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2013 (11) TMI 512 - GUJARAT HIGH COURTClaim of Interest for delay in allowing the transfer of respective MODVAT/CENVAT credit - On merger, the unutilized credit lying with the amalgamating company gets transferred to the amalgamated company automatically by virtue of Rule 57F(20) and 57S(5) of the Central Excise Rules, 1994 – Held that:- The department initially, even refused to grant the transfer of credit raising some technical objections. It was only at the intervention of this Court that the department, ultimately thought it appropriate to grant the transfer of the amount of unutilized MODVAT/CENVAT credit to the petitioner which the Respondent had unlawfully withheld. While doing so, however, no order was made as to interest. A further application made for grant of interest for delayed payment of MODVAT/CENVAT credit was rejected by the respondents. It is really surprisingly that the logic was that there was no statutory provision enabling the department to pay such interest to the petitioner. The contention to the effect that no interest is payable because there is no provision of interest under the scheme of the Act is also thoroughly misconceived and misplaced. When the Department acts illegally and not as per the scheme of the Act, the interest on such refund can never be provided for under the Scheme of the Act. If the authorities act as per the law, the question of granting interest on refund can be appreciated and considered as per the scheme of the Act. Contention to the effect that no interest is payable because there is no provision of interest under the scheme of the Act is also thoroughly misconceived and misplaced - Interest on refund is automatic and has to be granted on commercial principles – Reliance has been placed on the judgment of Apex court in the case of Sandvik Asia Ltd. v. Commissioner of Income-tax [2006 (1) TMI 55 - SUPREME Court], wherein the Hon’ble Apex Court even while finding that there was no statutory provision to pay interest on delayed payment of interest, held the assessee entitled to the same on general principles and found that the assessee would be entitled to be compensated by way of interest on interest – Decided in favor of Assessee.
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