TMI Blog2020 (12) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamanna Alam, Authorised Representative for the respondent ORDER The appellants are in appeal against the impugned order in appeal denying interest on delayed refund i.e. from the date of deposit till the refund of the pre-deposit of principal amount. The details are as follows:- Appeal No. Name of the party Amount deposited (Rs.) Show cause notice dated O.I.O. dated CESTAT F.O. date on merits Refund given vide O.I.O dated O.I.A. (denying interest) E/50171/19 Hitesh Industries 7,00,000 (during inv.) 12.02.07 02.12.10 14,87,904/- 02.02.18 26.06.18 28.11.18 E/50173/19 Deco Industries 35,00,000 (during inv.) 12.02.07 02.12.10 1,96,40,040/- 02.02.18 26.06.18 28.11.18 E/50172/19 Vikas Cable Company 10,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntradictory. Admittedly, the amount was deposited during the course of investigation in the year 2006 prior to issue of show cause notice on 12.02.2007. Further, this fact is also ipso facto proved by grant of refund of principal amount deposited, vide refund order(s) dated 26.06.2018. It is further urged that in view of the provisions of Section 11B read with Section 11BB, read with Section 35F and 35FF, the appellants are entitled to get interest from the date on which the amount was deposited till the date of grant of refund. The amount of pre-deposit was made admittedly, on the dispute raised by the Department as regards availing of cenvat credit with respect to input/ raw material received for production, by the appellants. As the appellants have been successful vide final order of this Tribunal dated 02.02.2018, the said amounts were never payable. The fact that the amounts were paid under protest is ipso facto established as the appellants have contested the show cause notice and have been in appeal. Further, the amounts deposited during investigation or pursuant to passing of the adjudication order, both form part of pre-deposit under Section 35F. Further, under the amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the present cases, the refund have been granted within a period of three months from the date of application pursuant to Final order of the Tribunal. Hence, no interest is payable. Further, in the case of Sandvik Asia Limited (supra) relates to refund of advance tax paid by the assessee, and refund arose pursuant to passing of the assessment order. In the facts of these cases, the refund arisen pursuant to passing of the final order of this Tribunal. It is further urged that in view of the specific provision, grant of interest under Section 35FF of the Act is applicable, as it existed prior to 06.08.2014 under which refund on pre-deposit is allowable on delay in granting refund beyond three months from the date of communication of the order, and thus no refund is allowable in the facts and circumstances of this case. Reliance is placed by the learned AR on ruling of the Apex Court in the case of CCE, Hyderabad vs. ITC Ltd., -2005 (179) ELT 15 (SC). 10. Having considered the rival contentions, I find that similar issue arose before this Tribunal in the case of Fujikawa Power Anr. vs. CCE ST, Chandigarh-I, vide final order No. 61041-61042/2019 dated 26.11.2019, whereby a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as commonly understood; it is essentially an agricultural operation and such changes as are brought about in the product are an outcome of agricultural operation. Both rice and husk remain in their natural form as a result of dehusking and are covered by the term agricultural product . 6. The High Court has also formed an opinion that Section 35C of the Income-tax Act, 1961, was designed to encourage development of agriculture and, therefore, gave a weighted deduction in respect of expenditure incurred in providing to the agriculturists services and facilities specified therein. The term agricultural product or product of agriculture is required to be construed liberally so as to include not merely the primary product as it actually grows, but also a product which undergoes a simple operation so as to make it more saleable or more usable. The rice and the husk though separated remain as they were produced and hence continued to be agricultural product or product of agriculture . 30. As the Hon ble Apex Court has held that conversion of paddy into rice is not a distinct operation and the rice and husk remain in their natural form as a result of dehusking and are cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three months aforesaid to the date of the order granting the refund. Explanation: If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. 16. Section 35FF of the Central Excise Act, 1944 deals with the situation in hand, the same is extracted below:- Section 35FF. Interest on delayed refund of amount deposited under the proviso to Section 35F- Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner (Appeals) or the Appellate Tribunal (hereinafter referred to as the appellate authority) under the first proviso to section 35F, is required to be refunded consequent upon the order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the adjudicating authority, unless the operation of the order of the appellate authority is stayed by a superior court or tribunal, there shall be paid to the appellant interest at the rate specified in section 11BB after the expiry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to them as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of ₹ 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. COMPENSATION: 46. The word Compensation has been defined in P. Ramanatha Aiyar s Advanced Law Lexicon 3rd Edition 2005 page 918 as follows: An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; something given or obtained as an equivalent; the rendering of an equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years in question in the four appeals are the assessment years 1977-78, 1978-79, 1981-82 and 1982-83. Already the matter was pending for more than two decades. We, therefore, direct the respondents herein to pay the interest on ₹ 40,84,906 (rounded to ₹ 40,84,900) simple interest @ 9% p.a. from 31.03.1986 to 27.03.1998 within one month from today failing which the Department shall pay the penal interest @ 15% p.a. for the above said period. 18. As the Hon ble Apex Court has answered the issue holding that the assessee is entitled to claim interest from the date of payment of initial amount till the date of its refund. Therefore, I hold that the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization. 19. Further, the interest on the refund shall be payable @ 12% per annum as held by Hon ble Kerala High Court in the case of Sony Pictures Networks India Pvt.Ltd.-2017 (353) ELT 179 (Ker.) wherein it has held as under:- 14. Now, the sole question remains to be considered is what is the nature of interest that the petitioner is entitled to get. As discussed above in the judgment Commissioner of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions of the department. In September 2004, the Hon ble Gujarat High Court had dismissed the SCA filed by the appellants against the order of the Tribunal rejecting the appeal for failure to make the pre-deposit. This SCA was dismissed in September 2004 and SLP was filed in the Hon ble Supreme Court in October 2004. In July 2005, the Hon ble Supreme Court ordered that if the amount directed to be deposited by the Tribunal is deposited, the appeals before the Tribunal has to be restored and decided on merits. In these circumstances, the amount deposited by the appellant is to be treated as pre-deposit since the matter had not attained finality during the relevant period. Therefore, refund is to be treated as refund of pre-deposit made when the appeal was pending. There is no dispute that the amounts deposited is duty but this is not the issue which has been taken into account while precedent decisions have allowed the interest at 12% on the refunds claimed in respect of pre deposit. I find that in the decisions cited by the learned advocate, interest at 12% has been allowed. Therefore, following the judicial discipline, I consider it appropriate that interest in this case also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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