2024 (10) TMI 1178 - AT - Central Excise

100% EOU entitled to interest on delayed refund of pre-deposit made following tribunal direction

M/s. Smitabh Intercon Limited Versus Commissioner of CGST & CX, Kolkata North

CESTAT Kolkata held that appellant, a 100% EOU, was entitled to interest on delayed refund of pre-deposit made pursuant to tribunal direction dated ... 100% EOU - interest on the delayed refund of pre-deposit - HELD THAT:- It is found that in this case, the appellant has made the pre-deposit in terms of the direction of the Tribunal vide Order dated 09.09.2014 on 11.11.2014, and the order of the Tribunal has gone in favour of the appellant. In these circumstances, by relying on the decision of the Tribunal in the case of Riba Textiles Ltd. [2020 (2) TMI 602 - CESTAT CHANDIGARH], which decision has been affirmed by the Hon'ble Punjab and Haryana High Court [2022 (3) TMI 693 - PUNJAB & HARYANA HIGH COURT], wherein the Hon'ble High Court observed 'The appellant is entitled to claim the interest on delay refund from the date of deposit till its realization.' Relying on the decision of the Hon'ble High Court of Punjab and Haryana in the case of Riba Textiles Ltd. the appellant is entitled to claim interest of pre-deposit made on 11.11.2014 till its realization. Appeal disposed off. Issues Involved:1. Entitlement to interest on the refund of pre-deposit.2. Applicability of legal precedents concerning interest on delayed refunds.Detailed Analysis:1. Entitlement to Interest on Refund of Pre-Deposit:The primary issue in this case revolves around the appellant's claim for interest on the refund of a pre-deposit amounting to Rs. 16,18,165/-. The appellant, a 100% Export Oriented Unit (EOU), had made this pre-deposit in compliance with a stay order from the CESTAT, Kolkata, dated 09.09.2014. Upon the favorable final order dated 11.08.2023, which set aside previous adverse orders, the appellant sought a refund of the pre-deposit along with interest. However, the Assistant Commissioner sanctioned the refund without interest, prompting the appellant to appeal this decision.The appellant argued that under Section 35F of the Central Excise Act, 1944, they were entitled to interest on the delayed refund. They supported their claim by referencing the Tribunal's decision in Riba Textiles Ltd. v. Commissioner of C. Ex., Panchkula, which was affirmed by the Punjab and Haryana High Court, establishing a precedent for granting interest on such refunds.2. Applicability of Legal Precedents:The appellant relied heavily on the decision in Riba Textiles Ltd., where the Tribunal and subsequently the High Court recognized the entitlement to interest on delayed refunds under the Central Excise Act. The High Court's decision referenced the Supreme Court's ruling in Sandvik Asia Ltd. v. CIT, Pune, which underscored the principle that interest on delayed refunds is a statutory right when the refund is unjustifiably withheld.In the present case, the Tribunal found that the appellant's pre-deposit was made following a Tribunal order and that the final order was in the appellant's favor, thus entitling them to interest from the date of deposit until realization. The Tribunal emphasized that the provisions of the Income Tax Act, 1961, and the Central Excise Act, 1944, are pari materia, making the Supreme Court's ruling in Sandvik Asia Ltd. applicable here.The Tribunal concluded that the appellant was entitled to interest on the pre-deposit from 11.11.2014 until the refund's realization. This decision aligns with the legal precedent set by higher courts, affirming the appellant's right to interest on delayed refunds.Conclusion:The Tribunal's judgment resolved the appellant's entitlement to interest on the refund of the pre-deposit, relying on established legal precedents. The appeal was accordingly disposed of, granting the appellant interest on the pre-deposit from the date of its payment until its realization.