2023 (8) TMI 847 - AT - Central Excise

Tribunal Orders Refund with Interest: Pre-Deposit must be Returned within 3 Months

Gujarat Borosil Limited Versus C.C.E. & S.T. -Surat-II

The Tribunal held that the refund of pre-deposit made for appeal should be granted within 3 months of the Tribunal's order, irrespective of whether the ... Calculation of interest on refund sanctioned - relevant dates - refund of pre-deposit made while filing the appeal before the tribunal is due from 3 months of passing of remand order by the Tribunal or after 3 months of passing order in de novo adjudication? - HELD THAT:- The pre-deposit for which the appellant has sought for the refund was paid specifically for entertaining the assessee’s appeal by this tribunal, once the appeal was disposed of by way either setting aside the demand or by way of remand to the adjudicating authority, the demand of duty does not exist for the time being, therefore the amount of pre-deposit became refundable to the assessee. on the order of the tribunal the contention of the department in this case is that the refund is matured from the date of de novo adjudication order has no relevance for the reason that de novo adjudication is nothing to do with the pre-deposit made under Section 35F before this Tribunal. From the circular No. 802/35/2004-CX dated 8 December, 2004, it was categorically clarified and reiterates their earlier circular that in case of refund of Pre-deposit the dead line for refunding, this pre-deposit is 3 months from the date of Tribunal’s order, accordingly if the refund is not granted within 3 months from the date of Tribunal’s order thereafter the department is bound to pay the interest to the claimant - As regard the revenue’s contention that the appellant have not filed the proper refund claim - it is found that in various judgments it has been settled that as regard refund of pre-deposit, there is no requirement for filing a refund claim. The department must give the refund suo moto on the basis of Tribunal’s order therefore merely because the appellant have not filed the proper refund claim within 3 months of the Tribunal order, department cannot be absolved from the liability of interest on the refund of pre-deposit. This issue has been considered in VOLTAS LIMITED VERSUS UNION OF INDIA [1998 (11) TMI 137 - HIGH COURT OF DELHI] where it was held that once the order of adjudication was set aside, the Tribunal could not have ordered the amount of pre-deposit to be retained awaiting the order of adjudication. There is no provision in the law requiring certain amount to be retained as a pre-deposit pending finalisation of the adjudication proceedings. As the amount is being withheld without any authority of law, it is liable to be refunded. Thus there is absolutely no doubt that appellant are entitled for the interest from the 3 months of the order of the tribunal till the refund was granted - appeal allowed. Issues Involved:1. Whether the refund of pre-deposit made while filing the appeal before the tribunal is due from 3 months of passing of remand order by the Tribunal or after 3 months of passing order in de novo adjudication.2. Consequential liability of the department to pay interest on the refund.Summary:Issue 1: Refund of Pre-deposit TimelineThe appellant argued that the pre-deposit made for the admission of the appeal should be refunded within 3 months from the date of the Tribunal's order, regardless of whether the order is final on merit or remand to the Adjudicating Authority. The appellant cited various judgments and a board circular to support this claim, emphasizing that the department's stance that the refund is due only after de novo adjudication is irrelevant and lacks legal backing.On the contrary, the respondent maintained that since the demand was not set aside and the matter was remanded for de novo adjudication, the refund of the pre-deposit is premature until the demand is set aside in the de novo process. Thus, the lower authorities rightly rejected the appellant's claim for interest.The Tribunal, after considering submissions from both sides, held that the pre-deposit made for entertaining the appeal becomes refundable once the appeal is disposed of, either by setting aside the demand or by remand. The Tribunal emphasized that the pre-deposit is not linked to the outcome of the de novo adjudication. This position is supported by CBEC Circular No. 802/35/2004-CX dated 8 December 2004, which mandates the return of pre-deposits within 3 months from the date of the Tribunal's order.Issue 2: Interest on RefundThe Tribunal referred to the aforementioned circular, which clearly states that if the refund is not granted within 3 months from the date of the Tribunal's order, the department is liable to pay interest to the claimant. The Tribunal also noted that there is no requirement for filing a refund claim for pre-deposits; the department must refund the amount suo moto based on the Tribunal's order.The Tribunal cited several judgments, including:- Voltas Limited v. Union of India: Held that once an adjudication order is set aside, the pre-deposit must be refunded without waiting for the de novo adjudication.- AFCONS Infrastructure Ltd. v. Union of India: Confirmed that the pre-deposit must be refunded with interest once the appeal is allowed, even if remanded for de novo consideration.- Premier Machinery Mfg. v. Commissioner of C.Ex., Surat -1: Affirmed that the appellant is entitled to interest on the refund of pre-deposit when the appeal is allowed by remand.In conclusion, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief, including interest from 3 months after the Tribunal's order until the refund was granted.Final Order:The Tribunal pronounced the order in the open court on 18.08.2023, allowing the appeal with consequential relief.