Statutory interest on pre-deposit refunds ends at the refund date; no further compensatory interest is payable.

Interest on refund of a pre-deposit under section 35F is governed by section 35FF of the Central Excise Act, 1944, which allows interest only from the date of payment of the deposit until the date of actual refund. The text states that once the refund and the statutory interest attributable to that deposit were paid up to the refund date, no further compensatory interest was payable for the later period. The claim for interest beyond 07.08.2017 was treated as an impermissible claim for interest on statutory interest, and the authorities relied on were distinguished. The restriction of interest to the refund date was therefore upheld.

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Issues: (i) Whether the appellant was entitled to interest or compensation for the period after the refund of the pre-deposit till the later date on which interest was actually paid.

Analysis: The appellant had deposited amounts under section 35F of the Central Excise Act, 1944, and the refund of the deposit was ultimately sanctioned on 07.08.2017. Section 35FF of the Central Excise Act, 1944 governs interest on delayed refund of such deposit and permits interest from the date of payment of the amount till the date of refund of that amount. The statutory requirement was treated as having been satisfied when the refund and the interest attributable to the deposit were paid up to the date of actual refund. The further claim for interest from 07.08.2017 to 07.02.2023 was treated as a claim for compensatory interest beyond the statute. The authorities relied upon by the appellant were found distinguishable, and the principle that only statutory interest is recoverable, with no further interest on such statutory interest, was applied.

Conclusion: The appellant was not entitled to any further interest or compensation beyond 07.08.2017, and the restriction of interest up to the refund date was upheld against the assessee.

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