Tribunal directs interest payment at 12% per annum for successful appeals

The Tribunal allowed the appeal, directing the Adjudicating Authority to grant interest at 12% per annum from the date of deposit till the refund within 45 days, emphasizing the correct application of Section 35FF for interest calculation, not Section 11BB as contended by the Revenue. The judgment clarifies the need for interest from the date of deposit till the date of refund without discrimination, aligning with precedent and statutory provisions, ensuring fair treatment and consistency in interest payments for successful appeal cases against demand orders.

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Issues involved:
Grant of interest under Section 35FF from the date of deposit till the date of refund.

Analysis:
The appellant, engaged in manufacturing Ayurvedic Medicinal products, deposited an amount of Rs. 25 lakhs following a search and subsequent demand confirmation of Rs. 1,09,01,676/-. The Tribunal allowed the appeal against the order-in-original, granting consequential benefits. Subsequently, the appellant filed a refund claim for the deposited amount. The Assistant Commissioner approved a refund of Rs. 25 lakhs but granted interest for a truncated period of 68 days at 6% instead of the applicable Section 35FF. The Commissioner (Appeals) dismissed the appeal, citing Section 11BB and the need for recovery to be unjustifiable for interest to be awarded, referencing a High Court ruling. The appellant contended that Section 35FF was applicable in this case, emphasizing interest from the date of payment till refund, not governed by Section 11BB.

The appellant argued before the Tribunal that the Commissioner (Appeals) erred in relying on Section 11BB instead of Section 35FF, which mandates interest on the refunded amount from the date of payment till refund. The Tribunal considered the relevant provisions and previous rulings, directing the Adjudicating Authority to grant interest at 12% per annum from the date of deposit till the refund within 45 days of the order, citing a Division Bench decision and the Supreme Court ruling in Sandvik Asia Ltd. The appeal was allowed in favor of the appellant, emphasizing the correct application of Section 35FF for interest calculation, not Section 11BB as contended by the Revenue.

This judgment clarifies the correct application of Section 35FF for interest calculation on refunded amounts, emphasizing the need for interest from the date of deposit till the date of refund without discrimination. The Tribunal's decision aligns with precedent and statutory provisions, ensuring fair treatment in granting interest to appellants following successful appeals against demand orders. The ruling provides clarity on the legal framework governing interest payments in such cases, ensuring consistency and adherence to statutory provisions for refund claims and interest calculations.

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