Spring Merchandiser Pvt Ltd Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
Summary: CESTAT Ahmedabad allowed the appeal filed by Spring Merchandiser Pvt. Ltd. concerning interest payable on refund of ₹15 lakh deposited during investigation between August 2005 and October 2005. The proceedings against the appellant had ultimately concluded in its favour, and the refund was sanctioned. However, the Commissioner (Appeals) treated only ₹1,18,073, representing 7.5% of the confirmed demand, as statutory pre-deposit under Section 35F of the Central Excise Act and granted interest of only ₹4,794 at the statutory rate prescribed under Section 11BB. The appellant challenged this restriction and sought interest on the entire refunded amount from the date of deposit till actual refund, along with interest on delayed payment of interest.
The appellant relied upon several judicial precedents holding that amounts deposited during investigation assume the character of pre-deposit and that assessees are entitled to interest from the date of deposit till refund. Reliance was placed on decisions including Omjai Bhavani Silk Mills, Sushitex Exports, Indo Rubber and Plastic Works, Parle Agro Pvt. Ltd., Raj Kumar Batra, and Eastern Coils Pvt. Ltd. The Department argued that interest could only be granted under Section 11BB at the prescribed statutory rate of 6% and contended that no “interest on interest” was permissible, relying on the Supreme Court judgment in Gujarat Fluoro Chemicals.
