2014 (5) TMI 252 - HC - Central Excise

Claim of interest on delayed refund - appellant claimed interest from the date of deposit - amount was deposited in pursuance of the search - Tribunal has allowed the interest at the rate prescribed under the law after three months from the date of filing of refund application till the date of payment. - Held that - Before the Tribunal the only question for consideration was whether the petitioner was entitled to claim interest on the refund amount after three months from the date of filing of the application or not. - The petitioner has not enclosed any grounds of appeal before the Tribunal, therefore, such plea cannot be entertained at this stage. Rate of interest - Held that - The interest @ 12% has been provided by Hon ble Supreme Court, there is no reason that the petitioner may not get interest @ 12%. No direction in regard is necessary to be issued. - writ petition dismissed - Decided against the assessee.

Summary

Issues:
Challenge to order by Customs, Excise and Service Tax Appellate Tribunal regarding interest payment on refund application.

Analysis:
The petitioner challenged the order passed by the Customs, Excise, and Service Tax Appellate Tribunal, New Delhi, seeking interest payment on the refund application. The petitioner's premises were searched, leading to a deposit of Rs.20 lakhs under coercive methods. Subsequently, an adjudicating authority raised a demand of Rs.21 lakhs, which was adjusted from the deposited amount. The Tribunal set aside the demand order, and the petitioner applied for a refund, which was granted on 11.3.2003 without interest under Section 11B of the Act. The petitioner's request for interest was rejected, leading to appeals up to the Tribunal, which allowed interest as per Section 11BB after three months from the refund application date.

The Tribunal's order was challenged by the Revenue in the Supreme Court, which was dismissed, citing the precedent set in Commissioner of Central Excise, Hyderabad v. I.T.C. Ltd. The Supreme Court had directed payment of interest at 12% in a similar case. The petitioner claimed interest from 12.8.1998 to 6.12.2000, contending the amount was illegally retained without a legal demand. However, the court found no substance in this claim as it was not raised before the Tribunal, which solely considered interest post three months from the refund application date.

Regarding the interest rate, the Tribunal had allowed interest at the rate prescribed under the law after three months from the refund application date. As the Supreme Court had set the interest rate at 12%, the petitioner was entitled to the same. The court dismissed the writ petition, affirming the Tribunal's decision on interest payment post three months from the refund application date without issuing any specific direction.

This detailed analysis covers the issues involved in the legal judgment, outlining the background, arguments presented, judicial decisions, and final outcome comprehensively.