Afcons Infrastructure Limited (Appellant) preferred an appeal against the order of the Commissioner of Central Excise Delhi-I, to the Hon’ble CESTAT, New Delhi and in accordance of the direction of the Hon’ble CESTAT, the Appellant made a pre-deposit of Rs. 55 lakhs. The Hon’ble CESTAT gave its order in favour of the Appellant and such order was served on jurisdictional Commissioner of Central Excise, Delhi-I on March 16, 2011.
The Department refunded pre-deposit on October 18, 2011 but without interest under Section 35FF of the Central Excise Act, 1944 (Excise Act) on pretext that Commissioner was not adjudicating authority and interest starts only after communication of appellate order to Adjudicating Authority. Therefore, interest would start only after 3 months from communication to the Adjudicating Authority.
The Appellant preferred a writ petition before the Hon’ble High Court of Delhi for payment of interest.
The Hon’ble High Court of Delhi noted that Section 2(a) of the Excise Act defines the term Adjudicating Authority as under: –
“It means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963, or the Commissioner of Central Excise (Appeals) or The Appellate Tribunal.”
The Hon’ble Court held that in terms of the Section 2(a) of the Excise Act, any authority competent to pass any order or decision under the Excise Act would fall within the expression the ‘Adjudicating Authority’ apart from the Central Board of Excise and Customs, the Commissioner of Central Excise (Appeals) and the Appellate Tribunal.
Therefore, the Commissioner would fall within the definition of Adjudicating Authority. Hence, the Appellant was entitled to interest at 6% per annum for period after expiry of 3 months from date of service of order of the Hon’ble CESTAT to the Commissioner of Central Excise, Delhi-I.
Important to note change in Section 35FF of the Excise Act w.e.f August 6, 2014 vide the Finance (No.2) Act, 2014:
Section 35FF of the Excise Act has been amended to provide for interest on delayed refund of pre-deposit from the date of pre-deposit made till the date of refund as against earlier provisions where interest was payable only if pre-deposit was not refunded within 3 months from date of communication of order of Appellate Authority. However, the new provisions are applicable only to the pre-deposit made under Section 35F of the Excise Act after August 6, 2014. Further, the rate of interest has been fixed at 6% per annum vide Notification No. 24/2014-CE (NT) dated August 12, 2014.
Furthermore, the Central Board of Excise and Customs vide Circular No. 984/08/2014-CX dated September 16, 2014 has clarified that the refund of pre-deposit
made by the assessee should not be withheld on the ground that Department is proposing to file an appeal or has filed an appeal against the order granting relief to the assessee. The concerned Jurisdictional Commissioner should ensure that refund of
pre-deposit should be made within the stipulated time of 15 days of the receipt of the letter of the assessee seeking refund.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)