Interest on refund of pre-deposit applies when departmental treatment links the deposit to the appellate process and Section 35FF is triggered.

Amounts deposited pursuant to a show cause notice and treated by the department as a pre-deposit for pursuing an appeal attract interest on refund under Section 35FF when refunded. The text notes that the sum was regarded as a deposit made for the appellate process, not as a standalone tax payment, so the statutory consequence under Sections 35F and 35FF applied. Interest was therefore payable on refund at the notified rate under Notification No. 24/2014-CE (N.T.), and denial of interest was set aside.

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Issues: Whether the amount of service tax deposited pursuant to the show cause notice and treated by the departmental authorities as pre-deposit for the appeal under Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 was entitled to interest on refund under Section 35FF of the Central Excise Act, 1944.

Analysis: The amount of Rs. 8,37,939 was found, on the record of the proceedings and the earlier appellate order, to have been treated as the deposit required for prosecuting the appeal and not as a mere tax payment detached from the appellate process. Since the authorities themselves had considered that amount as a pre-deposit for purposes of the appeal, the refund of that sum attracted the statutory consequence under Section 35FF. The order relied upon the scheme of Sections 35F and 35FF, together with Notification No. 24/2014-CE (N.T.) dated 12.08.2014, to hold that interest is payable on refund of such pre-deposit at the notified rate.

Conclusion: Interest was payable on the refunded amount of Rs. 8,37,939 as a pre-deposit, and the denial of such interest was set aside.

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