2013 (6) TMI 269 - HC - Central Excise

High Court Upholds Interest on Predeposit Appeal, Affirms Circular 802/35/2004-CX

The Allahabad High Court dismissed the appeal under section 35-G of the Central Excise Act, upholding the decision of the Customs, Excise and Service Tax ... Interest on pre-deposit - Return of pre-deposits within three months - Compliance with Supreme Court direction and departmental circular - Refund of pre-depositInterest on pre-deposit - Return of pre-deposits within three months - Compliance with Supreme Court direction and departmental circular - Entitlement to interest on pre-deposit and the date from which interest on refunded pre-deposit is payable - HELD THAT: - The Tribunal allowed interest on the pre-deposit from 1st July 2000, i.e., from three months after the Tribunal's order dated 31st March 2000. The Court noted that the Apex Court in Commissioner of Central Excise, Hyderabad v. ITC Ltd. directed compliance with a draft circular placed before it, and that the Board thereafter issued Circular No.802/35/2004-CX dated 08-Dec-2004 reiterating that pre-deposits shall be returned within three months of disposal of the appeal in the assessee's favour. The Tribunal's grant of interest from the date falling three months after its order accords with the circular as approved by the Supreme Court. The appellant's contention that interest should run from the date of actual pre-deposit was rejected as inconsistent with the directions embodied in the circular and the Apex Court's order approving it.The Tribunal was correct in awarding interest from 1st July 2000 (three months after the Tribunal's order of 31st March 2000); the appellant is not entitled to interest from the date of pre-deposit.Final Conclusion: The appeal is dismissed; no substantial question of law arises and the Tribunal's order awarding interest from the three-month period after its order is upheld. Issues:- Appeal under section 35-G of the Central Excise Act against the judgment and order passed by the Customs, Excise and Service Tax Tribunal.- Claim for payment of interest on predeposit made before the Commissioner (Appeals).- Application for refund of five lakhs of rupees rejected by the adjudicating authority.- Appeal partly allowed for refund of Rs.5 Lakhs by the Commissioner (A).- Interpretation of the date from which interest on refund should be granted.- Compliance with circular no.802/35/2004 - CX dated 08-Dec-2004 regarding refund of pre-deposits within three months from the date of order passed by the Appellate Tribunal.Analysis:The judgment by the Allahabad High Court pertains to an appeal under section 35-G of the Central Excise Act against a decision by the Customs, Excise and Service Tax Tribunal. The Tribunal had allowed the appellant's appeal for the payment of interest on a predeposit made before the Commissioner (Appeals). The appellant had filed an application for a refund of five lakhs of rupees, which was initially rejected but later partly allowed by the Commissioner (A) resulting in the refund being granted. The key issue was the date from which interest on the refund should be granted.The appellant contended that interest should be paid from the date of predeposit. The court referred to a circular issued on 8.12.2004, which specified that pre-deposits must be refunded within three months from the date of the order passed by the Appellate Tribunal. The Tribunal, in this case, had allowed interest to the appellant after three months from its order date, in accordance with the circular approved by the Apex Court. Therefore, the court dismissed the appellant's submission that interest should be paid from the date of deposit, stating that the Tribunal's decision aligned with the circular.The court emphasized that no substantial question of law arose for consideration and subsequently dismissed the appeal. The judgment underscores the importance of complying with circulars regarding the refund of pre-deposits within a specified timeframe following the disposal of appeals in favor of the assessee.