2021 (7) TMI 814 - AT - Service Tax

Tribunal grants appellant interest at 12% per annum, modifies rate calculation

The Tribunal allowed the appeal, setting aside the order-in-appeal and restoring the order-in-original with modifications in the interest rate ... Interest on delayed refund (of pre-deposit) - relevant time - to be granted from the date of communication of the final order of the Tribunal till the date of grant of refund, or from the date of pre-deposit? - HELD THAT:- The issue is no longer res integra and in the case of M/S J.K. CEMENT WORKS VERSUS COMMISSIONER, CENTRAL EXCISE, CENTRAL GOODS AND SERVICE TAX, UDAIPUR [2021 (3) TMI 123 - CESTAT NEW DELHI], wherein under the similar facts and circumstances, this Tribunal following the ruling of the Hon’ble Supreme Court in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [2006 (1) TMI 55 - SUPREME COURT] as well as of the Hon’ble Allahabad High Court in the case of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [2004 (7) TMI 98 - ALLAHABAD HIGH COURT] held that interest is payable from the date of deposit till the date of grant of refund - Further, the Division Bench of this Tribunal in M/S PARLE AGRO PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2017 (2) TMI 984 - CESTAT ALLAHABAD] has held that interest is payable @12%, following the ruling of the Hon’ble Supreme Court in the case of Sandvik Asia Ltd. The appellant is entitled for interest @12% p.a. from the date of deposit till the date of refund. The order-in-original is restored with the modification in the rate of interest - Appeal allowed - decided in favor of appellant. Issues:1. Calculation and grant of interest on a refund claim.2. Interpretation of Section 35 F and Section 35 FF of the Central Excise Act, 1944.3. Applicability of circulars issued by the CBEC on interest payment.4. Comparison with previous tribunal decisions on interest payment rates.Analysis:1. The case involved a dispute regarding the interest calculation on a refund claim made by the appellant, a manufacturer of excisable goods, who had deposited a sum of Rs. 15,00,000 as pre-deposit in compliance with a direction from the CESTAT. The Adjudicating Authority sanctioned the refund claim with interest from the date of deposit until the actual refund. However, the Revenue contended that interest should be granted from the date of the final order of the Tribunal. The Commissioner (Appeals) observed that the appellant was entitled to interest from the date of the final order of the Tribunal until the refund date, remitting the matter for re-calculation of interest.2. The Commissioner (Appeals) based the decision on the interpretation of Section 35 F and Section 35 FF of the Central Excise Act, 1944. It was noted that the pre-deposit made by the appellant in March 2013 was governed by the provisions of Section 35 F as it stood before the amendment brought by the Finance (No.2) Act, 2014. Therefore, interest was to be granted from the date of the final order of the Tribunal until the refund date, as per the pre-amendment provisions.3. The appellant relied on CBEC Circulars to support their claim for interest from the date of deposit till the refund date. Circulars, including No.1053/02/2017-EX and No.984/08/2014-CX, were cited to argue that interest should be paid in accordance with the circulars issued by the Board/Government. The appellant contended that the Adjudicating Authority was bound by these circulars, and the Commissioner (Appeals) did not find any error in following them.4. The Tribunal referred to previous decisions, including J.K. Cement and Parle Agro Ltd., to determine the interest rate payable on the refund claim. Following the rulings of the Hon'ble Supreme Court and the Allahabad High Court, the Tribunal held that interest should be paid at the rate of 12% per annum from the date of deposit till the refund date. The order-in-appeal was set aside, and the appellant was granted interest at the revised rate, with directions for the Adjudicating Authority to calculate and grant further interest within a specified timeframe.In conclusion, the Tribunal allowed the appeal, setting aside the order-in-appeal and restoring the order-in-original with modifications in the interest rate calculation, in favor of the appellant.