2022 (11) TMI 263 - AT - Central Excise

Quantum of interest calculated correctly or not - relevant date for calculation of interest - whether the appellant have been granted correct amount of interest for the correct period on the deposit made during the investigation pursuant to being successful in appeal? - HELD THAT - Under similar circumstances where the amount was deposited during investigation/audit this Tribunal has allowed the interest from the date of deposit till the date of refund @12% P.A. The appellant is entitled to interest from the date of deposit till the date of refund @ 12% P.A. Adjudicating Authority is directed to grant the balance interest within a period of 30 days from the date of receipt of this order - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Correct amount of interest granted on deposit made during investigation
- Interpretation of Section 35FF of the Central Excise Act regarding interest on successful appeal

Analysis:
1. Correct amount of interest granted on deposit made during investigation:
The appellant, a builder, had deposited an amount of 25 lakhs during an investigation under protest. Subsequently, a demand of over 25 lakhs was confirmed, which the appellant successfully appealed against. The appellant then sought a refund of the deposited amount, including interest. However, the refund granted only included interest on a portion of the deposited amount, leading to the appeal before the Commissioner (Appeals). The Commissioner (Appeals) rejected the appeal, prompting the appellant to further challenge the decision.

2. Interpretation of Section 35FF of the Central Excise Act regarding interest on successful appeal:
The crux of the issue revolved around the interpretation of Section 35FF of the Central Excise Act, which governs the grant of interest to an assessee on success in an appeal. The appellant argued that interest should be granted from the date of deposit till the date of refund at a rate of 12% per annum, citing precedent orders of the Tribunal, particularly the case of Parle Agro Limited. On the other hand, the Revenue contended that the notified rate of interest under Section 35FF was 6%.

3. The Tribunal, after considering the arguments presented by both parties, relied on the ruling of the Division Bench in the case of Parle Agro Ltd. and held in favor of the appellant. The Tribunal concluded that the appellant was entitled to interest at a rate of 12% per annum from the date of deposit till the date of refund. The Adjudicating Authority was directed to grant the balance interest within 30 days from the date of the order. Consequently, the appeal was allowed, and the impugned order was modified accordingly. Additionally, the Registry was instructed to correct the appeal classification to Service Tax Appeal instead of Excise Appeal.

4. In summary, the judgment addressed the issue of correct interest granted on a deposit made during an investigation, emphasizing the application of Section 35FF of the Central Excise Act. The decision clarified the entitlement of the appellant to interest at a rate of 12% per annum on the deposited amount, setting a precedent based on previous Tribunal rulings.