Interest on investigation deposits refunded at 12% per annum, with the lower 6% rate not applied.

Interest on an amount deposited during investigation and later refunded was determined with reference to the applicable statutory interest provisions under the Central Excise Act, 1944. The Tribunal followed earlier decisions holding that 12% per annum was payable on refunds of investigation deposits, and declined to apply the 6% rate under the notification issued under section 35FF. The refund therefore carried interest at 12% per annum from the date of deposit until the date of payment.

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Issues: Whether interest on the amount deposited during investigation and subsequently refunded was payable at 6% or 12% per annum.

Analysis: The appeal concerned refund of an amount deposited during investigation, where the only dispute was the applicable rate of interest. The Tribunal noted that earlier decisions had examined the issue with reference to the statutory interest provisions under the Central Excise Act, 1944 and had followed the view that interest at 12% per annum was justified on refunds of amounts deposited during investigation. The contrary view based on payment of interest at 6% under the notification issued under section 35FF of the Central Excise Act, 1944 was not preferred.

Conclusion: Interest on the refunded amount was held payable at 12% per annum from the date of deposit till the date of payment, and not at 6% per annum.

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