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2019 (11) TMI 1269 - AT - Central ExciseInterest of delayed refund - relevant date for calculation of such interest - Whether the appellants are entitled to claim @ 12@ of the deposit made during the period of investigation or as per the direction of the Tribunal while entertaining their appeal till its realization or not? - section 35FF of the Central Excise Act,1944 - HELD THAT - The said issue has been examined by this Tribunal in the case of Tribunal in the case of M/S. FUJIKAWA POWER AND M/S. KENZO INTERNATIONAL VERSUS CCE ST, CHANDIGARH-I 2019 (11) TMI 1197 - CESTAT CHANDIGARH where it was held that the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization. The appellants are not entitled to claim interest on delay refund from the date of deposit till its realization - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to interest on delayed refund from the date of deposit till realization. 2. Applicable rate of interest on the delayed refund. Detailed Analysis: 1. Entitlement to Interest on Delayed Refund from the Date of Deposit till Realization: The appellants contested the denial of interest on delayed refunds from the date of deposit till realization. The facts reveal that during an investigation, certain deposits were made by the appellants, and after adjudication and subsequent appeals, the amounts became refundable. The appellants sought interest on these refunds, which was rejected by the authorities. The appellants argued that deposits made during investigations are deemed under protest, referencing various judgments, including CCE vs. Pricol Limited and CCE vs. Eveready Industries India Limited. They further cited CCE, Chennai-II vs. Ucal Fuel Systems Limited, where it was held that interest is payable from the date of deposit till the date of payment. The respondent countered that the provisions of Section 35FF of the Central Excise Act, 1944, apply, which entitles interest on delayed refunds only after three months from the date of the appellate authority's order. The Tribunal examined the issue and referenced the case of M/s. Fujikawa Power and others vs. CCE, Chandigarh-I, where it was observed that interest on delayed refunds is to be paid after three months from the date of communication of the order, as per Section 35FF of the Central Excise Act, 1944. The Tribunal found that the provisions of the Income Tax Act and Central Excise Act are pari materia concerning interest on delayed refunds. The Tribunal referred to the Supreme Court decision in Sandvik Asia Limited, which established that interest is payable from the date of deposit till the date of refund. The Tribunal concluded that the appellants are entitled to claim interest from the date of deposit till realization. 2. Applicable Rate of Interest on the Delayed Refund: The appellants claimed interest at 12% per annum, citing the Tribunal's decision in Arihant Tiles & Marbles Pvt. Ltd. vs. CCE & CGST. The Tribunal examined various judgments, including the Kerala High Court's decision in Sony Pictures Networks India Pvt. Ltd., which awarded 12% interest on delayed refunds. It also referenced Ghaziabad Ship Breakers Pvt. Ltd., where interest at 12% was allowed on refunds of pre-deposits. The Tribunal noted that Section 243 of the Income Tax Act, 1961, and Section 35FF of the Central Excise Act, 1944, are similar in terms of interest on delayed refunds. Following the Supreme Court's decision in Sandvik Asia Limited and the Kerala High Court's decision in Sony Pictures Networks India Pvt. Ltd., the Tribunal held that the appellants are entitled to interest at 12% per annum from the date of deposit till realization. Conclusion: The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, holding that the appellants are entitled to claim interest on delayed refunds from the date of deposit till realization at the rate of 12% per annum. The corrigendum clarified that the appellants are indeed entitled to interest on delayed refunds from the date of deposit till its utilization.
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