Tribunal rules in favor of appellants, grants 12% interest on deposit refund

The Tribunal, in a case involving a dispute over interest on a deposit made under duress during an investigation by the Central Excise Department, ruled in favor of the appellants. Citing legal precedents and a Division Bench ruling, the Tribunal directed the Adjudicating Authority to grant interest at 12% per annum from the date of deposit to the date of refund. The decision emphasized the importance of timely and fair resolution of refund claims, ensuring that parties are appropriately compensated for financial implications arising from such deposits made under protest during investigations.

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Issues:
Claim of interest on refund of pre-deposit made or deposit during investigation under protest.

Analysis:
The case involved the appellants, engaged in the manufacture of sugar and alcohol, who deposited a significant amount under duress by the Central Excise Department during an investigation. The Commissioner confirmed a demand and imposed penalties, which were partly upheld by the Tribunal in a subsequent order. Following this, the appellants filed a refund claim, including interest, which was partially allowed by the Assistant Commissioner but denied interest citing Section 11 BB. The Commissioner (Appeals) upheld this decision, stating that interest liability arises after 3 months from the refund application date. The appellant contended that interest should be granted from the date of deposit till the date of refund, citing precedents and the Tribunal's Final Order No. 70180-70181/2021. The authorized representative for the Department relied on the impugned orders.

The Tribunal, considering the contentions, referred to a Division Bench ruling in Parle Agro Pvt. Ltd. Vs. Commissioner, CGST, enhancing interest on pre-deposit to 12% following the Apex Court's ruling in Sandvik Asia Ltd. The Tribunal directed the Adjudicating Authority to grant interest at 12% per annum from the date of deposit to the date of refund within two months from the order's receipt or service. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the entitlement to interest on the deposit made under protest during the investigation period.

This judgment highlights the significance of interest entitlement on deposits made under duress during investigations, emphasizing the application of interest rates as per legal precedents and directions from higher courts. The decision underscores the need for timely and fair resolution of refund claims, ensuring that interest is appropriately granted to parties facing financial implications due to such deposits.

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