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Issues: Whether interest was payable on delayed transfer of unutilized MODVAT/CENVAT credit unlawfully withheld by the department despite the absence of an express statutory provision.
Analysis: The unutilized credit was found to have vested in the amalgamated company on merger and the department was under a duty to decide the transfer application within a reasonable time. The credit was withheld without lawful justification, no effective proceedings were initiated in time, and the denial of transfer compelled repeated court intervention. The absence of an express provision for interest did not bar relief where the department had illegally retained money to which the assessee was rightfully entitled. In such a case, interest was treated as compensation for wrongful deprivation and not as a statutory accretion dependent only on the refund machinery.
Conclusion: Interest was payable to the assessee on the delayed transfer of MODVAT/CENVAT credit, and the rejection of the claim was set aside.
Final Conclusion: The petition succeeded and the assessee was granted monetary relief for the period of unlawful delay, including compensatory interest on the withheld credit and interest on the quantified interest amount.
Ratio Decidendi: Where credit or money is lawfully due to an assessee and is wrongfully withheld by the revenue without authority of law, interest may be awarded as equitable compensation even in the absence of an express statutory provision.
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