2023 (12) TMI 371 - AT - Central Excise

Entitlement for interest on refund of amount depositted as pre-deposit - interest on sanctioned amount of refund has been denied on the ground that refund has been sanctioned within three months from the date of communication of the order of appellate authority - Section 35FF of Central Excise Act, 1944 - HELD THAT - The amount in question was not deposited under Section 35F, however is akin to predeposit for the reasons as discussed above. Resultantly, we hold that the said proviso is not applicable to the given set of circumstances. Irrespective that the amount in question except for Rs.3,11,00,000/- was deposited prior 06.01.2014 - the findings are liable to be set aside. Section 35FF itself prescribes the rate of interest in the range of 5% to 36% when these provisions is read in the light of the above provisions and the decisions with respect to the rate of interest. The appellant is entitled to receive interest at the rate of 12%. Though the department has impressed upon that the demand with respect to Rs.16,00,60,335/- has been remanded for de novo adjudication but apparently and admittedly as on date the said demand also stands set aside vide the final order of this Tribunal dated 20.10.2017 2017 (12) TMI 7 - CESTAT NEW DELHI . The appellant is held entitled to have interest on the amount of refund sanctioned at the rate of 12% per annum from the date of the deposit of the amount till the date of refund thereof. Except that for an amount of Rs.13,50,500/- which was deposited during investigation but towards the duty liability that too from the Cenvat account. The appellant shall be entitled for the interest on the said amount from the date of the final order of the Tribunal dated 20.10.2017 (vide which the duty demand was set aside) till the date of payment thereof - Appeal allowed.

Summary

Issues Involved:
1. Entitlement to interest on the refund amount.
2. Applicability of Section 11B/11BB and Section 35FF of the Central Excise Act.
3. Rate of interest applicable on the refund amount.

Summary:

1. Entitlement to Interest on the Refund Amount:
The appellants sought interest on the refund amount from the date of deposit till the date of actual payment. The Tribunal observed that the amount in question was not a duty but a revenue deposit, which included cash seized during investigation and amounts deposited pursuant to court orders. The Tribunal held that such deposits should be treated as pre-deposits and are entitled to interest.

2. Applicability of Section 11B/11BB and Section 35FF of the Central Excise Act:
The Tribunal noted that Section 11B/11BB is not applicable to the given set of circumstances since the amount in question was not a duty but a revenue deposit. Instead, Section 35FF, which deals with interest on delayed refund of pre-deposit amounts, was applicable. The Tribunal referred to various judgments and departmental circulars, emphasizing that the provisions of Section 11B/11BB do not apply to revenue deposits.

3. Rate of Interest Applicable on the Refund Amount:
The Tribunal considered various notifications under different sections of the Central Excise Act, which prescribe interest rates ranging from 6% to 18%. It concluded that a rate of 12% per annum was appropriate, relying on precedents such as the Supreme Court's decision in Sandvik Asia Ltd. and other High Court rulings. The Tribunal held that the appellants were entitled to interest at 12% per annum from the date of deposit till the date of refund, except for an amount of Rs.13,50,500/- deposited during investigation, which would attract interest from the date of the Tribunal's final order setting aside the duty demand.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned order and directing the department to pay interest at the rate of 12% per annum on the refund amount from the date of deposit till the date of refund, with specific directions for the amount deposited during investigation.