2022 (2) TMI 407 - AT - Central Excise

Tribunal Upholds Decision: No Interest on Excess Central Excise Duty Refund

Astron Zinc Industries Versus C.C.E. & S.T. -AHMEDABAD-III

The Tribunal upheld the decision rejecting interest on a refund claim for central excise duty deposited during an investigation and pre-deposit made under ... Refund of central excise duty deposited during the investigation of case and Pre-deposit made under Section 35F of the Central Excise Act, 1944 - whether payment over and above the amount of 7.5% or 10% as stipulated under Section 35F of Central Excise Act, 1944 cannot be considered as deposit under the provisions of Section 35F ibid? - HELD THAT:- As per the facts of the present case the appellant suo moto deposited amount of duty during investigation. The said amount become refundable consequent to the tribunal’s order dated 12.01.2018. Before this date there was no reason for refunding amount even in terms of Section 11B, if any, refund is arising out of the order of appellate authority. The relevant date for filing refund is within one year from the date of such order therefore, in the present case when refund itself was not arising before the tribunal’s order dated 12.01.2018 there is no question of any interest. However, for entertaining the appeal the appellant required to pay 7.5% or 10% as the case may be as pre deposit in terms of section 35F of Central Excise Act, 1944. Section 35FF provides for interest on the mandatory pre deposit of 7.5% or 10% as the case may be, paid for filing the appeal. If any assessee pays an amount more than that which is otherwise not required, no interest is accurable on the amount over and above the mandatory pre deposit in terms of Section 35FF - in the impugned order the demand of interest on refund over and above the mandatory pre deposit was rightly rejected. Appeal dismissed. Issues:- Refund claim application for central excise duty deposited during investigation- Pre-deposit made under Section 35F of the Central Excise Act, 1944- Entitlement to interest on the deposit amount- Interpretation of Section 35F of the Central Excise Act, 1944- Applicability of CBIC Circular No. 984/08/2014-CX- Relevance of judgments Maheshraj Chemicals Pvt. Ltd. Vs. Commissioner of C.EX Ahmedabad and Parle Agro Pvt. Ltd. Vs. CCE Noida- Impact of the decision in Ranbaxy Laborites Ltd. Vs Union of IndiaDetailed Analysis:1. The appeal was against an order rejecting interest on a refund claim for central excise duty deposited during an investigation and pre-deposit made under Section 35F of the Central Excise Act, 1944. The appellant sought interest on the amount deposited during the investigation period. The Commissioner (Appeals) rejected the appeal, stating that any payment exceeding the stipulated percentage under Section 35F cannot be considered a deposit. The appellant argued that the deposit made during the investigation should qualify as duty under Section 3 of the Act to be governed by Section 11BB. The appellant relied on judgments Maheshraj Chemicals Pvt. Ltd. and Parle Agro Pvt. Ltd. to support their claim.2. The appellant contended that Section 35F sets minimum deposit criteria for appeals and does not exclude deposits exceeding the stipulated percentages. They argued that the deposit made during the investigation falls under this section, entitling them to interest under Section 35FF. The appellant disagreed with the reliance on CBIC Circular No. 984/08/2014-CX and the decision in Ranbaxy Laborites Ltd. Vs Union of India, stating that the core issue in the latter case was different.3. The Respondent supported the impugned orders, stating that the refund became applicable after the CESTAT order, making the relevant date for filing the claim the date of the tribunal's order. The Respondent referred to a Board Circular clarifying that amounts exceeding the stipulated percentages under Section 35F are not considered deposits. The Tribunal noted that interest is only payable on the mandatory pre-deposit under Section 35FF, and any excess payment does not accrue interest.4. The Tribunal upheld the impugned order, stating that interest on the refund amount exceeding the mandatory pre-deposit was rightly rejected. The relevant date for the refund claim was after the tribunal's order, and interest was not applicable before that date. The appeal was dismissed accordingly.In conclusion, the Tribunal held that interest on the refund amount exceeding the mandatory pre-deposit under Section 35F was not payable, upholding the impugned order and dismissing the appeal.