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2022 (12) TMI 364 - AT - Central ExciseInterest on the amount of refund sanctioned - deposit made during the investigations is merely a deposit of the duty under section 11B of Central Excise Act, 1944 (CEA), or not - applicability of Section 11BB of CEA - HELD THAT - Hon ble Apex Court has settled this issue in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT holding the assessee entitled for interest on the refund of the amount which he was not liable to pay to the Department from that date of the deposit itself. Section 11B of CEA is not applicable to such revenue deposits. It is further observed, as has been brought to notice, that Department since the time of issue of show cause notice have been acknowledging that amount in question is neither the amount of duty nor the amount of pre-deposit, the said acknowledgement is sufficient when read in the light of above discussed law to hold that the appellant was definitely entitled for interest on the amount of Rs.10,00,000/- but not in accordance with section 11B/11BB of Central Excise Act, 1944. Accordingly, it is held that Commissioner (Appeals) has wrongly involved the said provision while restricting the entitlement of appellant for claim of interest. The appellant is entitled for the interest @ 12% per annum from the date it was deposited i.e. with effect from 31.08.2009/ date of clearance of cheque for the said amount of Rs 10 lakh. Issue No. (1) as framed above accordingly is decided in favour of the appellant. Whether the Appellant is entitled for interest on the amount of interest if sanctioned as compensation to be paid by the Department for causing unnecessary monetary loss and harassment to the Appellant? - HELD THAT - The amount in question was not a duty deposit but was the Revenue deposit, the Government has retained the said amount over long years, as such appellant is held entitled for interest as compensation on the amount of interest already awarded under issue No. (1) however, @6% from the date of impugned Order-in-Appeal till its disbursement. Appeal allowed - decided in favor of appellant.
Issues involved:
1. Entitlement to interest on the amount deposited during investigation until disbursement. 2. Entitlement to interest on the interest sanctioned as compensation for monetary loss and harassment. Analysis: Issue 1: The appellant claimed interest on the amount deposited during investigation. The Tribunal referred to the case law of Sandvik Asia Ltd., which held that interest is payable on the refund of amounts not owed to the Department from the date of deposit. The Tribunal also cited the case of M/s. Parle Agro Pvt. Ltd. vs CGST, NOIDA, supporting the entitlement to interest from the date of deposit. It was noted that the amount in question was not a duty deposit but a revenue deposit. The Department acknowledged that the amount was neither duty nor a pre-deposit. Consequently, the appellant was held entitled to interest at 12% per annum from the date of deposit. Issue 2: Regarding the entitlement to interest on the interest sanctioned as compensation, the Tribunal observed that the appellant had already been granted interest on the principal amount. Referring to the impugned Show Cause Notice, it was evident that the deposited amount did not appear to be duty or pre-deposit. The Tribunal relied on the case of M/s. Digi Pro Import and Export P Ltd. vs Union of India, highlighting the unauthorized collection of duty during investigation. As no contrary decisions were presented, the appellant was awarded interest as compensation at 6% from the date of the impugned Order-in-Appeal until disbursement. In conclusion, both issues were decided in favor of the appellant, leading to the setting aside of the order under challenge and allowing the appeal.
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