CESTAT grants interest on pre-deposit refund from Tribunal's favorable decision date, rejects department's stay order defense

CESTAT held that appellant was entitled to interest on pre-deposit refund from date of Tribunal's favorable decision (24.10.2013), not from deposit dates or three months after claim filing. Drawing analogy from Section 11B Central Excise Act, interest becomes payable if pre-deposit not refunded within three months of Tribunal's disposal. Court rejected department's argument that SC's 123-day stay order suspended interest liability, ruling stay orders don't confer additional rights on applying party. Appeal allowed, impugned order set aside.

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Issues Involved:
1. Entitlement to interest from the date of deposit of amounts paid under protest.
2. Entitlement to interest during the period of stay granted by the Supreme Court.

Summary:

Issue 1: Entitlement to Interest from Date of Deposit

The appellant contested the Order-in-Appeal dated 06.12.2016, which directed recalculation of the refund amount and interest. The appellant argued that the amounts paid under protest did not constitute duty/tax since the activity was held non-taxable. They cited Article 265 of the Constitution of India, asserting that no tax shall be levied or collected without the authority of law. Therefore, the Department was bound to pay interest on the total amount deposited under protest. The Tribunal referenced Section 11BB of the Central Excise Act, which mandates interest on delayed refunds if not paid within three months from the date of receipt of the application. The Tribunal noted that payments made under protest are considered deposits, not duty, as supported by various judicial precedents. The Tribunal concluded that interest on the pre-deposit amount is payable from the date the Tribunal decided in favor of the appellant on 24.10.2013.

Issue 2: Entitlement to Interest During Stay Period

The appellant sought interest for the 123 days when the Tribunal's order was stayed by the Supreme Court. The Tribunal referred to the Supreme Court's judgment in Style (Dress Land) v. UT, Chandigarh, which held that obtaining a stay does not confer any additional rights and that interest is payable for the duration of the stay. The Tribunal concluded that interest is payable for the 123 days during which the stay was in effect.

Conclusion:

The Tribunal set aside the impugned order and allowed the appellant's appeal, granting interest from the date of deposit and including the period of the stay.

(Pronounced in the open Court on 04/04/2024)

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