Pre-deposit refund and interest: appellate remand set aside, with delayed refund held to carry interest.

A pre-deposit made for an appeal under the Central Excise Act was required to be refunded when the appellant succeeded, and the appellate authority had to decide the refund claim on the material already before it. The Commissioner (Appeals) had no power to remand the matter for reconsideration by the original authority in these circumstances, so the remand was unsustainable. Where refund of the pre-deposit was delayed, interest was payable on the belated refund, and denial of interest was contrary to the settled legal position. The assessee was therefore entitled to refund of the pre-deposit with interest.

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Issues: (i) Whether the Commissioner (Appeals) had power to remand the refund claim for reconsideration by the original authority; and (ii) whether interest was payable on delayed refund of an amount pre-deposited under Section 35F of the Central Excise Act.

Issue (i): Whether the Commissioner (Appeals) had power to remand the refund claim for reconsideration by the original authority.

Analysis: The pre-deposit had been made in the course of an earlier appeal and the original authority had declined refund only because the original deposit documents were not produced. Those documents were produced before the first appellate authority. The appellate forum was required to decide the refund claim on the material before it and could not send the matter back in the circumstances.

Conclusion: The remand ordered by the Commissioner (Appeals) was without power and unsustainable, in favour of the assessee.

Issue (ii): Whether interest was payable on delayed refund of an amount pre-deposited under Section 35F of the Central Excise Act.

Analysis: The claim related to return of a pre-deposit made for the purposes of appeal, and the settled position recognised that such deposit must be returned when the appellant succeeds. The applicable legal position also recognised liability to pay interest on belated refund of such pre-deposit, and the lower appellate view denying interest was contrary to that position.

Conclusion: Interest was payable on the delayed refund of the pre-deposit, in favour of the assessee.

Final Conclusion: The appeal succeeded, the remand was set aside, and the assessee was held entitled to refund of the pre-deposit with interest.

Ratio Decidendi: A pre-deposit made under Section 35F of the Central Excise Act must be refunded on success in appeal, and where such refund is delayed, interest is payable from the expiry of the prescribed period.

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