2022 (5) TMI 1039 - AT - Central Excise

Appellant denied interest on refunded pre-deposit under Central Excise Act

Cubex Tubings Limited Versus Commissioner of Central Tax, Hyderabad

The Tribunal held that the appellant was not entitled to interest on the refunded pre-deposit amounts under section 35FF of the Central Excise Act, 1944. ... Entitlement to interest on the amount of refund of pre-deposit under section 35F of the Central Excise Act, 1944 from the date of the deposit till the date of sanction of the amount - section 35FF of Central Excise Act - HELD THAT:- It is not in dispute that the amount towards pre-deposit under secton 35F of the Excise Act was deposited by the appellant on 30.08.2012, which date is prior to 06.08.2014 on which date section 35FF of the Excise Act was amended. The proviso to section 35FF of the Excise Act, as it stood after amendment on 06.08.2014, clearly stipulates that the amount deposited under section 35F of the Excise Act prior to 06.08.2014 shall continue to be governed by the provisions of section 35FF of the Excise Act as it stood before 06.08.2014. Thus, the appellant would not be entitled to claim interest on the pre-deposit amount as the provisions of section 35FF of the Excise Act, as it stood prior to its amendment on 06.08.2014, would be applicable. In the present case, it is not in dispute that the amount towards pre-deposit was deposited on 30.08.2012 and that the amount was sanctioned within three months from the date of communication of the order of the Tribunal to the adjudicating authority. The appellant would, therefore, not be entitled to claim interest. This is what was observed by the Deputy Commissioner as also the Commissioner (Appeals) while rejecting the claim of the appellant for payment of interest. In the present case, section 35F of the Excised Act, as it stood prior to 06.08.2014, provides for payment of interest only if the pre-deposit amount is not refunded within a period three months from the date of communication of the order to adjudicating authority. This is what has been observed by the Commissioner (Appeals). Appeal dismissed. Issues Involved:1. Entitlement to interest on the refund of pre-deposit under section 35FF of the Central Excise Act, 1944.2. Applicability of the amended versus unamended provisions of section 35FF of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Entitlement to Interest on the Refund of Pre-deposit:The appellant sought interest on the refunded pre-deposit amounts of Rs. 32 lakhs and Rs. 84 lakhs, which were deposited under section 35F of the Central Excise Act, 1944. The Tribunal had allowed the appeals on 28.02.2019, and the appellant claimed interest under section 35FF of the Excise Act from the date of deposit until the date of refund sanction. The Deputy Commissioner and the Commissioner (Appeals) both rejected the interest claim, stating that the unamended section 35FF applied, which provided no interest if the refund was made within three months from the date of communication of the Tribunal's order.2. Applicability of Amended vs. Unamended Provisions of Section 35FF:The core of the dispute revolved around whether the amended provisions of section 35FF (effective from 06.08.2014) or the unamended provisions applied. The unamended section 35FF stipulated that interest would only be payable if the refund was not made within three months from the date of communication of the appellate authority's order. The amended section 35FF, however, mandated interest from the date of deposit until the date of refund. The proviso to the amended section 35FF explicitly stated that deposits made before 06.08.2014 would be governed by the unamended provisions.Tribunal's Findings and Judgment:The Tribunal found that the pre-deposit was made on 30.08.2012, prior to the amendment date of 06.08.2014. Therefore, the proviso to the amended section 35FF applied, meaning the unamended provisions governed the case. Since the refund was sanctioned within three months from the date of communication of the Tribunal's order, no interest was payable under the unamended section 35FF.The Tribunal referenced several judgments to support its decision:- IFP Products (P) Ltd. vs. Union of India and Anr: The Allahabad High Court held that interest on pre-deposit refunds is only payable if the refund is delayed beyond three months from the date of communication of the appellate order, as per the unamended section 35FF.- Hindustan Agro Insecticides vs. Commissioner of Central Tax, Guntur: The Tribunal confirmed that the proviso to the amended section 35FF mandates that pre-deposits made before 06.08.2014 are governed by the unamended provisions.- J.K. Cement Works vs. Commissioner, Central Excise, Central Goods and Service Tax: The Tribunal noted that this decision, which allowed interest under the amended section 35FF despite the deposit being made before the amendment, did not lay down the correct legal position and was not applicable.The Tribunal dismissed the appeals, upholding the Commissioner (Appeals)'s order that no interest was payable since the refund was made within the stipulated three-month period under the unamended section 35FF.Conclusion:The Tribunal concluded that the appellant was not entitled to interest on the refund of the pre-deposit amounts as the provisions of section 35FF, prior to its amendment on 06.08.2014, applied. The appeals were dismissed, affirming the decisions of the Deputy Commissioner and the Commissioner (Appeals).