2019 (11) TMI 247 - AT - Service Tax

Entitlement of interest on pre-deposit made - Section 35FF of Central Excise Act, 1944 - It is the contention of the Revenue that the learned Commissioner (Appeals) has failed to appreciate the provision of Section 35FF of Central Excise Act, 1944 as was in existence, on the date the pre-deposit was made - HELD THAT - Various provisions of Section 35F and 35FF of CEA makes it clear that the Appellants are entitled to interest from the date only after expiry of 3 months from the date of communication of the order i.e. in the present case from 17.03.2019. The impugned order is modified and for calculation of the interest on the refund amount, the matter is remanded to the Adjudicating authority - Appeal allowed by way of remand.

Summary

Issues:
1. Whether interest is payable on the pre-deposit made by the Appellant pursuant to the order of the Tribunal?
2. Interpretation of Section 35FF of the Central Excise Act, 1944 regarding the payment of interest on the pre-deposit.

Analysis:
Issue 1:
The case involved a dispute regarding the payment of interest on a pre-deposit made by the Appellant following the Tribunal's order. The Tribunal had directed the Appellant to deposit a certain amount, part of which had already been paid. The Appellant sought interest on the refund of this pre-deposit amount. The Revenue contended that interest should be paid only after three months from the date of communication of the order, as per Section 35FF of the Central Excise Act, 1944.

Issue 2:
The crux of the matter revolved around the interpretation of Section 35FF of the Central Excise Act, 1944. The provision before 06.08.2014 stated that interest on delayed refunds of amounts deposited under the proviso to Section 35F would be payable after three months from the date of communication of the order of the appellate authority. However, the provision post 06.08.2014 allowed for interest at a specified rate from the date of payment till the date of refund. The critical distinction lay in the applicability of the provision based on the date of deposit, with amounts deposited before the commencement of the Finance Act, 2014 being governed by the earlier provision.

The Tribunal, after considering the contentions of both parties and examining the provisions of Section 35FF, concluded that interest on the pre-deposit amount was payable only after three months from the date of communication of the order. Therefore, the Tribunal modified the impugned order and remanded the matter to the Adjudicating authority for the calculation of interest on the refund amount from the appropriate date. The Revenue's appeal was partly allowed based on this interpretation of the law.