Tribunal grants interest on pre-deposit amount, sets 12% rate

The Tribunal allowed the appeal, setting aside the impugned order and directing the Adjudicating Authority to grant interest at 12% per annum on the pre-deposit amount under Section 35FF of the Central Excise Act. The decision clarified the entitlement to interest on pre-deposit amounts, emphasizing timely payment within two months from the order date. This ruling establishes a precedent for excise cases involving claims for interest on pre-deposit amounts, citing relevant legal provisions and precedents to support the appellant's claim.

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Issues:
1. Rejection of claim of interest on pre-deposit under Section 35FF of the Central Excise Act.

Analysis:
The appeal in this case revolves around the rejection of the claim of interest on the pre-deposit amount as required under Section 35FF of the Central Excise Act. The appellant's Director was compelled to deposit Rs. 50 lakhs during a search conducted by DGCEI officers, despite no provision for duty collection during such investigations. The appellant later sought a refund of this amount, leading to a show cause notice proposing a duty demand of Rs. 22,91,574 along with interest and penalty. The Adjudicating Authority confirmed this demand, leading to subsequent appeals and refund orders. The appellant contended that interest on the pre-deposit should be allowed under Section 35FF, highlighting a mistake of law in the impugned order.

The appellant's argument was supported by the contention that interest on the pre-deposit is permissible under Section 35FF of the Central Excise Act. The Authorized Representative for the Revenue, however, relied on the impugned order and cited a ruling of the Delhi High Court. The Tribunal, after considering the arguments, referred to a precedent decision in Parle Agro (P) Ltd. vs. Commissioner, CGST, where interest on pre-deposit made during investigation was enhanced from 6% to 12% following the Supreme 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 till the date of refund, emphasizing that the interest should be paid within two months from the date of the order. Consequently, the appeal was allowed, setting aside the impugned order.

In conclusion, the Tribunal's decision in this case clarifies the entitlement to interest on pre-deposit amounts under Section 35FF of the Central Excise Act. By referencing relevant precedents and legal provisions, the Tribunal upheld the appellant's claim for interest at a higher rate, emphasizing the need for timely payment of such interest. The judgment serves as a significant precedent for similar cases involving claims for interest on pre-deposit amounts in excise matters.

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