2021 (11) TMI 242 - AT - Central Excise

Entitlement to Interest on pre-deposit, on being successful in appeal - Section 35FF of Central Excise Act - HELD THAT - Section 35FF provides for interest on the amount refundable to an assessee, pursuant to being successful in appeal, does not make any distinction between pre-deposit made by way of cash/ LPA or by way of cenvat credit account - the finding of learned Commissioner (Appeals) is erroneous that no interest is payable whether the pre-deposit is made by way of debit in cenvat credit account. The Adjudicating Authority is directed to disburse the interest @12% per annum (on the refund amount of ₹ 49,94,990/-) from the date of deposit till the date of refund - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Entitlement to interest under Section 35FF of the Act on the amount of pre-deposit upon successful appeal before the Tribunal.

Analysis:
- The appellant deposited an amount as pre-deposit in a dispute regarding cenvat credit on input services, and upon success in appeal, sought a refund of the amount with interest.
- The Assistant Commissioner allowed only a partial refund, citing appropriation against an outstanding demand, without mentioning interest payment.
- The Commissioner (Appeals) set aside the appropriation but rejected the claim for interest, stating that interest is only payable on pre-deposit made in cash, not through cenvat credit.
- The Tribunal, upon hearing the parties, noted that Section 35FF does not differentiate between pre-deposit made in cash or through cenvat credit for interest entitlement.
- The Tribunal found the Commissioner (Appeals) erred in denying interest on the basis of payment mode and allowed the appeal, directing the Adjudicating Authority to disburse interest at 12% per annum from the date of deposit till the date of refund, as per precedent.

This judgment clarifies that entitlement to interest under Section 35FF of the Act on pre-deposit amount post successful appeal is not contingent on the mode of pre-deposit, whether in cash or through cenvat credit. The Tribunal emphasized that the law does not distinguish between payment modes for interest calculation. The decision highlights the importance of adhering to statutory provisions and ensuring proper disbursement of interest on refundable amounts. The ruling serves as a precedent for similar cases where interest claims on pre-deposit refunds are disputed based on the payment method, affirming the uniform application of the law in such matters.