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2019 (12) TMI 9 - AT - Central ExciseDemand of interest for delayed refund - relevant date for calculation of refund - earlier the amount was deposited towards recovery of refund proceedings - case of appellant is that they are entitled to claim interest from the date of deposit of the amount till its realization as the amount paid by the appellant as was not a duty - whether the appellant is entitled to claim interest from the date of deposit till its realization of the amount? HELD THAT - The issue decided in the case of M/S. FUJIKAWA POWER AND M/S. KENZO INTERNATIONAL VERSUS CCE ST, CHANDIGARH-I 2019 (11) TMI 1197 - CESTAT CHANDIGARH where it was held that the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. Thus, the appellant is entitled to claim the interest on delay refund from the date of deposit till its realization. The interest on the refund shall be payable @ 12% per annum - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to interest on delayed refund from the date of deposit till realization. 2. Rate of interest applicable on the delayed refund. Detailed Analysis: Issue 1: Entitlement to Interest on Delayed Refund from the Date of Deposit Till Realization The appellant filed a refund claim on 8.1.2018 for ?40 lakhs along with interest following a Tribunal order dated 30.11.2017. The Commissioner had previously disallowed Cenvat credit and rebate of duty on exported goods and imposed penalties, which led to the appellant depositing ?40 lakhs and furnishing a bank guarantee of ?10 lakhs. The Tribunal eventually set aside the original order on 30.11.2017, leading to the refund sanctioning authority allowing the refund but rejecting the interest claim. The appellant challenged this rejection, arguing for interest from the date of deposit until realization, as the amount deposited was not a duty. The Tribunal referenced the case of M/s. Fujikawa Power vs. CCE, Chandigarh-I, where it was observed that interest on delayed refund should be paid after three months from the communication of the appellate authority's order, as per Section 35FF of the Central Excise Act, 1944. However, the Tribunal found that provisions of the Income Tax Act and the Central Excise Act are pari materia, meaning they are similar in nature. Thus, the decision in Sandvik Asia Limited, which dealt with interest on delayed refunds under the Income Tax Act, was applicable. The Tribunal concluded that the appellant is entitled to interest from the date of deposit till realization. Issue 2: Rate of Interest Applicable on the Delayed Refund The Tribunal discussed various precedents, including the Hon’ble Kerala High Court decision in Sony Pictures Networks India Pvt. Ltd., which held that the interest on delayed refunds should be at 12% per annum. This rate was also supported by the case of Ghaziabad Ship Breakers Pvt. Ltd., where the Tribunal allowed interest at 12% on refunds of pre-deposits. The Tribunal found that both the Income Tax Act and Central Excise Act provisions on interest for delayed refunds are similar, and thus, the appellant should receive interest at 12% per annum from the date of deposit until the refund is realized. Conclusion: The Tribunal allowed the appeal, granting the appellant interest on the delayed refund from the date of deposit till realization at a rate of 12% per annum. The appeal was allowed with consequential relief, as pronounced in court on 27.11.2019.
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