2022 (7) TMI 520 - AT - Central Excise

Interest on demands made by the appellant during investigation and pursuant to the initial order of Departmental Adjudicating Authority, confirming the demand proposed in the impugned show cause notices - Section 11B of CEA 1944 - HELD THAT - It is observed that the Adjudicating Authority below has though sanctioned the refund of the said deposited amount, however, while relying upon the section 11B of the Central Excise Act, 1944 has denied the entitlement for interest on the said deposit. It is observed that the issue has been dealt in detail by this Tribunal in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD . Even the Hon ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT has dealt with the issue deciding the same in favour of the assessee holding the assessee entitled for the interest @12 % for the refund of the amount which were deposited not as the amount of duty. The issue is no more res integra that any deposits made if have not been confirmed as duty the time bar of Section 11B of Central Excise Act cannot be invoked. It stands clear that the amount in question was not the amount of duty after the Tribunal set aside the duty liability of the appellant. Hence, it is held that section 11 B is not applicable to such deposits. Commissioner (Appeals) is held to have wrongly invoked the said provisions. In terms of section 35 of Central Excise Act, the amount of refund being in the nature of deposit only appellant is held entitled for the interest on the said amount that too @ 12 % from the date of deposit till the date of realisation thereof. Appeal allowed.

Summary

Issues:
Claim of interest on deposits made during investigation and refund of deposited amount.

Analysis:
1. The appellants, engaged in manufacturing MS Ingots and MS Bars, were alleged to have fraudulently availed Cenvat Credit based on invoices without supplying goods. The Tribunal had earlier decided in favor of the appellants, leading to a refund claim for the deposited amount, which was subsequently sanctioned without interest.

2. The main issue revolved around the entitlement to interest on the deposited amounts during investigation. The appellant contended that precedent cases supported their claim for interest at a rate of 12%, citing legal authorities like Sandvik Asia Ltd. and Parle Agro (P) Ltd. The Department, however, argued that as the refund was granted within the prescribed time limit under section 11B of the Central Excise Act, the claim for interest was not maintainable.

3. The Tribunal, after considering the arguments, held that the appellant was entitled to interest on the deposits made during investigation. It referenced the case law of Parle Agro (P) Ltd., emphasizing that section 11B of the Excise Act did not apply in this scenario as the deposits were not confirmed as duty. Therefore, the appellant was granted interest at a rate of 12% from the date of deposit till realization, setting aside the orders denying interest.

4. The Tribunal's decision aligned with the legal principles that any deposits not confirmed as duty were not subject to the time bar of section 11B. As the amount in question was considered a deposit and not duty, the appellant rightfully received interest on the deposited amount. The Commissioner (Appeals) was found to have incorrectly applied section 11B, leading to the orders being overturned and both appeals being allowed.