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2022 (1) TMI 201 - AT - Central ExciseEntitlement to to interest on the amount deposited by it during the investigation, consequent to dropping of the entire demand - relevant time for calculation of interest - 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 , following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT has been pleased to grant interest @ 12% p.a. from the date of deposit till the date of grant of refund, with reference to Section 35FF of the Central Excise Act. The Court below is directed to disburse the interest on refund @ 12% p.a. from the date of deposit till the date of refund within a period of 45 days from the date of receipt or service of the copy of this order - Appeal allowed - decided in favor of appellant.
Issues involved:
- Entitlement to interest on the amount deposited during investigation Detailed Analysis: Issue 1: Entitlement to interest on the amount deposited during investigation The main issue in this appeal was whether the appellant is entitled to interest on the amount deposited during the investigation process. The appellant contended that interest should be paid on the deposited amount from the date of deposit until the actual payment or refund, at a rate of 12% per annum. The challenge was against the order-in-original that did not grant interest on the deposited amount. The appellant argued that interest should have been sanctioned under Section 35FF of the Central Excise Act, 1944, and various court judgments supported their claim for interest. It was emphasized that the deposited amount was not excise duty, as there was no determination of excise duty liability at the time of deposit. The appellant also cited precedents to support their claim that amounts deposited during investigation are considered to be under protest automatically. Issue 1.1: Legal Provisions and Precedents The appellant relied on Section 11B, Section 11BB, Section 35F, and Section 35FF of the Central Excise Act to support their claim for interest on the deposited amount. They argued that since the deposit was made due to a dispute raised by the Department and the appellant succeeded in the case, the deposited amounts were never actually payable. The appellant cited various judgments, including those of the Tribunal, to establish the entitlement to interest on the deposited amount until the grant of refund. Issue 1.2: Tribunal's Decision and Precedents The Tribunal, in its decision, agreed with the appellant's contentions and held that interest should be granted on the deposited amount. Citing the ruling of a Division Bench in a similar case, the Tribunal directed the disbursement of interest at a rate of 12% per annum from the date of deposit until the date of refund. The Tribunal's decision was in line with the provisions of Section 35FF of the Central Excise Act and relevant court judgments. The Tribunal emphasized that interest on the refund should be paid within a specified period from the date of the order. Issue 1.3: Division Bench Decision The Division Bench of the Tribunal, in a related case, granted interest on the deposited amount at a rate of 12% per annum from the date of deposit until the date of refund, following the precedent set by the Supreme Court in Sandvik Asia Ltd. The Division Bench directed the lower court to disburse the interest within a specific timeframe from the date of the order. In conclusion, the Tribunal allowed the appeal, affirming the appellant's entitlement to interest on the amount deposited during the investigation process, in accordance with the provisions of the Central Excise Act and relevant legal precedents.
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