TaxTMI 
TaxTMI 
2026 (9) TMI 1111
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....ce, the appellant had deposited a sum of Rs. 50,00,000/- (Rupees Fifty Lakhs only). 3. On the ground that the appellant is not eligible for the MODVAT Credit to the extent of Rs.78,91,213/, taken during the period from 01.04.1995 to 28.01.1996, a Show Cause Notice came to be issued on 02.05.2000. Vide Order-in-Original dated 28.01.2004, the adjudicating authority had confirmed the demand. Being aggrieved, the appellant filed their appeal before the Tribunal, whereupon the matter was remanded to the adjudicating authority. Thereafter, vide Order-in-Original dated 04.01.2010, the demand came to be confirmed by the adjudicating authority. Against the said order, the appellant filed an appeal before the Tribunal, whereafter, vide Final Order Nos. 75049-75050 of 2020 dated 03.01.2020, the Tribunal set aside the demand and allowed the appeals. 3.1. Consequent to this Final Order, the appellant sought refund of the amount deposited during the course of investigation. The actual amount, of deposit of Rs.50,00,000/- made by the appellant, has been refunded vide Order-in-Original No. 02/R/Refund/Bally-I/2020-2021 dated 17.06.2020. 3.2. Being aggrieved by the fact no interest was gra....
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....0 The Company applied for refund of excise duty deposited under protest of Rs. 50 lakhs in Form-R. June 17, 2020 The Assistant Commissioner of Central Tax, Bally-I Division, Howrah CGST & CX Commissionerate passed Order-in-Original No. 02/R/Refund/Bally-I/2020-2021 sanctioning refund of excise duties paid of Rs. 50,00,000/- without any interest. July 3, 2020 The Company submitted a letter to the Adjudicating Authority requesting for grant and sanction of interest on refund of Rs. 50,00,000/-. September 29, 2020 The Company filed appeal in Form E.A.-I against the refund order for Rs. 50,00,000/-, asking for grant and sanction of interest on such deposit refunded, before the Commissioner (Appeals-II). February 18, 2021 The Commissioner, CGST & Central Excise (Appeal-II), Kolkata passed Order-in-Appeal No. 78/HWH/CE/2020-21 sanctioning interest under Section 11BB of the Act after expiry of 3 months from the date of receipt of order dated 3rd January 2020. April 16, 2021 The Company filed appeal in Form E.A.-3 against order-in-appeal granting interest on refund of duty deposited. September 01, 2023 An application seeking expeditious hearing was fi....
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....its that they are entitled to interest at the rate of 12% per annum from the respective date of each deposit till the date of actual refund, as has consistently been held by this Tribunal and the Hon'ble Supreme Court of India in a catena of decisions, including the decision of this very Bench in M/s. Green Valley Industries Limited vs. Commissioner of CGST & CX, Shillong Commissionerate [Excise Appeal No. 75724 of 2021, Final Order No. 75189/2022 dated 11th April, 2022]. 6.3. The appellant further draws attention to the fact that Section 35FF did not exist in the statute prior to its introduction on 10th May, 2008; that during this period, there was no statutory provision governing the rate or commencement of interest on refund of amounts deposited during investigation or adjudication proceedings. It is submitted that in the absence of such provision, the Hon'ble Supreme Court of India, in Commissioner of Central Excise v. ITC Limited (decided on 2nd December, 2004), recognised the right of an assessee to receive interest at 12% per annum on amounts wrongly retained by the State from the date of such retention. 6.4. It has been submitted by the appellant that the Commissione....
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....the mean of the rates under the various applicable notifications. 6.8. Further, in addition to M/s. Green Valley Industries Limited (supra), the following decisions of the Hon'ble Supreme Court, the Hon'ble High Courts, and various Benches of this Tribunal have been relied upon by the appellant in support of its claim for interest at 12% per annum from the date of each deposit: (i) Sandvik Asia Ltd. vs. Commissioner of Income Tax-I, Pune [2006 (196) ELT 257 (SC)]: The Hon'ble Supreme Court held that interest is payable on amounts retained by the State to which it has no legitimate claim, recognising the foundational right of an assessee to compensation for the period of retention of amounts that were not liable to be deposited. This decision has consistently been applied by multiple Benches of this Tribunal to investigation-stage deposits. (ii) Parle Agro Pvt. Ltd. vs. Commissioner, CGST, Noida [Excise Appeal No. 70628 of 2019, Final Order No. 70180-70181/2021 dated 25th May, 2021]: The Tribunal conducted a detailed analysis of all relevant interest provisions under the Act (Sections 11AA, 11BB, 11DD, and 11AB) and held that interest at 12% per annum is the app....
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....ed on these terms. 8. The Ld. Authorized Representative of the Revenue appearing before us submits that the appellant has admittedly filed their Refund claim on 25th February, 2020 and consequently, the refund has been granted within the specified time; that the amounts cannot be treated as pre-deposit in terms of Section 35F so as to enable the appellant to claim the interest under Section 35FF. He has also made written submissions to this effect. Therefore, he justifies the order of the lower appellate authority and prays that the appeal be dismissed. 9. Heard both the sides and perused the appeal papers. 10. Admittedly, in this case, an investigation was taken up by the Revenue officials by visiting the premises of the appellant. The Revenue took the view that the appellant was availing MODVAT Credit, for which they were ineligible. In the course of investigation, the appellant paid the following amounts : (i) Rs. 15,00,000/- vide Cheque No. 661833 dated 27th July, 1996; (ii) Rs. 15,00,000/- vide Cheque No. 068132 dated 20th August, 1996; (iii) Rs. 15,00,000/- vide Cheque No. 784880 dated 28th September, 1996; (iv) Rs. 2,50,000/- vide....
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.... pass the order as per the directions given. The adjudicating authority has however confirmed the demand. On Appeal, this Bench at Paragraph 17 of its Order dated 3rd January, 2020 reproduced supra, has specifically noted that "It is apparent from the impugned order that the Learned Adjudicating authority, in respect of specific direction from the Tribunal, failed to adhere to the remand direction regarding consideration of submission made by the appellant'. The impugned order in question was set aside and the appeal was allowed 'with consequential' benefit as per law. 12.1. No factual details are emerging to the effect that this Final Order dated 3rd January, 2020 was further agitated by the Revenue before the High Court / Supreme Court. 12.2. This view also gets fortified by the fact that the refund of the deposited amount has been granted vide Order-in-Original dated 17th June, 2020, which has not been challenged by the Revenue. The Revenue has refunded the basic amount of Rs.50,00,000 on 17th June, 2020 and has not paid any interest for the intervening period i.e., 1996 to 2020 on the ground the appellant has filed the refund claim on 25.02.2020 [Para 5.2 of the OIA]. App....
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.... the Revenue wants the appellant to seek the refund, they would follow the Form R from their side. Mere filing of Form R itself cannot give the colour of Excise Duty, to enable the Revenue to deny interest payments to the appellant. Therefore, we hold that the denial of the interest on the ground that Section 11BB provisions were followed, is not legal and we set aside the impugned order on this ground. 14. Another indirect reference made by the Revenue is to the effect that there exists no provision to pay the interest this case. Admittedly, there was no statutory provision available for claiming the interest for the deposits made in 1996-1997. But we are also bound to take cognizance of the decisions of Supreme Court and High Courts in such cases. It would therefore be pertinent to go through some of the important judgements on the issue as to from which date the interest would accrue. We have for reference the following case laws: ▪ Ranbaxy Laboratories Ltd. v. Union of India [2012 (27) S.T.R. 193 (S.C.)] [21-10-2011] "The challenge in this batch of appeals is to the final judgments and orders delivered by the High Court of Delhi in W.P. No. 13940/2009....
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....Asia Ltd. V. Commissioner of Income Tax-I, Pune [2007 (8) S.T.R. 193 (S.C.)] [Civil Appeal Nos. 1337-1340 of 2005 decided on 27.01.2006] The Hon'ble Supreme Court framed the following questions : "A. Whether in view of binding decisions of this Court the respondents are estopped from urging that compensation as claimed by the appellant is not payable by them? And therefore whether the Bombay High Court erred in allowing them to urge such a contention in the impugned judgment? B. Assuming for the sake of argument that there is no provision in the Income-tax Act, 1961 ("the Act") for grant of such compensation, this Court had upheld the view of the Gujarat & Madhya Pradesh High Courts that compensation should be granted (whether called interest or otherwise) and hence the impugned judgment was contrary to a decision of this Court and ought to be reversed? ... E. Whether the High Court ought to have held that sections 240 and 244 of the Act refer to 'refund of any amount', which phrase clearly includes any amount (including interest) due by the Income Tax department to the assessee, and hence the appellant was entitled to interest o....
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...., that cannot mean that the withholding of monies is 'justifiable' or 'not wrongful'. There is no exception to the principle laid down for an allegedly 'justifiable' withholding, and even if there was, 17 (or 12) years delay has not been and cannot in the circumstances be justified. ... 30. At the initial stage of any proceedings under the Act any refund will depend on whether any tax has been paid by an assessee in excess of tax actually payable to him and it is for this reason that Section 237 of the Act is phrased in terms of tax paid in excess of amounts properly chargeable. It is, however, of importance to appreciate that section 240 of the Act, which provides for refund by the Revenue on appeal etc., deals with all subsequent stages of proceedings and therefore is phrased in terms of 'any amount' becoming due to an assessee. ... 45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money ....
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....Market, Ghaziabad. As no interest was paid by the appellant, the respondent filed a Civil Miscellaneous Writ Petition No. 249 of 2001 before the High Court of Judicature at Allahabad [2005 (188) E.L.T. 476 (All.)]. The Division Bench, considered the judgment rendered by this Court in Civil Appeal No. 7766 of 1995, took note of the time prescribed for disposal of the application for refund, the language employed in Section 11BB of the Central Excise Act, 1944 (for short, 'the Act') and further appreciating the conduct of the parties, opined that the liability for payment of interest is statutory and it is the bounden duty of the Assistant Commissioner to pay interest from 26th November, 1999 till 15th November, 2000 at the rate specified under Section 11BB of the Act. The aforesaid conclusion impelled the Division Bench to allow the writ petition with costs which was assessed at Rs. 10,000/-. The said order is the subject matter of appeal by special leave. . . . 17. The seminal issue is be whether there has been delay in grant of refund and consequently, whether the respondent-assessee is entitled to interest. Keeping in view the....
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....bunal failed to consider that such refund is governed under section 11 B of the Act, 1944, since it pertained to refund of duty amount paid by the respondent in compliance of an order of Adjudicating Authority. So also the interest on delay payment of refund is governed by Section 11 B of the Act, 1944. He submits that learned Tribunal has misinterpreted the Apex Court ruling in case of Mafatial Industries Ltd. v. Union of India 1997 (89) EL.T. 247 (S.C.) as well as in the case of Sandvik Asia Ltd v. Commissioner of Income Tax-l, Pune & Ors. AIR 2006 SUPREME COURT 1223 = 2007 (8) ST.R 193 (S.C.). Learned CESTAT also erred in granting interest @ 12% P.A., since the finding is based without any legal provisions. 12. Learned senior counsel for the respondent and counsel for the intervenor have opposed the prayer and submitted that no substantial question of law arises for adjudication in this appeal. They relied upon the judgment of High Court of Meghalaya at Shillong in the case of The Principal Commissioner of Central Goods and Service Tax v. M/s Green Valley Industries Pvt. Ltd. MC (Central Excise Ap.) No. 1/2023 dated 26/07/2023 [(2023) 10 Centax 117 (Meghalaya)] wherein ....
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....d body dealing in matters pertaining to excise duty, took into account the previous judgments of the Supreme Court, High Courts and the Tribunal itself to justify that the rate of 12 per cent per annum would apply in the facts of the present case. Again, since there is some basis to the award of interest by the Appellate Tribunal, the same does not call for any interdiction." [Emphasis supplied] ▪ Commissioner of Central Excise, Panchkula v. Riba textiles Ltd. [2022 (62) G.S.T.L. 136 (P & H)] "9. While deciding the issue of interest, Ld. Tribunal has relied upon the law laid down by the Apex Court in Sandvik Asia Ltd. v. CIT, Pune - 2007 (8) S.T.R. 193 (S.C.) wherein it was held that :- "45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civ....
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....rice of a privilege purchased; something given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer." 47. There cannot be any doubt that the award of interest on the refunded amount is as per the statute provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute, such provision has to govern the field. Therefore, the Court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. 48.....
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....ion of Learned Counsel for the appellant deserves to be accepted. Once a finding was recorded by the Tribunal in the order dated 311-2017 that the amount which had been deposited by the appellant during investigation and that deposited pursuant to the interim order passed by the Tribunal was a revenue deposit and not an excise duty deposit and there was no challenge to this finding of the Tribunal, the appellant cannot now, after the Commissioner (Appeals) has allowed the appeal by order dated 28-5-2019, raise this issue by filing the present appeal to assail the order dated 28-5-2019. 21. It also needs to be noted that the revenue had accepted the order dated 31-1-2017 passed by the Tribunal, as is clear from the letter dated 9-10-2017, the relevant paragraph of which is reproduced below : 11. The review Branch of CGST Commissioner of Noida Vide their letter C. No. V(15) JUD/CESTAT/FO/PAPL/N-1/238/2017/1856, dated 9-10-2017 informed that the Competent Authority has accepted CESTAT Final Order No. A/70145/2017-EX (DB), dated 31-1-2017 on 6 10-2017. 22. This apart, the Assistant Commissioner, by the order dated 13-10-2018, had also ordered for refund of th....
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....st paid on the amount collected during course of investigation which was paid much before issuance of Show cause Notice. The principle amount was ultimately refunded since no demand was ever confirmed against the appellant. However, the issue of refund of amount of interest was left open to be decided by refund sanctioning authority. ... 5. Having heard both the parties and after perusing the record it is worth noting that amount of Rs.50,00,000/- was deposited much before issuance of show cause notice and adjudication order did not confirm any demand against the appellant and thus the said amount was never appropriated against any demand. There was no demand against the appellant and accordingly such collection of amount was without authority of law. This position of law is now settled by various courts. I rely upon the case of Parle Agro Pvt. Ltd. reported as 2018 (360) ELT 1005 (T-All.) and Omjai Bhavani Silk Mils (P) Ltd. reported as 2009 (243) ELT 560 (T-Bang.). Rely upon the decision of this Tribunal in the case of M/s. Toyota Kirloskar Auto Parts Pvt. Ltd. reported as 2009 (240) ELT 124 (Tri.-Bang.) in which is held that: "The amount is not d....
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.... under five show cause notices is set aside, it becomes clear that the money deposited continues to be the appellant's property. He cannot be deprived of the same and is entitled for benefits arising out of said property. Hence interest accrued on the amount in question during the period it was in fixed deposit is the property of the owner of the amount i.e. the appellant herein. It was otherwise, involuntary deposited. 13. Following the said law of land, I hold that the appellants are entitled to claim the interest on the amount as has been refunded in their favour that too to be paid from the date of payment of initial amount till the date of its refund as has already been held by Commissioner (Appeals). ... 19. Consequent to the entire above discussion, the findings of the order under challenge are upheld with respect to holding appellant entitled for getting refund of the amount along with interest. However, it is held that the appellant is entitled to have interest on the amount of refund sanctioned at the rate of 12% per annum to be calculated from the date of the deposit of the amount till the date refund thereof. Resultantly, the present appea....
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....shall be governed by it. Since the period in question is prior to the notification providing for rate of interest on delayed refund of pre-deposit, issued under the Act, therefore, the case of the appellant shall be governed by the law laid down by the coordinate Bench of this Court in Madura Coats Private Limited (supra). 5.2. From the decision of the Hon'ble High Court extracted above, we find that the Hon'ble High Court has categorically held that interest @12% is payable in respect of refund of amount deposited during the course of investigation. In this regard, we find that there are different decisions by various High Courts on the issue of refund of the amount deposited during the course of investigation. However, the decision of the Jurisdictional High is binding on the Tribunals falling within it's jurisdiction, as held by the Larger Bench in the case of Collector of Central Excise Chandigarh vs. Kashmir Conductors - 1997 (96) E.L.T. 257 (Tribunal), wherein it is held as under: "10. The question as to how the Tribunal should proceed in the face of conflicting decisions of High Courts has been considered in M/s. Atma Steels P. Ltd. and others v. Collector ....