2021 (8) TMI 751 - AT - Central Excise

Maintainability of appeal - compliance with the minimum amount of pre-deposit or not - Refund claim - Circular No.984/08/2014-CX dated 16.09.2014 - HELD THAT - There is no ambiguity on reading Section 35 FF read with Section 35 F. The full amount of pre-deposit, even if it is more than the prescribed limit, has to be refunded by the Department along with interest. Further, the interest has to be granted from the date of deposit till the date of granting refund @ 12% p.a. (as held by the Division Bench of this Tribunal in Parle Agro). The Revenue is directed to grant further refund of the balance amount along with interest on full amount @12% from the date of deposit till the date of granting refund, after making adjustments for the interest already granted - this appeal is allowed.

Summary

Issues: Refund of pre-deposit under Section 35 F of the Central Excise Act, 1944; Interpretation of CBEC Circular No.984/08/2014-CX dated 16.09.2014; Applicability of Section 35 FF for interest on delayed refund of pre-deposit.

Analysis:

1. Refund of Pre-Deposit under Section 35 F: The appellant had made a deposit during an investigation, and subsequently, central excise duty was confirmed along with a penalty. The appellant succeeded in appeal before the Tribunal, leading to a refund claim. The Asstt. Commissioner relied on CBEC Circular No.984/08/2014-CX to adjudicate the refund application. The Circular specified conditions for considering payments made during investigation or audit as a deposit towards the stipulation under Section 35 F. The appellant was entitled to a refund based on the Circular's provisions, which were detailed in the adjudication.

2. Interpretation of CBEC Circular: The Asstt. Commissioner's decision was challenged before the Commissioner (Appeals) and subsequently before the Tribunal. The appellant argued that the Circular cannot override the Act's provisions and that the refund should cover the full amount of pre-deposit. The appellant emphasized that the Circular's provisions were misinterpreted by the lower court. The Tribunal analyzed the language of Section 35 FF, which mandates the refund of the full pre-deposit amount when successful in appeal, irrespective of exceeding the minimum prescribed under Section 35 F.

3. Applicability of Section 35 FF for Interest: The Tribunal further examined the applicability of Section 35 FF for interest on delayed refund of pre-deposit. It was established that the full pre-deposit amount, even if exceeding the prescribed limit under Section 35 F, must be refunded by the Department along with interest. The Tribunal referred to a Division Bench ruling for determining the interest rate at 12% p.a. from the date of deposit till the date of granting refund. Consequently, the Tribunal allowed the appeal, directing the Revenue to grant further refund with interest at the specified rate.

In conclusion, the Tribunal clarified the refund entitlement under Section 35 F, the interpretation of CBEC Circular, and the application of Section 35 FF for interest on delayed refunds of pre-deposit. The decision emphasized the obligation of the Department to refund the full pre-deposit amount along with interest when an appellant succeeds in appeal, ensuring compliance with the statutory provisions and legal principles.