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Issues Involved: Determination of entitlement to interest on pre-deposit amount and the applicable rate.
Summary: The writ appeal was filed against an order directing the Department to pay interest on the pre-deposit amount at 18% p.a. from the date of the CEGAT order till actual payment. The respondent-Company had appealed against a demand by the Department, deposited Rs. 30 lakhs as per CEGAT's direction, and later had the demand set aside. The Department delayed repayment of the pre-deposit amount, leading to the writ petition. The main issue was whether the assessee was entitled to interest on the pre-deposit amount and at what rate. The Department argued that the repayment did not fall under Section 11B of the Central Excise Act, thus no interest was due. They contended that previous case laws cited were not applicable to the present situation. The respondent-Company argued that once the appeal was allowed and the demand set aside, the deposit amount should be repaid with interest. The Court found that the Department could not escape liability to pay interest, especially considering the delay in repayment without valid reasons. The Court ruled that the respondent-Company was entitled to receive 15% interest on the pre-deposit amount from the date of the CEGAT order. The initial award of 18% interest by the single Judge was modified, and the Department was directed to pay the revised interest rate within a specified time frame. Failure to comply would result in an increased interest rate until actual payment. In conclusion, the writ appeal was disposed of in favor of the respondent-Company, with no costs awarded and the connected CMP closed.
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