Interest on delayed refund of pre-deposit applies once refund becomes due and is not made within three months.

A pre-deposit under Section 35F of the Central Excise Act, 1944, when returned after a successful appeal, carries interest if the refund is not made within three months from the date it becomes due. The refund of such a pre-deposit is not treated like an ordinary duty refund for denying interest once the stipulated period expires. On the facts noted, the refund became due on the Tribunal's final order allowing the appeal, and interest was payable for the delay until actual refund.

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Issues: Whether the assessee was entitled to interest on delayed refund of pre-deposit made under Section 35F of the Central Excise Act, 1944.

Analysis: The amount deposited as pre-deposit remained with the department after the appeal succeeded, and the refund became due once the Tribunal passed the final order allowing the appeal. The governing principle applied was that refund of a pre-deposit is not to be treated as ordinary duty refund for denying interest after the stipulated period. The applicable circulars and prior decisions recognised that a simple refund request together with the order making the deposit returnable was sufficient, and that interest becomes payable after expiry of three months from the date the refund becomes due. Since the refund was not made within that period, the delay attracted interest.

Conclusion: The assessee was held entitled to interest at 12% per annum on the refunded pre-deposit for the period commencing after three months from the date the refund became due until the date of actual refund.

Final Conclusion: The appeal succeeded to the extent of the claim for interest on delayed refund of the pre-deposit.

Ratio Decidendi: Where a pre-deposit becomes refundable after a successful appeal, interest is payable if the refund is not granted within three months from the date it becomes due.

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