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2004 (10) TMI 108 - HC - Central ExciseInterest on delayed refund of pre-deposit - Applicability of Sections 11B(2) and 11BB of the Central Excise Act 1944 - HELD THAT - From the bare reading of Sections 11B(2) and 11BB of the Act it is clear that if the concerned Authority satisfied with the case of the applicant of refund then it is to be paid within 3 months from the date of receipt of the Application and if it is not paid then the interest has to be paid on it u/s. 11BB of the Act. In our considered opinion the provision of Section 35F of the Central Excise Act 1944 are meant totally for a different purpose. It is only with a view to see that frivolous Appeals are not entertained therefore the order of pre-deposit of duty demanded or penalty levied is passed by the Appellate Authority while granting conditional stay. In the instant case also the petitioners were directed to pay not only the duty but also the penalty therefore the petitioners cannot claim interest on refund. Interest on refund can be awarded only under the provision of Section 11BB of the Act when there is a delay on the part of the Authority even after the order of refund was passed otherwise not. The same is the case with the Judgment of the learned Single Judge of Madras High Court delivered in Oswal Agro Mills Ltd 1999 (10) TMI 69 - HIGH COURT OF JUDICATURE AT MADRAS ) where the learned Single Judge of the Madras High Court without considering the provisions of either Sections 11BB or 11B(2) allowed the writ petition only on the ground of delay at every stage on the part of the respondents. Thus we are of the considered opinion that when specific application is made u/s. 11B(2) of the Central Excise Act 1944 for interest on belated refund then the same has to be considered and decided by the Authority in light of the provisions of Section 11B(2) as well as Section 11BB of the Act 1944. As Section 11BB of the Act provides interest for delayed refund of duty and not of deposit therefore in our considered opinion the respondent - Authority was right in rejecting the claim of interest on the delayed refund by its impugned order dated 29-8-2001 (Annexure-I). The court held that the respondent authority was correct in rejecting the claim for interest on the delayed refund of the pre-deposit. The petition was dismissed and the rule was discharged without any order as to costs.
Issues Involved:
1. Entitlement to interest on delayed refund of pre-deposit. 2. Applicability of Sections 11B(2) and 11BB of the Central Excise Act, 1944. 3. Interpretation of pre-deposit u/s 35F of the Central Excise Act, 1944. Summary: Entitlement to Interest on Delayed Refund of Pre-Deposit: The petitioners, M/s. Padmanabh Silk Mills and its partner, sought a writ of mandamus for the payment of interest at 15% p.a. on the refund amount for the period from 22-2-1997 to 18-11-1999. The petitioners had deposited Rs. 4 lakhs as a pre-deposit for an appeal, which was later quashed by CEGAT. Despite the appeal being allowed, the refund was delayed, prompting the petitioners to request interest on the delayed refund. Applicability of Sections 11B(2) and 11BB of the Central Excise Act, 1944: The petitioners claimed interest u/s 11B(2) of the Central Excise Act, 1944. However, the respondents rejected this claim, stating that Section 11BB provides for interest on delayed refunds of duty, not deposits. The court examined Sections 11B(2) and 11BB, concluding that interest on delayed refunds applies only to duty and not to pre-deposits. Interpretation of Pre-Deposit u/s 35F of the Central Excise Act, 1944: The court noted that pre-deposits u/s 35F are meant to prevent frivolous appeals and are not considered payments of duty. Therefore, the provisions of Section 11BB, which pertain to delayed refunds of duty, do not apply to pre-deposits. The court referenced various judgments, including those from the Madras High Court, Bombay High Court, and the Supreme Court, but found that these did not alter the interpretation that interest on delayed refunds applies only to duty. Conclusion: The court held that the respondent authority was correct in rejecting the claim for interest on the delayed refund of the pre-deposit. The petition was dismissed, and the rule was discharged without any order as to costs.
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