2021 (11) TMI 595 - AT - Central Excise

Entitlement to interest on refund - refund of the pre-deposit made or deposit made during investigation, under protest - HELD THAT - Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD held that, wherein interest on pre-deposit (made during investigation) has been enhanced from 6% to 12%, following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT . The Adjudicating Authority is directed to grant interest @ 12% p.a. from the date of deposit till the date of refund. Such interest should be granted within a period of two months from the date of receipt or service of the copy of this order. Appeal allowed.

Summary

Issues:
Claim of interest on refund of pre-deposit made or deposit during investigation under protest.

Analysis:
The case involved the appellants, engaged in the manufacture of sugar and alcohol, who deposited a significant amount under duress by the Central Excise Department during an investigation. The Commissioner confirmed a demand and imposed penalties, which were partly upheld by the Tribunal in a subsequent order. Following this, the appellants filed a refund claim, including interest, which was partially allowed by the Assistant Commissioner but denied interest citing Section 11 BB. The Commissioner (Appeals) upheld this decision, stating that interest liability arises after 3 months from the refund application date. The appellant contended that interest should be granted from the date of deposit till the date of refund, citing precedents and the Tribunal's Final Order No. 70180-70181/2021. The authorized representative for the Department relied on the impugned orders.

The Tribunal, considering the contentions, referred to a Division Bench ruling in Parle Agro Pvt. Ltd. Vs. Commissioner, CGST, enhancing interest on pre-deposit to 12% following the Apex Court's ruling in Sandvik Asia Ltd. The Tribunal directed the Adjudicating Authority to grant interest at 12% per annum from the date of deposit to the date of refund within two months from the order's receipt or service. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the entitlement to interest on the deposit made under protest during the investigation period.

This judgment highlights the significance of interest entitlement on deposits made under duress during investigations, emphasizing the application of interest rates as per legal precedents and directions from higher courts. The decision underscores the need for timely and fair resolution of refund claims, ensuring that interest is appropriately granted to parties facing financial implications due to such deposits.