Appellant entitled to 12% interest on refunded pre-deposited amount under Section 35FF Central Excise Act

CESTAT New Delhi held that appellant was entitled to interest on refund of pre-deposited amount at 12% per annum from deposit date until refund date. The authority had denied interest claiming refund was sanctioned within three months under Section 35FF of Central Excise Act, 1944. Tribunal found the proviso inapplicable to the circumstances and set aside the findings. For amount of Rs.13,50,500 deposited during investigation from Cenvat account, interest was allowed from final order date (20.10.2017) until payment. Appeal was allowed with interest entitlement established despite department's contentions regarding remand proceedings.

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Issues Involved:
1. Entitlement to interest on the refund amount.
2. Applicability of Section 11B/11BB and Section 35FF of the Central Excise Act.
3. Rate of interest applicable on the refund amount.

Summary:

1. Entitlement to Interest on the Refund Amount:
The appellants sought interest on the refund amount from the date of deposit till the date of actual payment. The Tribunal observed that the amount in question was not a duty but a revenue deposit, which included cash seized during investigation and amounts deposited pursuant to court orders. The Tribunal held that such deposits should be treated as pre-deposits and are entitled to interest.

2. Applicability of Section 11B/11BB and Section 35FF of the Central Excise Act:
The Tribunal noted that Section 11B/11BB is not applicable to the given set of circumstances since the amount in question was not a duty but a revenue deposit. Instead, Section 35FF, which deals with interest on delayed refund of pre-deposit amounts, was applicable. The Tribunal referred to various judgments and departmental circulars, emphasizing that the provisions of Section 11B/11BB do not apply to revenue deposits.

3. Rate of Interest Applicable on the Refund Amount:
The Tribunal considered various notifications under different sections of the Central Excise Act, which prescribe interest rates ranging from 6% to 18%. It concluded that a rate of 12% per annum was appropriate, relying on precedents such as the Supreme Court's decision in Sandvik Asia Ltd. and other High Court rulings. The Tribunal held that the appellants were entitled to interest at 12% per annum from the date of deposit till the date of refund, except for an amount of Rs.13,50,500/- deposited during investigation, which would attract interest from the date of the Tribunal's final order setting aside the duty demand.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned order and directing the department to pay interest at the rate of 12% per annum on the refund amount from the date of deposit till the date of refund, with specific directions for the amount deposited during investigation.

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