Appellant entitled to interest on delayed refund from deposit date until realization under Marshall Foundry precedent

CESTAT Allahabad allowed the appeal regarding interest on delayed refund. The tribunal held that the appellant was entitled to claim interest on delayed refund from the date of deposit until realization, following the precedent set in Marshall Foundry case. The dispute was considered settled law (res integra) with consistent tribunal decisions supporting this position. The impugned order was set aside, granting the appellant's claim for interest on the delayed refund for the entire period from deposit to actual realization of the refund amount.

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Issues Involved:
1. Entitlement to interest on delayed refund.
2. Rate of interest applicable on delayed refund.
3. Period from which interest on delayed refund is to be calculated.

Detailed Analysis:

1. Entitlement to Interest on Delayed Refund:
The core issue addressed in the judgment is whether the appellant is entitled to interest on the delayed refund. The Tribunal referenced its previous decisions, including *M/s Marshall Foundry & Engineering Pvt. Ltd. vs. Commissioner of CGST, Faridabad* and *M/s Fujikawa Power and others vs. CCE, Chandigarh-I*. It was established that the appellant is indeed entitled to claim interest on the delayed refund. The Tribunal cited Section 35FF of the Central Excise Act, 1944, which mandates that interest is payable if the refund is not processed within three months from the date of the appellate authority's order.

2. Rate of Interest Applicable on Delayed Refund:
The Tribunal examined the applicable rate of interest on delayed refunds. It referenced the decision of the Hon'ble Apex Court in the case of *Sandvik Asia Ltd.*, which held that the assessee is entitled to interest on delayed refunds. The Tribunal also cited the Hon'ble Kerala High Court's decision in *Sony Pictures Networks India Pvt. Ltd.*, which fixed the interest rate at 12% per annum. The Tribunal found that the provisions of Section 243 of the Income Tax Act, 1961, and Section 35FF of the Central Excise Act, 1944, are parimateria, thereby justifying the application of a 12% interest rate.

3. Period from Which Interest on Delayed Refund is to be Calculated:
The Tribunal clarified that the interest on the delayed refund should be calculated from the date of deposit until the date of realization. This conclusion was supported by the Tribunal's consistent view in previous cases, including *Ghaziabad Ship Breakers Pvt. Ltd.*, where it was held that interest at 12% should be paid from the date of deposit.

Conclusion:
The Tribunal concluded that the appellant is entitled to interest on the delayed refund from the date of deposit until the date of realization at a rate of 12% per annum. The impugned order was set aside, and the Order-in-Original was upheld. The appeal filed by the appellant was allowed with consequential relief as per law.

(Order pronounced in open court on - 29th July, 2024)

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