2010 (7) TMI 356 - HC - Central Excise

Court revises interest rate on Central Excise Duty pre-deposit

The Court held that the pre-deposit was considered towards Central Excise Duty, applying Section 11-BB for interest determination. The Single Judge's 14% ... Interest – Delay in refund of pre-deposit or duty - 'Pre-Deposit' is used, if the deposit is towards 'Central Excise Duty', then as far as the payment of interest is concerned, the provisions of Section 11-BB of the Central Excise Act alone is having its application - rate of interest to be paid is 8% from 2-9-2003 to 11-9-2003 and 6% from 12-9-2003 to till date - it is not established that the payment is not made towards 'Central Excise Duty', but towards other payment, the argument advanced by the learned counsel for the appellants will not hold good - the respondent was directed to pay interest at the rate of 8% from 2-9-2003 to 11-9-2003 and 6% from 12-9-2003 to till the date of payment Issues:1. Appeal against the order of the learned Single Judge dated 30-10-2009 in W.P. (MD) Nos. 3167 and 3168 of 2006.2. Refund of pre-deposit amount without interest.3. Appeal for modification of the order directing payment of interest.4. Determination of whether the pre-deposit was towards Central Excise Duty.5. Dispute over the rate of interest to be paid on the refunded amount.Issue 1:The writ appeals were filed by the Assessees against the order of the learned Single Judge dated 30-10-2009. The appeals were heard together and disposed of by a common judgment. The parties were referred to as per their rank in the appeals for convenience.Issue 2:The appellants made a pre-deposit during a surprise inspection, which they later sought as a refund with interest. The refund was ordered without interest, leading to writ petitions for interest payment. The Single Judge directed interest at 14% per annum, to be credited to the CENVAT Account, prompting the appellants to seek modification.Issue 3:The Single Judge dismissed the petitions seeking modification, stating no provision allowed such changes in a writ petition. The appellants then filed writ appeals challenging this decision.Issue 4:The appellants argued that the amount paid was a pre-deposit and not Central Excise Duty, citing terms in the refund orders. They contended that Section 11-BB of the Central Excise Act applied only to Duty refunds, not pre-deposits, and sought interest without curtailment.Issue 5:The Senior Standing Counsel argued that the pre-deposit was towards Central Excise Duty, as no other payment was accepted by the Central Excise Department. Notifications determined the interest rate applicable, and the appellants' payment was considered as Excise Duty, entitling them to 8% interest from a specific period.In conclusion, the Court found that unless proven otherwise, the pre-deposit was considered towards Central Excise Duty, making the provisions of Section 11-BB applicable for interest determination. The Single Judge's order directing 14% interest was set aside, and the respondent was directed to pay interest at 8% and 6% for specific periods. The respondent was instructed to make the payment within thirty days. The appeals were disposed of with no costs awarded.