2018 (2) TMI 1392 - AT - Central Excise

Clandestine removal of finished goods - mis-use of the cenvat credit - seizure of currency - Held that - Revenue should pay interest for the period the amount remained in its custody - the amount of ₹ 8 lakh seized in cash and held by the Department in bank account should be eligible for interest from 21.09.2005 (from the date of seizure) till its actual refund. The interest in this case should be computed on the basis of the interest accrued to the Revenue for keeping such money in the bank account. Interest as per the provisions of Section 35 F ibid - Held that - the only active provision contained in the Central Excise Statute for grant of interest is Section 11 BB, which mandates that if the refund is not sanctioned within three months from the date of its filing, the said refund should be paid along with interest at the prescribed rate. Further, Section 35 FF of the Act provides that in case of favourable order by the Appellate Authorities, the refund should be sanctioned within three months from the date of communication of such order to the adjudicating authority - In this case, since the order was not communicated to the appellant or the Adjudicating Authority on 26.12.2016, the claim of the appellant for interest from such date, should not merit consideration. The appellant should be entitled for refund of interest from the date of seizure of currency, till its actual refund by the Department and that the Department should pay the interest amount at the applicable bank rate - appeal disposed off.

Summary

Issues:
- Entitlement to interest on cash deposit seized by the Department
- Entitlement to interest as per Section 35 F of the Central Excise Act
- Commencement of interest accrual period for refund

Analysis:

Entitlement to interest on cash deposit seized by the Department:
The appellant claimed interest on the cash deposit of ?8 lakh seized by the Department from the date of seizure. The Tribunal cited a judgment by the Allahabad High Court, stating that interest on confiscated amounts should be paid for the entire period it remained in the custody of the Revenue. Accordingly, the Tribunal held that the appellant should receive interest on the seized amount from the date of seizure until its refund, calculated based on the interest accrued to the Revenue for holding the money in a bank account.

Entitlement to interest as per Section 35 F of the Central Excise Act:
The appellant argued for interest under Section 35 F of the Central Excise Act, but the Tribunal noted that the Act only provides for interest under Section 11 BB. This section mandates interest payment if a refund is not sanctioned within three months of filing. As the refund claim was filed after a favorable order by the Tribunal, and there was a delay of only four days in sanctioning the refund, the appellant was entitled to interest for this short period, as correctly awarded by the Commissioner (Appeals). The claim for interest from the date of the Tribunal's order was dismissed as Section 35 FF specified interest accrual from the date of communication of the order to the Adjudicating Authority.

Commencement of interest accrual period for refund:
Based on the judgment of the Allahabad High Court in a similar case, the Tribunal ruled that the appellant should receive interest from the date of seizure of currency until its refund by the Department, with the interest amount to be paid at the applicable bank rate. This decision was made in alignment with the legal precedent and principles established by previous court rulings.

In conclusion, the Tribunal disposed of the appeal in favor of the appellant, granting interest on the seized cash deposit and clarifying the entitlement to interest under the relevant provisions of the Central Excise Act. The decision was based on legal interpretations and precedents set by higher courts, ensuring a fair and just resolution in the matter.