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2025 (1) TMI 1317 - AT - Central ExciseInterest on the refunded amount deposited as a pre-deposit under the erstwhile provisions of Section 35F and Section 35FF of the Central Excise Act 1944 - HELD THAT - In the present case appellant had deposited the amounts by way of reversal of entries in the CENVAT account on 15.11.2007. These amounts were appropriated by the adjudicating authority vide order in original dated 29.05.2009. After appropriation the amounts deposited acquired the character of duty. The order of appropriation was upheld by the Commissioner (Appeal). Subsequently Tribunal allowed the appeal filed by the appellant leading to present proceedings of refund. From the perusal of the above section 35F it is evident that the amounts deposited in terms of this section are noting but duty. The use of phrase in this section pending the appeal deposit with the adjudicating authority the duty demanded. Further from the perusal of Section 35 FF it is evident that in case the appeal is finally decided in favour of the appellant hen the amount so deposited under Section 35 F shall be refunded along with interest for period after expiry of period of three months from the date of communication of order of Appellate Authority at the rates specified as per section 11BB. In case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT Hon ble Supreme Court has held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Interpreting the above decision of Hon ble Supreme various benches of tribunal have concluded in the favour of the grant of interest form the date of deposit and at the rate of 12% (though not provided by the statute or any Notification issued in terms of Section 11BB or Section 35FF of the Central Excise Act 1944). However it may also be noted that these decisions were in respect of the deposits made when there was no separate provision for refund of deposits along with interest. In that situation courts and tribunals were allowing interest from the date of deposit till the date of refund and were also prescribing the rate of interest as deemed fit. Conclusion - The appellant was not entitled to interest on the refunded pre-deposit amount as the refund was made within the statutory period and the applicable provisions did not mandate interest payment. There are no merits in the appeal - appeal dismissed.
The judgment concerns an appeal filed by the appellant against the order of the Commissioner (Appeals) Central Excise & CGST, Noida, which rejected the appellant's claim for interest on a refund amount. The core issue revolves around whether the appellant is entitled to interest on the refunded amount deposited as a pre-deposit under the erstwhile provisions of Section 35F and Section 35FF of the Central Excise Act, 1944.
Issues Presented and Considered: The primary legal question considered is whether the appellant is entitled to interest on the amount refunded, which was initially deposited as a pre-deposit during the pendency of an appeal. Specifically, the appellant claims interest from the date of deposit until the refund was granted, relying on various judicial precedents and statutory provisions. Issue-wise Detailed Analysis: Relevant Legal Framework and Precedents: The legal framework involves the interpretation of Sections 35F and 35FF of the Central Excise Act, 1944, as they existed during the relevant time. Section 35F required a pre-deposit of duty or penalty pending an appeal, while Section 35FF provided for interest on delayed refunds of such deposits. The appellant relied on several precedents, including the decisions in Modern Threads India Ltd., Indore Treasure Market City Pvt. Ltd., and others, which dealt with similar issues of interest on delayed refunds. Court's Interpretation and Reasoning: The Tribunal examined the statutory provisions and the amendments brought by the Finance Act, 2014. It noted that the provisions applicable at the time of the deposit governed the refund and interest. The Tribunal emphasized that the refund of pre-deposits is distinct from the refund of duty, and the interest on such refunds is governed by the specific provisions of Section 35FF, which requires interest to be paid from the date of communication of the appellate order, not from the date of deposit. Key Evidence and Findings: The Tribunal found that the refund was processed within three months from the date of communication of the appellate order, as required by Section 35FF. Therefore, no interest was due to the appellant under the statutory provisions. The Tribunal also referred to several judicial decisions that supported this interpretation, including the Supreme Court's decision in Ranbaxy Laboratories, which clarified that interest liability commences after the expiry of three months from the date of receipt of the refund application. Application of Law to Facts: The Tribunal applied the statutory provisions and judicial precedents to the facts of the case, concluding that the appellant was not entitled to interest on the refunded amount since the refund was made within the statutory period. The Tribunal distinguished between the refund of duty and the refund of pre-deposits, noting that the latter does not automatically attract interest unless specified by the statute. Treatment of Competing Arguments: The Tribunal considered the appellant's reliance on various judicial precedents but found that none of them could override the clear statutory provisions. It noted that decisions granting interest from the date of deposit were based on circumstances where no statutory provision existed, which was not the case here. Conclusions: The Tribunal concluded that the appellant was not entitled to interest on the refunded pre-deposit amount, as the refund was processed within the statutory period, and the applicable provisions did not provide for interest in such circumstances. Significant Holdings: Core Principles Established: The judgment reinforces the principle that interest on refunds is governed by specific statutory provisions, and in the absence of a statutory mandate, interest cannot be granted. The refund of pre-deposits is distinct from the refund of duty, and interest on such refunds is subject to the provisions applicable at the time of deposit. Final Determinations on Each Issue: The Tribunal dismissed the appeal, holding that the appellant was not entitled to interest on the refunded pre-deposit amount, as the refund was made within the statutory period, and the applicable provisions did not mandate interest payment.
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