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TaxTMI 
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2025 (11) TMI 1459
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....at the actual consumption was less than SION. On the basis of this order, the appellant claimed consequential refund of amount paid. The adjudicating authority sanctioned the refund of Rs. Five Crore vide Order-in-Original dated 08.11.2019. Subsequently, the appellant filed an application dated 21.01.2020 claiming interest on Rs. Five Crore which was rejected by the adjudicating authority in his letter dated 16.03.2020 mainly on the ground that the issue of interest stands decided in the OIO dated 08.11.2019. The appellant preferred an appeal before the Commissioner(A) and the Commissioner(A) rejected their appeal mainly on the following grounds. * Ample opportunities for personal hearing in the case was given to the appellant but failed to respond in any manner. * A claim of a person for refund of any duty or interest paid by or borne by that person is governed by section 27 of the Customs Act, 1962. Further, Section 27A of the Customs Act, 1962 provides for payment of interest if any duty ordered to be refunded under subsection (2) of section 27 is not refunded within three months from the date of receipt of refund application. With regard to denial of interest ....
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....on 11BB of Central Excise Act, 1944. [para 5]. 2. In response the appellant submitted as follows: The issue involved in the present appeal is regarding claim of interest on refund of deposit made during the course of investigation. The details are as under: Amount and date of deposit Date of show cause notice Date of order in original Date of Tribunal Final Order dropping the entire demand Date on which refund of deposit was granted Date on which application for claim of interest on deposit was made Date of letter/ order denying claim of interest on deposit Date of OIA denying claim of interest on deposit Rs. 5,00,00,000/- on 18.09.2014 29.06.2015 17.05.2016 25.03.2019 08.11.2019 21.01.2020 16.03.2020 26.07.2021 The Ld. Commissioner (Appeals) vide Impugned OIA dated 26.07.2021 has denied the interest claim on deposit on the following grounds: a) The issue of interest has already been decided vide OIO dated 08.11.2019 and thus there is no illegality in the adjudicating Authority's decision vide letter dated 16.03.2020 so far as the demand of interest under section 27A of the Customs Act, 1962 is concerned. [Para 4....
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....served that the appellant is not eligible for interest under section 27A of the Customs Act, 1962. The relevant extract of OIO dt. 08.11.2019 is mentioned below: "27.. Since the complete refund claim was received on 23.08.2019 and this refund is being sanctioned within three months from the date of receipt of complete application therefore no interest is required to be paid in this case under section 27A of the Customs Act, 1962." It was submitted that the appellant had filed the separate application for claim of interest on deposit based on the following: * The OIO dated 08.11.2019 neither sanctioned nor denied any interest on the refund of deposit, and * the appellant is not claiming any interest under section 27A of the Customs Act, 1962. 2.4 There is no bar under the law to not file a separate application to claim interest on deposit. The appellant relies on the case of GENERAL COMMODITIES PVT LTD v. Commissioner CGST-2021-TIOL-342-CESTATBANG wherein the Tribunal has held that the claim of interest by a separate application under Section 11BB does not amount to review or reopen of such completed orders and the appellant has right to claim the in....
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.... (c) the amount of fine or penalty involved does not exceed fifty lakh rupees." Upon analysis of Section 129C(4)(b) and (c), the following categories of cases are specifically excluded from Single Member Bench jurisdiction: a) Cases involving determination of rate of duty for assessment purposes. b) Cases involving determination of rate of duty for assessment purposes. c) Cases where difference in duty or duty involved exceeds Rs. 50 Lakhs. d) Cases where difference in duty or duty involved exceeds Rs. 50 Lakhs. 3.1 The present case pertains exclusively to claim of interest on refund of revenue deposit. Interest is neither duty, nor fine, nor penalty. Therefore, disputes regarding interest do not fall within the excluded categories mentioned in Section 129C(4) of the Customs Act, 1962. 3.2 The phrase "any disputed case, other than" in Section 129C(4)(b) of the Customs Act, 1962 creates a broad category of cases that can be heard by a Single Member, with specific exclusions carved out. Interest disputes are not among these exclusions. 3.3 The Hon'ble CESTAT, New Delhi examined an identical issue under Section 35D of the Cent....
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....the rate of interest payable on refund of amounts in circumstances such as the present case. 4.1 However, the absence of an explicit provision does not mean that the right to interest is extinguished. The Hon'ble Courts & Tribunals have consistently held that when amounts are wrongfully retained by the Revenue, interest must be paid to compensate for the deprivation of use of money. 4.2 The Hon'ble CESTAT, Allahabad in Parle Agro Pvt. Ltd. vs. Commissioner, CGST, Noida, 2022 (380) E.L.T. 219 (Tri. All.) addressed this exact legal position and provided comprehensive guidance on quantification of interest in the absence of statutory provisions. The Hon'ble Tribunal in Parle Agro observed: "33. There is no provision in the Excise Act, which deals with refund of revenue deposit and so rate of interest has not been prescribed, when revenue deposit is required to be refunded. 34. To be able to have some guidance regarding the rate of interest in case revenue deposit has to be refunded, the aid of the interest provisions under Section 11AA (which deals with interest on delayed payment of duty), Section 11BB (which deals with interest on delayed refunds ....
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.... that when the Revenue wrongfully retains money belonging to the assessee/taxpayer, interest must be paid as compensation for deprivation of use of money. 4.4 It is submitted that the rate of 12% per annum has been adopted as a reasonable and equitable rate, balancing the interests of both the Revenue and the taxpayer, considering the varying rates prescribed under different fiscal statutes (ranging from 6% to 18%). 4.5 In the present case, interest can be quantified using the following framework: a) Rate of Interest: 12% per annum (following Sandvik Asia Ltd. and Parle Agro Pvt. Ltd.) b) Period of Calculation: From the date of deposit/payment until the date of actual refund. III. PRECEDENTIAL VALUE OF DECISIONS FROM COURTS OF EQUITY JURISDICTION: 5. The question posed regarding whether orders passed by Courts of Equity Jurisdiction (Hon'ble Supreme Court or High Courts) can be followed by Tribunals is answered in the affirmative. Article 141 of the Constitution of India provides: "141. Law declared by Supreme Court to be binding on all courts.- The law declared by the Supreme Court shall be binding on all courts within the territ....
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....ibunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working: otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest court in the State is binding on authorities or tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction." The Hon'ble Supreme Court in the case of Union of India vs. Kamlakshi Finance Corporation Ltd. [AIR 1992 (SC) 711] also laid down as follows: "The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities The Hon'ble CESTAT across various benches has consistently applied the principles laid down in Sandvik Asia Ltd. Th....
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....the exclusion category in Section 129C(4) of the Customs Act, 1962. Therefore, what is not excluded gets included in the jurisdiction of Single Member. Learned Advocate to support his case has also relied on Dhampur Sugar Mill Limited as reported in 2006 (204) ELT 106 (Tri-Delhi), wherein it was again emphasized that what is not excluded specifically gets included within the jurisdiction of Single Member Bench. He also points out that the decision was also followed by CESTAT in the Commissioner of CCE & ST Rohtak vs Som Sugandh Industries reported at 2021 (375) ELT 367 (Tri.-Chandigarh). Above submissions have been duly considered by this court and this court finds substance in the point made by the appellant. That whatever is not specifically excluded is very much included when there is a possibility only that the amount consequent to a positive decision which may eventually get sanctioned by the department only may exceed Rs. 50 Lakh alternatively. This court also find that the exclusion of the Single Member has to be either by the statute as has been indicated above by the financial limit of duty as well as for the cases involving classification and valuation disputes. Such excl....
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....erest as per provisions of Section 27A of the Customs Act. Therefore, even the Appellate Authority held that once the refund has been sanctioned within the period of three months from filing of the application, the department stands discharged from any interest obligation under Section 27 or 27A of the Customs Act. However, with the support of case law, party is of the view that what has been sought was the refund of deposit of the money paid during investigation and such deposit stand on different footing and in support has relied upon various case laws. Party also submits from the date of deposit to the date of disbursement of refund of interest in the interregnum. In light of following, he relied upon the decision of Sandvik Asia Ltd. reported at 2006 (196) ELT 257 (SC) which though was delivered in the income tax wherein principle has been laid down that for withholding of any amount from an assessee without authority of law, Revenue must compensate assessee and this has to be done irrespective of absence of any statutory provisions. Doctrine of compensation was thus propounded by the Apex Court. 6.1 Next decision relied upon by the party is Parle Agro Private Limited vs Com....
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....t against any confirm demand, allowed @12% per annum on refund amount calculated from the date of deposit until the date of refund. The order took note of various decisions including Parle Agro and Principal Commissioner of CGST New Delhi vs Emmar Mgf Construction Pvt. Ltd. reported as 2021 (55) GSTL 311 (Tri. Del.) in para 16 of the order. It also, inter alia, took cognizance of the decision of Hon'ble Supreme Court in case of Kuil Fireworks Industries reported as 2002-TIOL-424-SC where the Apex Court directed the refund of pre-deposit with 12% interest. This decision was specifically on indirect tax laws and not on income tax. Similar decisions have been quoted by the appellants which for the want of repetition are not reproduced. This court also took note of decisions in the case in Sony Pictures Network India Pvt Ltd. reported in 2017-TIOL-1102-HC-KERALA-CUS. In view of foregoing, it is quite clear that the interest is liable to be paid on Revenue deposits and has been consistently paid @ 12% by various decisions of this Tribunal as well as various High Courts. In this context, this Court finds that the law declared by the Hon'ble Supreme Court as well as various High Courts th....
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....neither sanctioned nor denied any interest on the refund of deposit, and * the appellant is not claiming any interest under section 27A of the Customs Act, 1962. 6.7 There is no bar under the law to not file a separate application to claim interest on deposit. The appellant relies on the case of GENERAL COMMODITIES PVT LTD v. Commissioner CGST-2021-TIOL-342-CESTATBANG wherein the Hon'ble Tribunal has held that the claim of interest by a separate application under Section 11BB does not amount to review or reopen of such completed orders and the appellant has right to claim the interest under Section 11BB. The tribunal further observed that the application filed by appellant was not towards refund of Cenvat credit paid by them but towards the grant of interest on delayed sanction of refund amount. By applying the ratio of the judgment in the case of General Commodities (Supra) the appellant's claim of interest on deposit by a separate application is maintainable. 7. This point of emphasis is that the need to grant interest as well as quantum has become established at the level of Hon'ble Supreme Court as well as various High Court and same deserves to be follow....