2022 (8) TMI 985 - HC - Central Excise

Interest on refund - relevant date from which the interest on refund will get triggered from the date of deposit or after the expiry of three months from the date when the refund application was filed? - rate at which interest should be paid - section 11BB of the Central Excise Act, 1944 - notification dated 12.09.2003 issued by the Government of India through the Ministry of Finance (Department of Revenue) - threshold limit of amount which was deposited in the course of investigation - HELD THAT - The principal amount, therefore, which is involved in the present proceedings is Rs 25,00,000/-. Issue notice - List the matter on 11.11.2022.

Summary

Issues:
1. Date from which interest on refund will be triggered
2. Rate at which interest should be paid

Analysis:
1. The petitioner's counsel highlighted two key issues for consideration in the case. Firstly, the date from which the interest on refund should be triggered was in question - whether from the date of deposit or after three months from the date of filing the refund application. Secondly, the rate at which the interest should be paid was under scrutiny.
2. The petitioner's counsel argued that the interest should be paid at a rate of 6%, citing Section 11BB of the Central Excise Act, 1944, and a notification issued by the Government of India through the Ministry of Finance. He contended that the interest rate should range between 5% and 30% as per the notification, with the specific rate being fixed at 6% as per the notification dated 12.09.2003.
3. The petitioner's counsel further pointed out that the Customs, Excise and Service Tax Appellate Tribunal had granted interest at a rate of 12%, which he argued was contrary to the statutory rate of interest. Additionally, the Tribunal had ruled that interest is payable from the date of deposit until the date of refund, which was contested by the petitioner as a substantial question of law.
4. It was noted that the Supreme Court's judgment in Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune & Ors. (2006) 2 SCC 508 had been explained in a subsequent judgment dated 19.04.2022 in Civil Appeal nos. 2995-2996/2022 titled Union of India & Ors. v. M/s Willowood Chemicals Pvt. Ltd. & Anr., as referenced by the petitioner's counsel.
5. The respondent's counsel mentioned that the refund amount sought was related to the sum deposited during the investigation, with the principal amount involved in the proceedings being Rs 25,00,000.
6. Subsequently, notice was issued, and the respondent's counsel accepted the notice on behalf of the respondent without filing a reply, opting instead to submit written submissions. The counsels were granted permission to file written submissions not exceeding two pages each, at least three days before the next hearing scheduled for 11.11.2022. Additionally, the operation of the impugned orders was stayed until further proceedings.