2023 (12) TMI 111 - AT - Central Excise

Refund claims for interest - denial on the ground that as per the adjudicating authority interest was not a pre-deposit under Section 35 F as amended w.e.f. 06.08.2014 - HELD THAT - Appellant had deposited an amount of Rs.1,00,00,000/- as directed by the Hon ble High Court vide order dated 08.07.2014 - Admittedly, in this case the appeal was filed on 27.08.2014 all though it was in respect of the Order-in-Original dated 23.05.2013, no appeal was filed before the appellate authority i.e. CESTAT. The amount was deposited prior to the date of commencement of Finance (No 2) Act, 2014 as per the direction of Hon ble High Court, this appeal was filed on 27.08.2014, i.e after the date of commencement of Finance Act, 2014. The Tribunal has considered this appeal filed after 27.08.2014 in terms of the amended provisions of Section 35F by treating the amount deposited as per direction of Hon ble High Court as a pre-deposit as per Section 35F as amended w.e.f. 06.08.2014. From the proviso to the amendment made in Section 35 F, it is quite evident that the date of filing the appeal is the date for determining the applicability of the amended section and not the date of deposit nor the date of order appealed against is having any relevance. Tribunal has in its order dated 12.12.2014, considered the amount deposited by the appellant as per the directions of the Hon ble High Court, as deposit made under the provisions of amended Section 35F, for purpose of consideration of appeal. Tribunal has considered the amount deposited as per the direction of Hon ble High Court after completion of adjudication proceedings to be in compliance of the conditions of mandatory pre-deposit. It is important to note that amount was deposited as per the direction of Hon ble High Court and was not an deposit made in terms of Section 35 F prior to the commencement of the Finance (No 2) Act, 2014. Accordingly the proviso to Section 35FF would not be applicable in the facts of the present case. Similar has been stated by the Board in its Circular No 984/08/2014 dated 16.09.2014, where it was held that Since the amount paid during investigation/audit takes the colour of deposit under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962 only when the appeal is filed, the date of filing of appeal shall be deemed to be the date of deposit made in terms of the said sections. Impugned order holding contrary to the above cannot be sustained and the same is set aside - appeal allowed.

Summary

Issues Involved:
1. Entitlement to interest on pre-deposit amount.
2. Applicability of amended Section 35FF of the Central Excise Act, 1944.

Summary:

Entitlement to Interest on Pre-deposit Amount:
The appellant contended that the pre-deposit amount of Rs. 1 crore, made on 30.08.2013 as per the Hon'ble High Court's direction, should accrue interest from the date of payment until the refund date, as per Circular No. 984/08/2014-CX dated 16.09.2014. The adjudicating authority denied interest, stating that the amended Section 35FF, effective from 06.08.2014, was not applicable since the refund was made within three months. The Commissioner (Appeals) upheld this decision, concluding that the appellant was not entitled to interest as the pre-deposit was governed by the pre-amendment provisions of Section 35FF.

Applicability of Amended Section 35FF:
The appellant filed a refund claim following the Tribunal's Final Order dated 04.04.2018, which was allowed by the Original Authority except for the interest on Rs. 1 crore. The Commissioner (Appeals) maintained that the amount deposited before 06.08.2014 was not subject to the amended Section 35FF. However, the Tribunal noted that the appeal was filed on 27.08.2014, after the amended Section 35F came into force. The Tribunal had treated the amount deposited as a pre-deposit under the amended Section 35F, making the amended Section 35FF applicable for interest determination. The Tribunal emphasized that the date of filing the appeal, not the deposit date, determines the applicability of the amended section.

Conclusion:
The Tribunal held that the appellant was entitled to interest on the pre-deposit amount as per the amended Section 35FF. The impugned order denying interest was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision aligns with the Board's Circular No. 984/08/2014, stating that payments made during investigations or audits take the color of deposit under the amended Section 35F upon filing the appeal.