2014 (8) TMI 481 - HC - Service Tax

Interest on refund claim - date of service of order of Tribunal to the department - Whether service of a certified copy on the Commissioner of Central Excise, Delhi-I would constitute due service for the purpose of section 35FF of the Central Excise Act, 1944? - Held that - Normally it is the Assistant Commissioner who grants the refund order. Even otherwise, in the facts of this case, the adjudication order had, in any event, been passed by the Commissioner of Central Excise, Delhi-I. Thus, in whichever manner the case is looked at, the Commissioner of Central Excise, Delhi-I would fall within the expression adjudicating authority as appearing in section 35FF of the said Act. Therefore, the relevant question to ask is on which date was the order passed by the Tribunal communicated to the adjudicating authority . Clearly, this fact has been recorded in the order dated 14.03.2014 itself that the order passed by the Tribunal on 04.03.2011 was served on the Commissioner of Central Excise, Delhi-I on 16.03.2011. Therefore, the refund ought to have been made on or before 16.06.2011. However, the refund was actually made on 18.10.2011. Therefore, interest was payable under section 35FF of the said Act to the petitioner for the period 16.06.2011 to 18.10.2011. Rate of interest has to be specified by the Central Government by a notification in the official gazette. However, the rate cannot be below five per cent and cannot exceed thirty per cent per annum. As per the notification No.67/2003-CE(N.T.) dated 12.09.2003 which was applicable during the relevant period, the Central Government has fixed the rate of interest at six per cent per annum for the purposes of section 11BB of the said Act. It is that rate of interest which shall be applicable in the present case also - Decided in favour of assessee.

Summary

Issues:
1. Payment of interest on refund amount by Revenue to the petitioner.
2. Interpretation of due service for the purpose of section 35FF of the Central Excise Act, 1944.
3. Determination of the adjudicating authority under section 35FF.
4. Calculation of interest rate under section 11BB of the Central Excise Act, 1944.

Analysis:

Issue 1: Payment of interest on refund amount
The petitioner succeeded in its appeal before the Customs, Excise and Service Tax Appellate Tribunal and was refunded the pre-deposit amount without any interest. The petitioner sought interest on the refund, which was initially rejected by the Court. However, a review petition was filed, and the Division Bench recalled its earlier order based on the clarification that the order had been served on the Commissioner of Central Excise, Delhi-I. The key question was whether the petitioner was entitled to interest under section 35FF of the Act.

Issue 2: Interpretation of due service
The Division Bench reconsidered the earlier order and questioned whether the service of a certified copy on the Commissioner of Central Excise, Delhi-I constituted due service for the purpose of section 35FF of the Act. It was established that the order had been communicated to the adjudicating authority, and the refund should have been made by a specific date, leading to the conclusion that interest was payable to the petitioner.

Issue 3: Determination of the adjudicating authority
The Court examined the definition of "adjudicating authority" under the Act, which includes any authority competent to pass orders under the Act. In this case, the Commissioner of Central Excise, Delhi-I was considered the adjudicating authority, and the order from the Tribunal had been communicated to him within the required timeline, making the petitioner eligible for interest under section 35FF.

Issue 4: Calculation of interest rate
The Court determined that the rate of interest under section 11BB of the Act had to be specified by the Central Government and could not be below five percent or exceed thirty percent per annum. As per the applicable notification during the relevant period, the rate was fixed at six percent per annum. Therefore, the Court directed the Revenue to pay interest to the petitioner at the rate of six percent per annum for the specified period.

In conclusion, the Court allowed the writ petition, ordering the Revenue to pay interest to the petitioner for the specified period at the prescribed rate, emphasizing compliance within a set timeframe.