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2025 (2) TMI 553 - AT - Central ExciseInterest on refund of amount deposited during investigation - relevant date for calculation of interest - removal of Coumarin without payment of duty - whether interest is payable to the appellants in respect of voluntary payments/deposit made towards alleged removal Coumarin without payment of duty from 19th May 2001 to 24th January 2004 or otherwise? - HELD THAT - The final demand confirmed by the Tribunal is limited to the adjudged demands in respect of seized goods alone and the issues have attained finality. These have been duly taken into account by the original authority in his order dated 01.04.2019 and he had accordingly sanctioned the refund of Rs.19, 47, 750/- and ordered for the said amount to be remitted separately by RTGS/NEFT to the appellant. Thus the amount of refund has been sanctioned as per law by the original authority and the same bas been duly confirmed by the first appellate authority also. As regards the appellant s claim of interest it is found that the issue with regard to payment of interest on voluntary deposit made during investigation has been examined by the co-ordinate Bench of the Tribunal in the similar set of facts in the case of Parle Agro Private Limited 2017 (2) TMI 984 - CESTAT ALLAHABAD and it was held that interest is payable from the date of deposit till the date of payment. The Central Board of Excise and Customs (CBE C) has also issued instructions to the departmental field formations vide Circular No. 984/8/2014-CX dated 16.09.2014 wherein it has been clarified that the appellant is entitled for interest on refund of pre-deposit from the date of deposit to the date of refund. In the case of Pace Marketing Specialties 2011 (8) TMI 796 - ALLAHABAD HIGH COURT the Hon ble High Court of Allahabad upon consideration of the judgement of the Hon ble Supreme Court in the case of Sandvik Asia Limited 2006 (1) TMI 55 - SUPREME COURT had granted interest at the rate of 12% in similar case. In view of the specific stand taken by the co-ordinate Bench of the Tribunal in the case of Parle Agro Pvt. Ltd. this Bench cannot take a different view contradicting the stand already taken therein. Conclusion - The appellant is entitled to interest on the refund of the pre-deposit amount at the rate of 12% per annum. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether interest is payable on the voluntary payments/deposit made by the appellant during the investigation period for the alleged removal of Coumarin without payment of duty. Specifically, the Tribunal examined whether the appellant is entitled to interest on the refund of Rs. 19,47,750/- at the rate of 12% per annum from the date of deposit until the date of payment. 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework primarily involves Section 35FF of the Central Excise Act, 1944, which deals with the payment of interest on refunds. Additionally, the Tribunal referred to Section 11B and Section 11BB of the Excise Act, which pertain to claims for refund of duty and interest on delayed refunds, respectively. The Tribunal also considered precedents set by similar cases, notably the decision in Parle Agro Pvt. Ltd. and the guidance from the Central Board of Excise and Customs (CBE&C). Court's Interpretation and Reasoning The Tribunal noted that the issue of interest on voluntary deposits made during investigations has been previously addressed by a co-ordinate Bench in the Parle Agro Pvt. Ltd. case. It was determined that interest is payable from the date of deposit until the date of payment. The Tribunal emphasized that there is no specific provision in the Excise Act dealing with the refund of revenue deposits, and thus, general principles and precedents must guide the determination of interest rates. Key Evidence and Findings The Tribunal found that the appellant had deposited Rs. 20 lakhs during the investigation, which was later adjusted against the confirmed duty liability. The original authority sanctioned a refund of Rs. 19,47,750/- after deducting penalties. The Tribunal confirmed that the refund was processed as per the law, but the issue of interest remained unresolved. Application of Law to Facts The Tribunal applied the legal principles established in Parle Agro Pvt. Ltd., where interest was granted at the rate of 12% per annum. It considered the lack of specific provisions for revenue deposit refunds and relied on analogous sections of the Excise Act, which prescribe interest rates for delayed payments and refunds. Treatment of Competing Arguments The appellant argued that interest should be granted based on the precedent set by the Parle Agro Pvt. Ltd. case. The Revenue contended that Section 35FF only mandates interest if there is a delay beyond three months in sanctioning refunds, and since the provision was amended post-2014, it was not applicable. The Tribunal rejected the Revenue's argument, noting that the Parle Agro decision was still pending appeal and had not been overturned. Conclusions The Tribunal concluded that the appellant is entitled to interest at the rate of 12% per annum on the refund amount from the date of deposit until the date of payment. This conclusion was supported by the CBE&C's circular and the legal reasoning in Parle Agro Pvt. Ltd. 3. SIGNIFICANT HOLDINGS The Tribunal held that the appellant is entitled to interest on the refund of the pre-deposit amount at the rate of 12% per annum. It emphasized that the legal position clarified by the CBE&C and the precedent set by Parle Agro Pvt. Ltd. support this entitlement. The Tribunal set aside the impugned order denying interest and allowed the appeal with consequential relief. Significant verbatim quotes include: "In view for the aforesaid decisions, and the fact that the rate of interest varies from 6% to 18% in the aforesaid Notifications issued under sections 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant of interest @12% per annum seems to be appropriate." The Tribunal's final determination was that the appellant should receive interest on the refunded amount, aligning with the principles established in prior cases and administrative guidance.
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