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 calculation, in favor of the appellant. The appellant was granted interest at the rate of 12% per annum from the date of deposit till the refund date, based on interpretations of relevant provisions of the Central Excise Act, 1944, and previous tribunal decisions. The Adjudicating Authority was directed to recalculate and grant further interest within a specified timeframe.

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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.

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