2024 (7) TMI 303 - AT - Central Excise

Grant of interest from the date of deposit till the date of allowance of refund alongwith appropriate interest on the amount deposited during investigation - HELD THAT - The issue is no longer res integra and it has been held by Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD , wherein this Tribunal have held that interest on refund of amount deposited during investigation or deposited during pendency of appeal is allowable under Section 35EE of the Act and has to be paid from the date of deposit till the date of refund. The Appellant is entitled to interest on the refundable amount of Rs.50,00,000/- from the date of deposit (03.06.2006) till the date of refund being 02.01.2020, @ 12% per annum - Appeal allowed.

Summary

Issues:
Grant of interest on deposited amount during investigation and refund claim.

Analysis:
The appeal was filed by the Appellant challenging the Order-in-Appeal passed by the Commissioner (Appeals) regarding the grant of interest on the amount deposited during investigation. The Appellant had deposited Rs.50,00,000/- during the investigation conducted on 30.05.2006. A show cause notice was issued on 13.06.2008 demanding duty of Rs.11,06,661/- along with interest and penalty. The duty demand was confirmed by the Commissioner vide Order-in-Original No.05/CE/Commr./2010 on 31.03.2010, where the deposited amount was also appropriated. The Appellant appealed against this order, and the Tribunal set aside the order on 24.07.2017, allowing all appeals and granting consequential relief. The Department's appeal to the High Court was dismissed on 05.02.2019. The Appellant filed a refund application on 12.07.2019 for the deposited amount, claiming interest from the date of deposit till refund sanction. The Assistant Commissioner sanctioned the refund but did not address the interest claim, leading to an appeal by the Appellant on 01.12.2020 before the Commissioner (Appeals).

The Appellant argued that interest on the refundable amount deposited during investigation is allowable under Section 35EE of the Act, citing the Division Bench ruling in Parle Agro Pvt. Ltd. vs. Commissioner, CGST, Noida and the Supreme Court's decision in Sandvik Asia Ltd. vs. Commissioner of Income Tax-I, Pune. The Appellant sought consequential benefits based on these precedents. The Revenue's Authorized Representative supported the impugned order. The Tribunal found the issue to be settled by the Division Bench ruling in Parle Agro Ltd., confirmed by the Punjab & Haryana High Court in Riba Textile Ltd., and allowed the appeal. The Appellant was granted interest on the refundable amount from the date of deposit till the refund date at 12% per annum. The judgment was pronounced on 05th July, 2024.