2024 (12) TMI 408 - AT - Service Tax

Refund of the amount deposited in terms of Section 35F of CEA - refund claim rejected as time barred - HELD THAT - Undisputedly the amount has been deposited by the appellant as directed by the CESTAT under Section 35F for consideration of the appeal filed by the appellant and would qualify as pre-deposit. Hon ble Gujarat High Court has in case of Ghaziabad Ship Breakers 2010 (10) TMI 151 - GUJARAT HIGH COURT observed ' it is an undisputed position that the amount in question had been deposited by the respondent during the pendency of the appeal before the Supreme Court. In the circumstances, it is apparent that the amount so deposited would squarely fall within the ambit of Section 129-E of the Act and has to be treated as pre-deposit. Thus, the contention raised on behalf of the appellant that the amount has been paid by way of duty and not pre-deposit, being contrary to the provisions of section 129E of the Act, does not merit acceptance.' It is settled position in law that amount deposited for hearing of the appeal needs to be refunded to the appellant without going into any integrities of Section 11B. Thus, refund should have been granted alongwith the applicable interest to the appellant as per Section 35FF as it existed at the time when deposit was made - Appeal is allowed.

Summary

Issues:
Refund of pre-deposit under Section 35F of the Central Excise Act, 1944.

Analysis:
The judgment revolves around the refund of an amount deposited by the appellant under Section 35F of the Central Excise Act, 1944. The appellant had initially deposited Rs.50 lakhs as directed by CESTAT for consideration of the appeal. Subsequently, the Tribunal allowed the appeal, and the appellant sought a refund of the deposited amount. The Original Authority rejected the refund claim as time-barred, leading to the appellant filing an appeal before the Commissioner (Appeals), which was dismissed. The appellant then filed the current appeal challenging the rejection of the refund claim.

The Hon'ble Gujarat High Court's observation in the case of Ghaziabad Ship Breakers highlighted the distinction between payment of duty and pre-deposit under Section 129E of the Act. The section mandates that a person appealing against an order related to duty, interest, or penalty must deposit the amount demanded. The deposit is a pre-condition for entertaining the appeal and is considered a mode of payment to safeguard the revenue's interests. The judgment emphasized that any amount deposited during the pendency of an appeal before the High Court or the Supreme Court falls within the ambit of Section 129E and must be treated as a pre-deposit.

The judgment also referenced Circulars issued by the CBIC, emphasizing that the amount deposited for an appeal must be refunded to the appellant upon a favorable decision, without the need for a refund application. The Circulars clarified that pre-deposit for filing an appeal is not considered a payment of duty and should not be subjected to the refund process under Section 11B of the Central Excise Act, 1944. Refunds, along with interest, should be promptly paid to the appellant within a specified timeframe, even if the Department plans to challenge the appellate authority's decision.

Furthermore, the judgment cited a case where an assessee was entitled to a refund upon being successful in an appeal, as per Section 35F of the Act. It highlighted that the appellant should receive a refund of the deposited amounts with interest, as per the provisions existing at the time of deposit. The judgment concluded by allowing the appeal and directing the refund of the pre-deposit amount to the appellant, in line with Section 35FF of the Central Excise Act, 1944.

In summary, the judgment clarifies the legal principles governing the refund of pre-deposit amounts under Section 35F of the Central Excise Act, 1944, emphasizing the entitlement of appellants to refunds upon successful appeals and the procedural requirements for such refunds.