CESTAT allows 12% Interest on refund of deposit paid under Section 35F

Elegant Developers Vs The Commissioner, Central Excise & CGST (CESTAT Delhi)

It is observed that original Adjudicating Authority has awarded interest at the rate of five per cent. The said rate is the lowest rate in the amended Section 35FF. The amount in question is not an amount of duty but was an amount paid by way of deposit under Section 35F for availing the remedy of an appeal. The appeal has been allowed. Such an amount is bound to be refunded along with the appropriate consequential relief as that of interest. I draw my support from the decision of Hon’ble High Court, Mumbai in the case of Suvidhe Limited Vs Union of India [1996 (82) ELT 177]. Hon’ble Apex Court also in the case of Pratibha Processors Vs Union of India [1996 (88) ELT 12 (SC)] has held that interest is essentially compensatory in character. The appellant is held to be reasonably compensated for the interest that too from the date of its payment. Further, I observe that the original Adjudicating Authority has given no reason for applying the lowest rate of interest given in amended Section 35FF. Keeping in view the above adjudication, I am of the opinion that the reasonable rate of interest in the given facts and circumstances is the rate at twelve per cent. Hence, the request of the appellant is accepted with respect to rate of interest also. Consequent to the above discussion, the order under challenge/Order-in-Appeal is hereby set aside holding appellant to be entitled for sanction of refund of pre-deposit amount along with interest at the rate of twelve per cent thereof.

FULL TEXT OF THE CESTAT DELHI ORDER

The appellants, M/s Elegant Developers, are engaged in Real Estate Agent Services and are registered under Service Tax. Show cause notice bearing No.83 dated 22.04.2010 was issued to the appellants by DGCEI, New Delhi proposing a demand along with interest and the penalty. The said proposal was confirmed by original Adjudicating Authority vide Order No.132 dated 30^th September, 2013. However, this Tribunal vide Final Order No.53602-53605/2019 dated 25^th June, 2019 has set aside the aforesaid Order-in-Original. Pursuant thereto that the appellant filed a refund claim for amount of pre-deposit of Rs.22,05,981/- vide their letter dated ₉th December, 2019. The said amount along with interest of Rs.5,53,006/- was sanctioned in favour of the appellant vide Order-in-Original No.59 dated 11^th February, 2020. The Department had gone in an appeal against the said order and Commissioner (Appeals) vide Order-in-Appeal No.38 dated 16^th March, 2021 has allowed the Department’s appeal setting aside the Order­in-Original to the extent of sanctioning the amount of Rs.5,53,006/- as interest. Being aggrieved thereof, the appeal is before this Tribunal.

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