Departmental deposit treated as pre-deposit under amended Section 35F/35FF - refund with 6% interest; original claim date upheld u/s 11B(2)

Whether the departmental deposit constituted a pre-deposit attracting statutory interest: applying the post-2014 amendment to Section 35F/35FF and Central Government Circular No. 984/8/2014-CX (and the principle under Section 129EE of the Customs Act), the deposited amount is treated as a pre-deposit and the appellant is entitled to interest thereon; consequence - refund of the deposit with interest at the government-fixed rate of 6% per annum from date of deposit until disbursement. Whether the refund application date governs entitlement: under Section 11B(2) the subsequently filed claim (27.10.2023) relates back to the original claim dated 21.03.2018 and was wrongly treated as the original; consequence - impugned order set aside and appeal allowed.

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Issues: (i) Whether the appellant is entitled to interest on the refunded amount from the date of deposit till disbursement; (ii) Whether the refund application filed on 27.10.2023 relates back to the earlier refund claim dated 21.03.2018 and, consequently, whether the later filing can be treated as the original application.

Issue (i): Whether the appellant is entitled to interest on the refunded amount from the date of deposit till disbursement.

Analysis: The judgment treats amounts deposited during investigation as equivalent to pre-deposit and applies the legal framework granting interest on pre-deposited amounts where the appeal succeeds. The decision relies on the circular and statutory provisions providing for interest on deposits (notably Section 129EE of the Customs Act, 1962 and Section 35FF of the Central Excise Act, 1944) and precedent recognizing entitlement to interest from the date of deposit where the deposit was made pending investigation or litigation.

Conclusion: The appellant is entitled to interest on the refunded amount from the date of deposit until disbursement at the rate fixed by the Central Government (6%).

Issue (ii): Whether the refund application filed on 27.10.2023 relates back to the earlier refund claim dated 21.03.2018 and whether the later filing was wrongly treated as the original application.

Analysis: The judgment applies the relation-back principle under the relevant provisions governing refunds, concluding that the subsequent filing after the tribunal's favourable order relates back to the initially filed refund claim. The subsequent filing was therefore not to be treated as an original application for the purpose of computing entitlement to interest.

Conclusion: The refund application dated 27.10.2023 relates back to the refund claim dated 21.03.2018; the later filing was wrongly considered the original refund application for interest computation.

Final Conclusion: The revenue deposit is to be refunded with interest from the date of deposit until disbursement at the rate fixed by the Central Government; the impugned order denying interest from the date of deposit is set aside and the appeal is allowed.

Ratio Decidendi: A deposit made during investigation is to be treated as a pre-deposit entitling the depositor to interest under Section 129EE of the Customs Act, 1962 (and corresponding provisions), and a refund claim filed earlier remains the basis for interest entitlement even if a subsequent re-filing occurs after a favourable appellate order.

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