The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT), New Delhi Bench directed the Adjudicating Authority to grant 12% interest on delayed refund.
The appellant, M/s J. K. Cement Works has filed the present appeal against the order-in-appeal passed by the Commissioner (Appeals), Central Excise & Central Goods & Service Tax, Jodhpur, denying interest on delayed refund i.e. from the date of deposit till the refund of the pre-deposit of the principal amount.
Mr. Bipin Garg, Counsel for the appellant, urged that it is evident that the appellant had reversed the cenvat credit under protest and had contested the show cause notice. The matter was finally settled in favour of the appellant by order of the Rajasthan High Court.
Mr. Garg submitted that the scheme of Central Excise Act and its Rules has always been that wherever any demand of duty has not been paid by any assessee at the appropriate rate and date, the same attracts charging of interest on such amount from such date. Such principle needs to be followed even in such cases where any amount has been retained and utilized by the Revenue till the date of reimbursement of such amount to the assessee.
In such cases, the assessee needs to be compensated by way of interest, towards the financial loss suffered by the assessee, due to action of the Revenue.
On the other hand, Mr. Pradeep Gupta, Counsel for the respondent, opposes the prayer for grant of interest and submitted that in view of the specific provision, the grant of interest under Section 35FF of the Act is applicable, as it existed prior to August 6, 2014, under which refund on pre-deposit is allowable on delay in granting refund beyond three months from the date of communication of the order, and thus no refund is allowable in the facts and circumstances of this case.
The coram of a Judicial Member, Anil Choudhary held that the Adjudicating Authority is directed to grant interest from the date of deposit till the date of grant of a refund at the rate of 12% per annum. Such interest on refund should be granted within a period of 60 days from the date of receipt of, or service of a copy of the order.