed refunds are indeed pari materia. The Tribunal referenced its earlier decision in the Donar Foods case, which affirmed that the definition of "manufacture" under the Income Tax Act is comparable to that under the Central Excise Act. Thus, the Sandvik Asia Limited judgment was deemed applicable to the Central Excise Act cases. 3. Rate of Interest Applicable to the Delayed Refund: The Tribunal held that the appellants are entitled to interest from the date of deposit until the date of refund. The interest rate was determined to be 12% per annum, following the precedent set by the Hon’ble Kerala High Court in the Sony Pictures Networks India Pvt. Ltd. case and the Tribunal's decision in the Ghaziabad Ship Breakers Pvt. Ltd. case. The Tribunal noted that the latest decision of the Hon’ble Apex Court in the Sandvik Asia Limited case, which awarded interest on delayed refunds, should be followed as it is the law of the land under Article 141 of the Constitution of India. Conclusion: The Tribunal allowed the appeals, holding that the appellants are entitled to interest on delayed refunds from the date of deposit until the date of realization at a rate of 12% per annum. The decision was pronounced in court on 26.11.2019.
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