2019 (11) TMI 234 - AT - Central Excise

Interest on delayed refunds - Whether Appellant is entitled for interest on the amount refunded w.e.f the date of respective payments in accordance of Section 35 FF of the Central Excise Act, 1944? - HELD THAT - This provision is the amended provision as applicable w.e.f 06.08.2014, the proviso makes it abundantly clear that this will be applicable only for such deposits as are made after coming into existence of this amendment - Apparently and admitted, the amounts in this case were paid in the year 2003 and 2012. The both payments being prior the aforesaid amendment in Section 35FF, this provision is not applicable. Otherwise also it is an admitted fact that order of refund was announced on 08.02.2016, the amount was disbursed on 29.04.2016 once the payment is made within three months of the refund, no question of any interest to be paid along therewith at all arises. Even for the period since August, 2012 till February, 2016, the Appellant is held not entitled for the interest as prayed - Appeal dismissed - decided against appellant.

Summary

Issues:
1. Entitlement to interest on refunded amount.
2. Applicability of Section 35FF of the Central Excise Act, 1944.

Analysis:
1. The Appellant, engaged in the manufacture of vegetable oil, deposited a total amount of ?18,90,323/- in 2003 and 2012, which was later refunded in 2016. The Appellant claimed interest on the refunded amount from the date of deposit. The Commissioner (Appeals) allowed the appeal, directing the refund. However, a show cause notice proposing rejection of interest claim was issued in 2017. The Tribunal heard arguments from both sides.

2. The key issue was whether the Appellant is entitled to interest on the refunded amount from the date of respective payments under Section 35FF of the Central Excise Act, 1944. The provision states that interest is payable if the amount is not refunded within three months of the appellate authority's order, applicable to deposits made after the amendment in 2014. The payments in this case were made in 2003 and 2012, pre-amendment. The order for refund was issued in 2016, and the amount was disbursed within three months, negating the need for interest payment.

3. The Appellant argued that the amount was unlawfully detained by the department, citing case laws to support the claim for interest. The Department Representative contended that the deposits were made following orders from the adjudicating authorities, High Courts, and the Supreme Court. The Supreme Court's directions were followed, and the refund was processed promptly after the order in 2016, indicating no illegal detainment.

4. The Tribunal noted that the amended provision of Section 35FF was not applicable to pre-amendment deposits. The deposits made in 2003 and 2012 were in compliance with court orders. The Supreme Court's direction in 2012 did not imply any entitlement to interest. As there was no intentional delay or negligence by the department in processing the refund, the Appellant's claim for interest was dismissed.

5. The Tribunal concluded that the Appellant was not entitled to interest on the refunded amount, considering the timeline of events and the absence of any findings regarding interest entitlement in the Supreme Court's order. The appeal was dismissed based on these findings.