Ashirwad Equipment Pvt. Ltd. Vs Commissioner of Central Excise & CGST (CESTAT Allahabad)
The appeal arose from an order rejecting the appellant’s claim for interest on the refund of ₹8,37,939, while allowing interest at 6% only on the statutory pre-deposit of ₹84,609 under Section 35F of the Central Excise Act, 1944, as made applicable to service tax matters through Section 83 of the Finance Act, 1994. The refund itself had been sanctioned after the CESTAT allowed the appellant’s earlier appeal and set aside the service tax demand, interest and penalties.
The department had initiated proceedings alleging non-payment of service tax on mining services and supply of tangible goods for the period 2008-09 to 2010-11. A show cause notice was issued, followed by an adjudication order confirming the demand along with interest and penalties. The appellant’s appeal before the Commissioner (Appeals) was rejected, after which the CESTAT allowed the appeal. Pursuant to the Tribunal’s order, the refund of ₹9,52,798, comprising ₹84,609 as pre-deposit, ₹8,37,939 as service tax and interest only on the statutory pre-deposit, was sanctioned. The appellant sought rectification, contending that interest should also be granted on ₹8,37,939, but the department rejected the request on the ground that the amount had been deposited as service tax and not as a pre-deposit under Sections 35F and 35FF. The Commissioner (Appeals) upheld that view, leading to the present appeal.
The Tribunal examined the factual record and noted that after issuance of the show cause notice, the appellant had deposited ₹8,37,939 and later made an additional deposit of ₹84,609 while filing the appeal before the CESTAT. It further observed that the Commissioner (Appeals), while entertaining the first appeal, had expressly recorded satisfaction that the appellant had complied with the mandatory pre-deposit requirement under Section 35F. The appeal memorandum also disclosed that the amounts of ₹4,12,000 and ₹4,25,939 deposited through challans dated 13.05.2015 formed part of the deposits relied upon for maintaining the appeal. The Tribunal found that the revenue had never disputed this factual position or challenged the Commissioner’s finding regarding compliance with Section 35F.
The Tribunal held that the subsequent refund order incorrectly treated the amount of ₹8,37,939 merely as tax deposited against the show cause notice while ignoring the factual position consistently accepted during the appellate proceedings. Accepting the department’s stand would imply that the Commissioner (Appeals) had entertained the appeal without ensuring compliance with the mandatory pre-deposit requirement, which was contrary to the record. Accordingly, the Tribunal concluded that the deposits of ₹4,12,000 and ₹4,25,939 together amounting to ₹8,37,939 had been treated as pre-deposit for hearing the appeal under Section 35F read with Section 83 of the Finance Act, 1994. Consequently, refund of the said amount was also governed by Section 35FF, entitling the appellant to statutory interest.
The Tribunal further observed that the impugned order proceeded on a legal proposition without properly examining the facts on record. It referred to the Board Circular dated 10.03.2017, which provides that where an appeal is decided in favour of the assessee, refund of the pre-deposit must be granted along with interest under Section 35FF from the date of deposit until the date of refund. The Tribunal held that subordinate authorities could not introduce qualifications inconsistent with the circular. Having decided the matter on the factual findings, the Tribunal found it unnecessary to examine the judicial precedents cited by the appellant.
Holding that the impugned order could not be sustained, the Tribunal allowed the appeal and held that the amount of ₹8,37,939 was to be treated as pre-deposit under Section 35F, making it eligible for interest on refund under Section 35FF of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
