In a Setback to Emaar MGF Constructions, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench disallowed interest on refund of amount towards predeposit.
The Department has filed this appeal to assail the order dated 05.02.2020 passed by the Commissioner of Central Tax (Appeals)-II, Delhi1 by which the appeal was filed by M/s. Emaar MGF Construction Pvt Ltd. 2 to assail the order passed by the Assistant Commissioner sanctioning refund of the pre-deposit amount but denying interest has been allowed with a direction that interest shall be paid on the pre-deposit amount in terms of section 35FF of the Central Excise Act, 19443, as amended on 06.08.2014, from the date of deposit of the said amount.
Cross objection has been filed by the respondent with a prayer that interest should be granted on delayed payment @ 12% per annum from the date of deposit till the date of refund. The issue that arises for consideration in this appeal is regarding payment interest on refund of the amount deposited towards the predeposit.
The amended provisions of section 35F provide that the Tribunal shall not entertain any appeal unless the appellant deposited 7.5% of the duty in dispute. The second proviso contemplates that the provisions of the section shall not apply to stay applications and appeals pending before the appellate authority prior to the commencement of the Finance Act No. 2 of 2014, i.e. 06.08.2014. It is, therefore, clear that the amended provisions of section 35F will not apply if stay applications and appeals were pending before the Tribunal prior to 06.08.2014.
The Bench consisting of Justice Dilip Gupta, President and PV Subba Rao, Technical Member held that “In the present case, as noticed above, the amount was deposited by the respondent pursuant to the directions issued under the unamended provisions of the 35F. Such being the position, interest on delayed refund of amount would continue to be governed by the unamended provisions of section 35FF. The Cross Objections filed by the respondent seeking higher rate of interest would have to be rejected since interest itself is not payable to the appellant.”
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