2023 (3) TMI 170 - AT - Central Excise

Grant of proper interest on the amount refunded, which was deposited during investigation - HELD THAT - The issue herein is squarely covered on all four by the precedent ruling of 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 which has also been confirmed by Punjab Haryana High Court in COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT . It was held in the above-stated cases that interest on refund of amount deposited during investigation or deposited during pendency of appeal is allowable under Section 35EE of the Act and has to be paid from the date of deposit till the date of refund. The appellant is entitled to interest on the refundable amount of Rs. 22,84,270/- from the date of deposit (27.10.2010) till the date of refund being 05.02.2021, @ 12% per annum - Appeal allowed.

Summary

Issues:
Grant of proper interest on the amount refunded, which was deposited during investigation.

Analysis:
The appeal revolved around the issue of granting proper interest on the amount refunded, which had been deposited during the investigation. The appellant had initially deposited Rs. 75,00,000/- and Rs. 25,00,000/- on the department's behest during the investigation in October and November 2010, respectively. Subsequently, a show cause notice was issued demanding duty along with interest and penalties. The adjudicating authority confirmed a duty demand of Rs. 37,63,934/- and imposed penalties, directing the refund of the remaining amount deposited. Both the appellant and the department appealed against this decision. The Tribunal remanded the appeals for denovo adjudication in 2017. In May 2020, the Commissioner dropped the duty demand but imposed fines and penalties. The appellant filed a refund application for the remaining amount in June 2020, leading to discrepancies identified by the department in August 2020. These discrepancies were resolved by the appellant in September 2020. The department sanctioned Rs. 22,84,270/- for refund in February 2021 without any interest on the amount, prompting the appellant to file an appeal against the non-granting of interest on the refund amount in September 2021.

The appellant argued that interest on the refund of the deposited amount during the investigation should be granted from the date of deposit until the date of refund, citing a Division Bench ruling and a Supreme Court case. The revenue authority relied on the impugned order. The Tribunal, after considering the arguments, found that the issue was covered by the precedent ruling of the Division Bench and the Punjab & Haryana High Court. Consequently, the Tribunal allowed the appeal, holding that the appellant was entitled to interest on the refundable amount from the date of deposit in October 2010 until the date of refund in February 2021, at a rate of 12% per annum. The appeal was allowed, and the decision was pronounced in open court on March 1, 2023.