Appeal granted for interest on seized amount, Section 11BB prevails over 35FF. Refund awarded to appellant.

The Tribunal allowed the appeal, holding that the appellant was entitled to interest on the seized amount from three months after the original refund application date under Section 11BB. The Commissioner (Appeals) erred in rejecting the interest claim based on Section 35FF, as it only applies to amounts deposited under Section 35F. The Tribunal set aside the order and granted the refund with interest, ruling in favor of the appellant on 05.11.2020.

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Issues Involved:
1. Denial of interest on refund claim.
2. Applicability of Section 35FF of Central Excise Act, 1944.
3. Applicability of Section 11B and Section 11BB of Central Excise Act, 1944.

Detailed Analysis:

1. Denial of Interest on Refund Claim:
The appellant, a manufacturer of Cellulose powder, claimed a refund of Rs. 15 Lakhs, which was seized by the Central Excise officers in August 2007. The appellant argued that the amount was taken through blank cheques filled in by the officers. The initial refund claim submitted on 24.12.2007 was rejected by the lower authorities. The Tribunal allowed the appeal with consequential relief, but the Revenue adjusted the Rs. 15 Lakhs against a confirmed demand of Rs. 46,40,538/-. The Tribunal later allowed the appeal both on merits and on the issue of refund. The refund was granted without interest, leading the appellant to approach the Commissioner (Appeals), who rejected the claim for interest.

2. Applicability of Section 35FF of Central Excise Act, 1944:
The Commissioner (Appeals) rejected the interest claim based on Section 35FF, which provides for interest on delayed refunds of amounts deposited under Section 35F. The appellant contended that Section 35FF does not apply as the Rs. 15 Lakhs was not deposited under Section 35F but was erroneously taken in September 2007. The Tribunal agreed, stating that Section 35FF applies only to amounts deposited under Section 35F, and thus, the provisions of Section 35FF were not applicable to the Rs. 15 Lakhs in question.

3. Applicability of Section 11B and Section 11BB of Central Excise Act, 1944:
The appellant argued that interest should be granted under Section 11BB, which mandates interest on delayed refunds from three months after the original application date. The Tribunal noted that Section 11B concerns claims for duty and interest paid on such duty, while Section 11BB pertains to interest on delayed refunds. The Tribunal found that the appellant's claim for interest was valid under Section 11BB, as the interest is to be granted suo-moto along with the refund. The Tribunal also addressed the Revenue's argument regarding Section 11B(5)(B)(ec), clarifying that it pertains to the relevant date for limitation purposes and does not affect the interest claim.

Conclusion:
The Tribunal concluded that the Commissioner (Appeals) erred in rejecting the interest claim based on Section 35FF. The Tribunal held that the appellant was entitled to interest on the Rs. 15 Lakhs from three months after the original refund application date, as per Section 11BB, and set aside the impugned order. The appeal was allowed, and the judgment was pronounced in open court on 05.11.2020.

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