The Allahabad Bench of Customs,Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to L.G. Electronics by holding that interest was payable on a post-2014 pre-deposit under Section 35FF of the Central Excise Act,1944.

L.G.Electronics India Pvt. Ltd,appellant-assessee, was engaged in manufacturing Colour Televisions (CTVs), Refrigerators, Air Conditioners, and Washing Machines. It also produced chassis sub-assemblies (PCBs) for CTVs, which were used in-house and also supplied to various OEMs across the country. These parts were classified under heading 85.29, and excise duty at 16% was paid based on the sale price.

During an investigation, the assessee deposited ₹47,82,819/- before the issuance of the Show Cause Notice (SCN). This amount was later appropriated through an order dated 25.11.2004. The assessee challenged the order, and the tribunal, in its order dated 07.08.2013, remanded the matter.

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On remand, the Commissioner again confirmed the demand on 31.03.2016. The assessee filed a fresh appeal, treating the earlier deposit as part of the total 7.5% pre-deposit of ₹8,58,23,726/-. The tribunal, on 18.08.2022, allowed the appeal.

Following this, the assessee claimed a refund, which was granted in full, including the ₹47,82,819/-, treating it as pre-deposit. However, interest was not paid on this amount. The Commissioner (Appeals) accepted it as pre-deposit but denied interest by applying the amended Section 35FF, effective from 06.08.2014. Aggrieved by this, the assessee then filed the present appeal before the tribunal.

The tribunal heard both parties and reviewed the appeal records.It noted that the assessee had challenged the denial of interest on the pre-deposit amount of ₹47,82,819/-. The bench observed that since the appeal was filed after 06.08.2014, the pre-deposit was made under the new Section 35F. Therefore, the proviso to Section 35FF, which applies to deposits made before 06.08.2014, was not relevant.

The appellate tribunal clarified that pre-deposit requirements arise only after an appeal is filed. Since the appeal in this case was filed in July 2016, the deposit was rightly treated under the amended law. It held that interest under Section 35FF was payable from the actual date of deposit.

While referring to Central Board of Indirect Taxes and Customs (CBIC) Circular No. 984/8/2014-CX, the tribunal noted that although the circular treats the date of filing the appeal as the date of deposit, such a view had no legal basis. Once the deposit was accepted as a pre-deposit under the new Section 35F, interest had to be paid from the date of deposit.

A single member bench comprising P.K Choudhary (Judicial Member) also found that the earlier case relied upon in the order, Jeevan Diesels and Electricals Ltd., did not apply here, as that appeal was filed under the old provisions before 2014.

Accordingly, the tribunal allowed the appeal and directed that interest be paid from the date of deposit.

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