2026 (1) TMI 388 - AT - Central Excise

Interest on refunded pre-deposit in s. 11B refund appeal rejected, as s. 35FF interest claim required separate proceedings

The dominant issue was whether interest on a pre-deposit, allegedly refunded without interest, could be granted in an appeal arising from a refund claim ... Interest on amount sanctioned as refund to the appellant from the date of deposit of the amount by the appellant to the date the amount was refunded to the appellant - HELD THAT:- From the submissions advanced by the learned senior counsel for the appellant, it transpires that this pre-deposit amount was paid to the appellant. The only contention is that interest was not paid. If interest was not paid it was for the appellant to have pursued separate appropriate proceedings and this claim for interest cannot be examined in these proceedings which emanate from the application filed by the appellant under section 11B of the Central Excise Act. This application does not refer to refund of the amount of pre-deposit or payment of interest on it under section 35FF of the Central Excise Act. This issue, therefore, cannot be examined in this appeal. There is, therefore, no merit in this appeal - It is, accordingly, dismissed. Issues: (i) Whether interest is payable to the applicant on the sanctioned refund of Rs. 341,99,83,326/- where the refund was sanctioned within three months of filing the section 11B application; (ii) Whether the Commissioner (Appeals) could adjudicate a claim for interest under section 35FF arising from pre-deposits in proceedings under section 11B.Issue (i): Whether interest is payable on the refunded amount where the refund was sanctioned within three months from the date of filing the section 11B application.Analysis: Section 11B provides the statutory remedy for claim of refund of duty and interest paid on such duty by application to the Assistant Commissioner. Section 11BB prescribes payment of interest where an amount ordered to be refunded under section 11B is not refunded within three months from the date of receipt of the section 11B application, and specifies the rate-making power of the Central Government. The refund application in question was filed on 26.09.2019 and the sanctioned refund order was passed on 18.10.2019, within the three-month period prescribed by section 11BB.Conclusion: Interest under section 11BB is not payable because the refund was sanctioned within three months of receipt of the section 11B application.Issue (ii): Whether a claim for interest under section 35FF in respect of pre-deposits can be adjudicated in proceedings that arise from an application under section 11B.Analysis: Section 35FF relates to interest on amounts pre-deposited in connection with appeals and is a distinct statutory provision from the refund mechanism under section 11B. The section 11B application before the authority sought refund of contingency duty deposited and did not include a claim for interest under section 35FF relating to pre-deposits. Procedural and jurisdictional limits on the remedy invoked confine the authority to the scope of the section 11B application.Conclusion: The claim for interest under section 35FF in respect of pre-deposits could not be examined or granted in the section 11B proceedings; that claim required separate and appropriate proceedings.Final Conclusion: The appellate challenge to the denial of interest in the section 11B refund proceedings is without merit and the appeal is dismissed.Ratio Decidendi: Where a refund ordered under section 11B is sanctioned within three months of receipt of the section 11B application, interest under section 11BB is not payable; separate claims for interest under distinct statutory provisions (such as section 35FF) must be pursued in proceedings appropriate to those provisions and cannot be adjudicated in a section 11B refund application.