2005 (2) TMI 156 - HC - Central Excise

Interest on pre-deposit - Refund of pre-deposit - whether the petitioner is entitled to the refund of the money deposited under Section 35F of the Act with interest consequent to the order as passed by the learned CEGAT - HELD THAT - As noticed supra, on the authority of the judgment of the Supreme Court in Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd. 2004 (12) TMI 90 - SUPREME COURT , the assessee is entitled to refund of the pre-deposit made as a pre-condition for hearing of the appeal on the assessee being ultimately successful. In the case on hand, it is contended that final orders have not been passed by the CEGAT as an order of remand has been passed by it. As a matter of fact, the order dated 3-3-1997 passed by the learned CEGAT has not been placed before us. However, operative portion of the order has been extracted in Paragraph 5 of the affidavit filed in support of the writ petition. A perusal thereof would show, a fact, which is not in dispute, that while allowing the appeal, learned CEGAT remanded the matter to the adjudication Commissioner of Central Excise for de novo consideration . The order of the learned Collector was set aside. Though it is a remand order for de novo consideration by the Commissioner of Central Excise, insofar as the appeal before the learned CEGAT is concerned, the matter can be said to have been finally disposed of setting aside the order of the learned Collector. The pre-deposit made by the petitioner u/s 35F is thus liable to be refunded with interest. A deposit u/s 35F is for availing the remedy of appeal. Such amount has to be returned when the appeal is allowed, as in the case on hand. As already noticed, pre-deposit amount of Rs. 28,00,000/- has been adjusted against re-adjudication demand. The question of interest and payment thereof alone has to be considered by the respondent authorities. Accordingly, the writ petition is allowed in part with a direction upon the respondents to pass orders for payment of interest in accordance with the concerned Circular referred to in the order of the Supreme Court in Commissioner of Central Excise, Hyderabad v. I.T.C. (supra) within a period of one week from the date of communication of a copy of this judgment and order. Thus, there shall be no order as to costs.

Summary

Issues involved:
Entitlement to interest on pre-deposit made by petitioner till a specific date following an order by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT).

Analysis:

1. The petitioner sought direction for interest payment on a pre-deposit made under proviso to Section 35F of the Central Excise Act. The Collector of Central Excise confirmed the demand of excise duty on structurals fabricated by the petitioner, which was later set aside by CEGAT. The petitioner applied for a refund of the pre-deposit, but the authorities adjusted it against a re-adjudication demand without granting interest. The respondents argued that the petitioner should have followed proper procedures under Section 11B of the Act for refund. The petitioner relied on judgments from Delhi High Court and Bombay High Court supporting interest payment on refunds.

2. The High Court referenced various judgments to establish the precedent for interest payment on pre-deposits refunded after successful appeals. The Supreme Court's decision in Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd. clarified that pre-deposits are refundable with interest upon the assessee's success. Despite a remand order by CEGAT for de novo consideration, the High Court concluded that the appeal had been finally disposed of, entitling the petitioner to interest on the pre-deposit. The Court directed the respondents to process interest payment as per the Circular mentioned in the Supreme Court's order within one week.

3. The High Court's decision aligned with established legal principles and judgments, emphasizing the entitlement to interest on pre-deposits refunded after successful appeals. By referencing previous rulings and the Circular mentioned in the Supreme Court's order, the Court provided a clear directive for the respondents to comply with the interest payment obligation. The judgment clarified the legal position on interest payments in such cases, ensuring the petitioner's rights were upheld in line with judicial precedents and statutory provisions.