2022 (9) TMI 1278 - AT - Central Excise

Grant of interest on the amount deposited during investigation which has subsequently been ordered to be refunded - interest at the rate of 6 per cent under the notification dated 21.08.2014 issued under section 35FF of the Central Excise Act, 1944 - HELD THAT - The Allahabad High Court in Pace Marketing Specialties v/s Commissioner of Central Excise 2011 (8) TMI 796 - ALLAHABAD HIGH COURT while granting interest at the rate of 12 per cent had relied upon the decision of the Supreme Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT - the view taken by the Allahabad in Pace Marketing is followed by the Division Bench of the Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD . The appellant would, therefore, be entitled to interest at the rate of 12 per cent instead of 6 per cent from the date of deposit till the date of payment - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to interest on the refund amount.
2. Applicability of interest rate - 6% or 12%.

Analysis:
1. The appeal was filed against the order passed by the Commissioner of Central Tax (Appeals) to challenge the grant of interest at a rate of 6% under a specific notification. The appellant, engaged in manufacturing excisable goods, had deposited a substantial amount during an investigation resulting in the issuance of a show cause notice. Although the demand was later dropped, the appellant filed a refund claim and was granted the refund without interest. Subsequently, the appellant sought interest on the refund amount, leading to a series of appeals and orders. The main contention revolved around whether interest should be granted on the refund amount and at what rate.

2. The appellant initially sought interest at a higher rate of 9 to 18%, but the Commissioner (Appeals) upheld the interest rate of 6%. The appellant relied on a Tribunal decision in another case to argue for a 12% interest rate based on the deposit made during the investigation. The Department's representative, however, supported the 6% interest rate citing a specific notification and a judgment of the Madras High Court. The Tribunal considered these arguments, along with previous judgments and notifications related to interest rates under the Excise Act.

3. After analyzing the various notifications and judgments, including those from the Allahabad High Court and the Supreme Court, the Tribunal concluded that interest should be granted at a rate of 12% instead of 6% on the amount deposited during investigation until the payment date. The Tribunal aligned with the Allahabad High Court's interpretation and the Division Bench's decision in a similar case, deviating from the lower interest rate prescribed by the notification. Consequently, the appeal was allowed, modifying the previous order to reflect the higher interest rate of 12%.

This detailed analysis highlights the progression of the case, the arguments presented by both parties, and the Tribunal's reasoning behind the decision to grant interest at a rate of 12% instead of 6% on the refund amount.