Court directs Revenue to pay interest to petitioner at 6% under Central Excise Act

The Court allowed the writ petition, directing the Revenue to pay interest to the petitioner at a rate of six percent per annum for the specified period. The Court clarified that the petitioner was entitled to interest under section 35FF of the Central Excise Act, 1944, due to the proper communication of the order to the adjudicating authority. The decision emphasized compliance within a set timeframe and upheld the petitioner's right to receive interest on the refund amount.

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Issues:
1. Payment of interest on refund amount by Revenue to the petitioner.
2. Interpretation of due service for the purpose of section 35FF of the Central Excise Act, 1944.
3. Determination of the adjudicating authority under section 35FF.
4. Calculation of interest rate under section 11BB of the Central Excise Act, 1944.

Analysis:

Issue 1: Payment of interest on refund amount
The petitioner succeeded in its appeal before the Customs, Excise and Service Tax Appellate Tribunal and was refunded the pre-deposit amount without any interest. The petitioner sought interest on the refund, which was initially rejected by the Court. However, a review petition was filed, and the Division Bench recalled its earlier order based on the clarification that the order had been served on the Commissioner of Central Excise, Delhi-I. The key question was whether the petitioner was entitled to interest under section 35FF of the Act.

Issue 2: Interpretation of due service
The Division Bench reconsidered the earlier order and questioned whether the service of a certified copy on the Commissioner of Central Excise, Delhi-I constituted due service for the purpose of section 35FF of the Act. It was established that the order had been communicated to the adjudicating authority, and the refund should have been made by a specific date, leading to the conclusion that interest was payable to the petitioner.

Issue 3: Determination of the adjudicating authority
The Court examined the definition of "adjudicating authority" under the Act, which includes any authority competent to pass orders under the Act. In this case, the Commissioner of Central Excise, Delhi-I was considered the adjudicating authority, and the order from the Tribunal had been communicated to him within the required timeline, making the petitioner eligible for interest under section 35FF.

Issue 4: Calculation of interest rate
The Court determined that the rate of interest under section 11BB of the Act had to be specified by the Central Government and could not be below five percent or exceed thirty percent per annum. As per the applicable notification during the relevant period, the rate was fixed at six percent per annum. Therefore, the Court directed the Revenue to pay interest to the petitioner at the rate of six percent per annum for the specified period.

In conclusion, the Court allowed the writ petition, ordering the Revenue to pay interest to the petitioner for the specified period at the prescribed rate, emphasizing compliance within a set timeframe.

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