Interest on Pre-Deposit not available If Refund of Pre-Deposit sanctioned within Three Months: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench has ruled that the interest on pre-deposit under the Central Excise Act, 1944 is available if the refund is sanctioned within three months from the date of communication of the order of the Tribunal to the adjudicating authority.

The department rejected the refund claim of interest made by the appellant, Cubex Tubings Limited on the amount of refund of pre-deposit under section 35F of the Central Excise Act, 1944 from the date of the deposit till the date of sanction of the amount. This interest was claimed under section 35FF of the Excise Act.

Justice Dilip Gupta, President and Mr. P.V. Subba Rao, Member (Technical) has observed that it is not in dispute that the amount towards the pre-deposit was deposited on 30.08.2012 and that the amount was sanctioned within three months from the date of communication of the order of the Tribunal to the adjudicating authority.

“The appellant would, therefore, not be entitled to claim interest. This is what was observed by the Deputy Commissioner as also the Commissioner (Appeals) while rejecting the claim of the appellant for payment of interest,” the bench said.

The judgment of the Delhi High Court in MRF Limited will also not help the appellant. This judgment holds that the pre-deposit amount which is required to be deposited when an appeal is preferred does not bear the character of a tax and, therefore, the filing of a form which is purely for the purpose of administrative convenience cannot in any manner fixe the period of limitation.

In the present case, section 35F of the Excise Act, as it stood prior to 06.08.2014, provides for payment of interest only if the pre-deposit amount is not refunded within a period three months from the date of communication of the order to adjudicating authority. This is what has been observed by the Commissioner (Appeals).

To Read the full text of the Order CLICK HERE

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