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2020 (2) TMI 602 - AT - Central ExciseInterest on delayed refunds - denial of interest for the pre-deposit before 06.08.2014 - relevant date for calculation of interest - HELD THAT - The issue has been settled by this Tribunal in the case of M/S. MARSHALL FOUNDRY ENGG. PVT. LTD., M/S. MARSHALL AUTO CAST PVT. LTD., M/S. MARSHALL FOUNDRY WORKS PVT. LTD., M/S. MARSHALL CASTING LIMITED AND M/S. MARSHAL ATUT INDUSTRIES LIMITED VERSUS COMMISSIONER OF CGST, FARIDABAD 2019 (11) TMI 1269 - CESTAT CHANDIGARH where it was held that appellants are not entitled to claim interest on delay refund from the date of deposit till its realization. The appellant is entitled to claim the 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 refunds. 2. Applicability of precedent cases and judicial decisions. 3. Determination of the rate of interest to be applied. Issue-Wise Detailed Analysis: 1. Entitlement to Interest on Delayed Refunds: The appellant sought interest on delayed refunds for amounts paid during an investigation and while entertaining a stay application. The refunds were sanctioned on 02.06.2017, but the adjudicating authority did not consider the claim for interest from the date of deposit till realization. The Tribunal referred to the case of M/s Marshall Foundry & Engg. Pvt. Ltd. vs. Commr of CGST, Faridabad & others, which settled the issue in favor of granting interest for the intervening period. 2. Applicability of Precedent Cases and Judicial Decisions: The respondent opposed the appellant's claim by citing the case of Commr of CGST, Mumbai vs. M/s Juhu Beach Resort Ltd., which denied interest for pre-deposits before 06.08.2014. However, the Tribunal found that this case did not consider the decisions of the Hon’ble Apex Court in Sandvik Asia Ltd vs. CIT, Pune, and the Hon’ble High Court of Madras in CCE, Chennai-II vs. UCAL Fuel Systems Ltd. Therefore, the decision in M/s Juhu Beach Resort Ltd. was not relied upon. Instead, the Tribunal referenced the case of M/s Marshall Foundry & Engg. Pvt. Ltd., which had examined these decisions and concluded that interest on delayed refunds is payable. 3. Determination of the Rate of Interest to be Applied: The Tribunal examined Section 243 of the Income Tax Act, 1961, and Section 35FF of the Central Excise Act, 1944, noting that both sections deal with interest on delayed refunds and are parimateria. The Tribunal followed the decision of the Hon’ble Apex Court in Sandvik Asia Ltd., which held that the assessee is entitled to interest from the date of payment of the initial amount till the date of its refund. The Tribunal also considered the Hon’ble Kerala High Court's decision in Sony Pictures Networks India Pvt. Ltd., which fixed the interest rate at 12% per annum, and the Tribunal's own decision in Ghaziabad Ship Breakers Pvt. Ltd., which also awarded interest at 12% on refunds of pre-deposits. Conclusion: The Tribunal concluded that the appellant is entitled to claim interest on the delayed refund from the date of deposit till its realization at a rate of 12% per annum. The impugned order denying interest was set aside, and the appeal was allowed in favor of the appellant. The judgment emphasized the importance of following the law of the land as established by the Hon’ble Apex Court and ensuring that the appellant receives due compensation for the delayed refund.
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