2023 (7) TMI 950 - AT - Service Tax

Interest on refund of retention of rebate claim - Earlier recovery of interest made from the Rebate claim on exports - entitlement for interest for the intervening period - HELD THAT - The said issue has come up before this Tribunal in several cases. In the case of Riba Textile Ltd 2020 (2) TMI 602 - CESTAT CHANDIGARH where this Tribunal observed the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. The said order has been affirmed by Hon ble Punjab Haryana High Court 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT , therefore it is held that the appellant is entitled to claim interest i.e. from the date of sanctioning of the rebate claim i.e. 4.02.2016 and 12.03.2016 for Rs. 36,98,880/- and Rs. 6,97,904/- respectively till the date of sanctioning of their rebate claim i.e. 31.03.2021 and 10.06.2021 respectively. It is pertinent to mentioning that the appellant is entitled to interest @ 12% P.A. as held by this Tribunal in the case of Parle Agro Pvt Ltd 2021 (5) TMI 870 - CESTAT ALLAHABAD . Appeal disposed off.

Summary

Issues Involved:

1. Whether the appellant is entitled to interest on the delayed refund of the rebate claim.
2. The rate of interest applicable for the delayed refund.

Summary:

Issue 1: Entitlement to Interest on Delayed Refund

The appellant contested the deduction of interest from their rebate claims by the Adjudicating Authority in 2016. The Tribunal had previously allowed their appeals, leading to the refund claim being sanctioned. However, the appellant argued they were entitled to interest for the intervening period when the rebate amount was withheld. The Tribunal cited several cases, including Riba Textile Ltd. vs CCE and Sandvik Asia Ltd vs. CIT, Pune, to support the appellant's right to interest on delayed refunds. The Tribunal concluded that the appellant is entitled to claim interest on the delayed refund from the date of deposit until realization.

Issue 2: Rate of Interest Applicable

The Tribunal examined precedents and statutory provisions, including Section 243 of the Income Tax Act, 1961, and Section 35FF of the Central Excise Act, 1944, which are parimateria. The Tribunal referred to the Sony Pictures Networks India Pvt. Ltd. and Ghaziabad Ship Breakers Pvt. Ltd. cases, which established a 12% interest rate on delayed refunds. Consequently, the Tribunal held that the appellant is entitled to interest at 12% per annum from the date of sanctioning of the rebate claim (04.02.2016 and 12.03.2016) until the date of actual refund (31.03.2021 and 10.06.2021).

Conclusion:

The Tribunal directed the Adjudicating Authority to comply with the order within 30 days, granting the appellant interest at 12% per annum on the delayed refund. The appeals were disposed of accordingly.