2013 (11) TMI 1034 - AT - Central Excise

Recovery of interest on the erroneous refund sanctioned Held that - Applicability of Section 11AB for deemed of interest as determined by the adjudicating authority is required to be examined and thereafter the case laws would be looked into, the matter requires to be examined on the provisions of demand of interest and in the light of the decision of the Hon ble Supreme Court - It is appropriate that the matter should be re-examined by the Commissioner (Appeals) - appeals are allowed by way of remand to the Commissioner (Appeals) Decided in favour of Revenue.

Summary

Issues:
Recovery of interest on erroneous refund sanctioned and paid to the assessee following a decision by the Hon'ble Madras High Court, subsequently set aside by the Hon'ble Supreme Court.

Analysis:
The appeals arose from a common order concerning the recovery of interest on an erroneous refund paid to the assessee. The assessee, a manufacturer of aluminum, claimed a benefit denied by the Superintendent of Central Excise. The Appellate Collector allowed the appeal, but the Government of India overturned this decision. Subsequently, the Hon'ble Madras High Court ruled in favor of the assessee, leading to a refund payment by the Revenue. However, the Hon'ble Supreme Court later set aside the High Court's judgment, prompting the assessee to repay the amount. A show-cause notice was issued proposing a demand for interest under relevant sections of the Central Excise Act. The Adjudicating authority confirmed the interest demand, leading to an appeal by the assessee before the Commissioner (Appeals).

The Revenue appealed to the Tribunal seeking modification of the Commissioner (Appeals) order, arguing that interest should be payable from the date of insertion of the interest clause in the Act. The Revenue quantified the interest amount, while the assessee also filed an appeal challenging the Commissioner (Appeals) decision. The Revenue contended that interest should be paid from the insertion date of the relevant clause until the completion of payment. The assessee argued against the demand of interest under a specific section, highlighting the absence of fraud or willful misstatement in the case.

The Tribunal considered the timeline of events, noting the payment and subsequent refund repayment by the assessee. The Commissioner (Appeals) had modified the interest calculation, leading to appeals by both parties. The Tribunal emphasized the need to re-examine the applicability of the relevant sections in light of the Supreme Court decisions cited by both sides. The matter was remanded to the Commissioner (Appeals) for further examination based on the Tribunal's observations.

In conclusion, the Tribunal allowed both appeals by remanding the case to the Commissioner (Appeals) for a re-examination of the demand for interest in accordance with the provisions of the Central Excise Act and relevant judicial decisions.