Section 35FF provide interest from date of deposit till the date of refund

Nakoda Ispat Ltd. Vs Commissioner of Customs (CESTAT Delhi)

Division Bench of this Tribunal in Parle Agro Limited, wherein the amount was deposited during the stage of investigation/audit, this Tribunal have held that on being successful in appeal, interest is allowable under Section 35FF from the date of deposit till the date of refund. Further, following the ruling of the Apex Court in the case Sandvik Asia Ltd. (supra), it has been held that interest shall be payable @ 12% p.a. Further, Single Member Bench of this Tribunal in the case of Riba Textiles Ltd vs. CCE & S.T., 2020(2) TMI 602-Chandigarh have also granted interest @ 12% p.a. under Section 35FF. This order had been appealed against by Revenue before Hon’ble Punjab & Haryana High Court in CEA No. 8/2022, by its judgement dated 14/03/2022, High Court have upheld the grant of interest @ 12% p.a., relying upon the ruling of the Apex Court in the case of Sandvik Asia Ltd (supra).

In view of aforementioned observations and findings, I allow these appeals and modify the impugned order(s) to the effect that the appellant shall be entitled to interest under Section 35 FF @ of 12% p.a. from the date of deposit till the date of grant of refund.

FULL TEXT OF THE CESTAT DELHI ORDER

The issue involved in these appeals is regarding allowance of proper interest under Section 35FF of Central Excise Act.

2. The brief facts as per Appeal No.51050/2022 are Central Excise duty of Rs. 1,25,99,362/- was demanded vide SCN dated 07/07/2008, which was confirmed vide O-I-O dated 17/12/2008 alongwith interest and equal penalty. This Tribunal vide stay order dated 20/07/2009 directed to deposit the full amount of duty and waived the amount of interest and penalty. Subsequently, this order was challenged before Hon’ble Chhatisgarh High Court in writ petition no. 6048/2009, whereas Hon’ble High Court by its order dated 07/12/2009 modified the stay order to deposit 50% of the adjudged duty. Thereafter, the appellant deposited amount of Rs. 62,99,682/- vide challan on 03/03/2010, as confirmed by Hon’ble Supreme Court.

3. Vide final order no. A/52427/2016-Ex DB dated 29/06/2016, this Tribunal allowed the appeal and set aside the impugned order-in-original with consequential relief. Thereafter, revenue filed appeal before Hon’ble High Court, which was dismissed on 30/01/2017. Further, the appeal by revenue before Hon’ble Supreme Court was disposed of as withdrawn on 26/10/2020. The appellant claimed refund of the amount of pre-deposit by filing application on 25/01/2021 together with appropriate interest. The Adjudicating Authority granted the refund of the amount of pre-deposit of Rs. 62,99,682/-, however, did not accept the claim for payment of interest. Being aggrieved, appellant preferred appeal before the learned Commissioner (appeals) who vide impugned order-in-appeal dated 05/01/2022, allowed interest under Section 35FF, observing that interest is payable under Section 35FF, as it existed prior to 06/08/2014.

4. Being aggrieved the appellant is before this Tribunal inter alia on the ground that Section 35FF was amended by way of substitution w.e.f. 06/08/2014 to provide for grant of interest from the date of deposit till the date of refund, at the specified rate. He further relies on the following rulings:

i) Riba Textiles Ltd vs. CCE & S.T. Panchkula– 2020(2) TMI 602-CESTAT, Chandigarh

ii) M/s. Fujikawa Power And M/s. Kenzo International vs. CCE & ST, Chandigarh-2019 (11) TMI 1197- CESTAT, Chandigarh

iii) M/s. Pensla Exports Pvt Ltd vs. CCE & ST, Jalandhar-2019 (12) TMI 9- CESTAT, Chandigarh

iv) M/s. Marshall Foundry & Engg. Pvt. Ltd. & others vs. CCGST, Faridabad- 2019 (11) TMI 1269- CESTAT, Chandigarh

wherein it have been held that interest under Section 35FF shall be payable from the date of deposit (even if deposited during investigation/audit) till the date of refund. Further, it has been directed that rate of interest shall be payable @ 12% p.a., following the ruling of Hon. Supreme Court in the case of Sandvik Asia Ltd. – 2006 (196) ELT 257 (SC). Accordingly, he prays for allowing the appeal with consequential benefits. Learned Counsel further informs that during pendency of this appeal, the Adjudicating Authority have granted interest at the lower rate of 6% and have calculated the amount of interest arbitrarily for a shorter period.

5. Similar facts are there in the other four appeals. The amount of pre-deposit etc. is as follows:-

6. Learned AR for revenue relies on the impugned order. Learned AR further mentions that some of the Final orders of this Tribunal, were on similar issue, which were appealed before High Court of Delhi/Allahabad, the operation of the order of this Tribunal have been stayed, and appeal admitted.

7. Having considered the rival contentions, I find that Division Bench of this Tribunal in Parle Agro Limited, wherein the amount was deposited during the stage of investigation/audit, this Tribunal have held that on being successful in appeal, interest is allowable under Section 35FF from the date of deposit till the date of refund. Further, following the ruling of the Apex Court in the case Sandvik Asia Ltd. (supra), it has been held that interest shall be payable @ 12% p.a. Further, Single Member Bench of this Tribunal in the case of Riba Textiles Ltd vs. CCE & S.T., 2020(2) TMI 602-Chandigarh have also granted interest @ 12% p.a. under Section 35FF. This order had been appealed against by Revenue before Hon’ble Punjab & Haryana High Court in CEA No. 8/2022, by its judgement dated 14/03/2022, High Court have upheld the grant of interest @ 12% p.a., relying upon the ruling of the Apex Court in the case of Sandvik Asia Ltd (supra).

8. In view of aforementioned observations and findings, I allow these appeals and modify the impugned order(s) to the effect that the appellant shall be entitled to interest under Section 35 FF @ of 12% p.a. from the date of deposit till the date of grant of refund.

9. Accordingly, the Adjudicating Authority is directed to grant the balance amount of interest as modified herein within 45 days of receipt or service of this order. Appeals are allowed.

(Order pronounced on 22.08.2022)