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2022 (4) TMI 929 - AT - Central ExciseEntitlement to interest on the amount of pre-deposit - Section 35FF of Central Excise Act - HELD THAT - The Court below has erred in refusing interest. That under similar facts and circumstances, Division Bench of this Tribunal in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD held that an assessee is entitled to interest on such pre-deposit on being successful in appeal, from the date of deposit till the date of refund @ 12% p.a., following the ruling of Hon ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT . The appellant is entitled to interest @ 12% p.a., from the date of deposit till the date of grant of refund - the Adjudicating Authority is directed to disburse the amount of interest within a period of 45 days from the date of receipt of this order - appeal allowed.
Issues:
Whether the appellant is entitled to interest on the amount of pre-deposit under Section 35FF of the Act. Analysis: The appellant, engaged in manufacturing pharmaceutical products, claimed exemption for their product Phenotil under Notification No. 6/2002-CE. The Revenue disputed the exemption, leading the appellant to deposit duty under protest without charging it in their invoice. Subsequently, the Tribunal ruled in favor of the appellant, allowing a refund of duty paid through PLA but rejecting the amount paid through cenvat credit. The Revenue appealed against the refund grant, and the Commissioner (Appeals) allowed their appeal, rejecting the appellant's claim. The appellant then appealed to the Tribunal against the total rejected refund amount of ?9,35,97,502. During the appeal, the Revenue demanded the refunded amount be deposited back with interest, leading the appellant to deposit ?3,24,05,000 under protest, citing it as a pre-deposit under Section 35F. The Tribunal, in a subsequent order, held that the amount of ?9,35,97,502 deposited under protest from April 2006 to March 2014 was refundable to the appellant. Subsequently, the appellant requested a refund, including the pre-deposit amount of ?3,24,05,000 with interest as per Rule. While the pre-deposit amount was refunded, the claim for interest under Section 35FF was rejected on the grounds that the refund was given within three months of the application date. The appellant contended that the rejection of interest was incorrect, citing Section 35FF which provides for interest on pre-deposit upon successful appeal, and argued that the old provisions of Section 35FF applied as the deposit was made in 2018. Upon review, the Tribunal found the lower court erred in denying interest. Citing a previous ruling, the Tribunal held that the appellant was entitled to interest at 12% per annum from the date of deposit till the date of refund. Drawing on the Supreme Court's decision in Sandvik Asia Ltd. vs. CIT-I, Pune, the Tribunal allowed the appeal, directing the Adjudicating Authority to disburse the interest amount within 45 days from the order's receipt, granting the appellant consequential benefits.
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