2023 (2) TMI 774 - AT - Central Excise

Interest on refund of pre-deposit - Relevant Date - Relevant time for calculation of interest (on pre-deposit in a case where the Tribunal has finally passed the final order setting aside the demand) - Entitlement for interest from the date of deposit of pre-deposit or after the three months from the date of filing of refund application - HELD THAT - On this issue Hon ble Supreme Court/ High Courts and this Tribunal has taken a view that in case of pre-deposit, interest should be given from the date of deposit. Reliance placed in the case of PRINCIPAL COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, NEW DELHI VERSUS M/S EMMAR MGF CONSTRUCTION PVT. LIMITED 2021 (12) TMI 243 - CESTAT NEW DELHI where it was held that The issue is not longer res integra as the 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 have held that such amount deposited during investigation and /or pending litigation is ipso facto pre-deposit and interest is payable on such amount to the assessee being successful in appeal, from the date of deposit till the date of refund. In the case of COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT the Hon ble Punjab Haryana High Court observed that Section 142 of the Act when read with Section 2(48) of the Act is a complete answer to the plea raised by the appellant qua the issue of jurisdiction. The provision explicitly provides that every claim of refund shall be dealt under the existing law i.e. Central Excise Act, 1944 and not by the provisions of the Act. Thus the plea of transfer of jurisdiction due to GST regime is not available to the appellant. It is settled that the appellant are entitled for the interest on refund of pre-deposit amount @6% from the date of deposit till the date of refund. Appeal allowed - decided in favour of appellant.

Summary

Issues Involved:
1. Whether the appellant is entitled to interest from the date of deposit of pre-deposit or after three months from the date of filing of the refund application.

Issue-Wise
Detailed Analysis:

Issue 1: Entitlement to Interest from the Date of Deposit of Pre-Deposit

Arguments by the Appellant:
- The appellant argued that the interest on the refund amount, which was deposited as a pre-deposit, should be payable from the date of the pre-deposit itself. This argument is supported by several judgments:
- CCE, Panchkula vs. Riba Textiles Limited (2022)
- Pr. Commissioner of CGST, New Delhi vs. Emmar MGF Construction Pvt. Limited (2021)
- Hawkins Cookers Limited vs. CCE, Chandigarh (2017)
- CCE, Kutch (Gandhidham) vs. Deep Construction Co. (2019)
- Team HR Services Pvt. Limited vs. UOI (2020)
- Ashima Limited vs. CCE & ST., Ahmedabad (2019)
- CCE, Hyderabad vs. ITC Limited (2005)

Arguments by the Revenue:
- The Revenue reiterated the findings of the impugned order, which presumably did not favor the appellant's claim for interest from the date of pre-deposit.

Tribunal's Findings:
- The Tribunal acknowledged that the issue to be decided was whether the appellant is entitled to interest from the date of the pre-deposit when the Tribunal has set aside the demand.
- The Tribunal referred to several judgments, including those cited by the appellant, to establish that interest should be given from the date of the pre-deposit. Notable cases include:
- Riba Textiles Limited: The Punjab & Haryana High Court referred to the Supreme Court's decision in Sandvik Asia Ltd. v. CIT, Pune, which emphasized that interest should be paid from the date of the pre-deposit.
- Emmar MGF Construction Pvt. Limited: The Tribunal's Principal Bench upheld that interest @ 6% per annum should be paid from the date of deposit till the date of actual refund.
- Hawkins Cookers Limited: The Tribunal's Chandigarh Bench confirmed that no application for refund is necessary, and interest should be paid from the date of the appellate order.
- Team HR Services Pvt. Limited: The Delhi High Court ordered interest @ 6% per annum from the date of deposit till the date of refund, with an enhanced rate if the refund was delayed.

Conclusion:
- The Tribunal concluded that the appellant is entitled to interest on the refund of the pre-deposit amount @ 6% from the date of deposit till the date of refund. The impugned orders were set aside, and the appeals were allowed with consequential relief.

Pronouncement:
- The judgment was pronounced in the open court on 07.02.2023.