Refund of Deposit during Investigation: CESTAT allows Interest @12% from the Date of Deposit [Read Order]

The CESTAT, Kolkata bench, on Monday, allowed interest at 12% from the date of deposit in cases where amount was deposited during the investigation.

The Appellant, M/s. Green Valley Industries Limited, had succeeded in its appeal before this Tribunal vide FO 75527/2020 dated 22/10/2020 which had resulted in refund of Rs.78,16,265/- which was deposited by the Appellant during the investigation proceedings before the issuance of the Show Cause Notice.

The Adjudicating authority allowed the refund, however, no interest was paid by the Adjudicating authority on the ground that the payment of interest under section 35FF is applicable to delayed refund of amount deposited under proviso to section 35F of the Central Excise Act, 1944.

Shri P.K.Choudhary, Member (Judicial) observed that the Appellant had deposited the amounts as refunded during investigation proceedings which was later on set aside by this Tribunal in part leading to the captioned refund of duty.

With regard to the application of the Supreme Court decision in Gujarat Fluro Chemicals, the Tribunal observed that the said judgment distinguishes the judgment in Sandvik Asia only to the extent of payment of interest on delayed payment of interest, which is not the subject matter of dispute at all.

“Hence the said judgment is not applicable to the case at hand,” the Tribunal said.

While concluding, the Tribunal held that “thus in light of the view taken by this Tribunal in Parle Agro (supra), it is my considered view that the Appellant is entitled to interest @ 12% from the date of deposit till the date of receipt of such refund. The order of the First Appellate Authority is modified to the above extent. The lower authorities are directed to compute the eligible interest as above and pay the same within four weeks from the date of communication of this order.”

To Read the full text of the Order CLICK HERE

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