TMI Blog2024 (3) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Hon'ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Rate of interest - HELD THAT:- No doubt the department has relied upon a notification of 2014 and as per the Section 35FF also, the rate of interest has to be more than 5% but less than 36%, however, subject to a re-notification. The above decision of Hon ble Apex Court in M/s. Finacord Chemicals (P) Ltd. [ 2015 (5) TMI 371 - SUPREME COURT ] which is subsequent to the said notification. Applying the said matrix, the appellant entitled for interest at the rate of 12%. The decision of Hon ble High Court is found not applicable to the given set of circumstances. The provision involved in the said decision is the Section 129 EE of the Customs Act - the appellant is held entitled for interest from the date of deposit to the date of payment at the rate of 12%. Appeal allowed. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) Ms. J. Kainaat, Advocate for the Appellant Shri Rohit Issar, Authorized Representative for the Respondent ORDER Present appeal has been filed by M/s. Kumawat Contractors to assail the Order-in-Appeal No. 225/2018 dated 27.03.2018. The facts in brief relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parle Agro Pvt. Ltd. Vs. Commissioner, CGST, Noida reported as 2022 (380) ELT 219 (Tri.-All.) (ii) Riba Textile Ltd. Vs. Commissioner of Central Excise and Service Tax, Panchkula reported as 2020-TIOL-932- CESTAT-CHD. (iii) Commissioner of Central Excise, Panchkula Vs. M/s. Riba Textile Ltd. reported as 2022 (62) G.S.T.L. 136 (P H) (iv) Raghuveer Metal Industries Ltd. Vs. Commissioner of CGST, Jaipur-I (F.O. No. 51621-51624/2023) dated 07.12.2023. (v) Shree Rajasthan Syntex Ltd. Vs. Commissioner of CGST, Rajasthan (F.O. No. 50949-50950/2023 dated 20.07.20230) (vi) Matta Paints and Hardware Store Vs. The Commissioner Central Tax, New Delhi (F.O. No. 51128/2022 dated 02.12.2022) 4. Emphasis has also been laid on the Circular No. 984/8/2014-CX., dated 16.09.2014, the Para 5 thereof, to impress upon that department also is of the opinion that in the event of remand, refund of pre-deposit shall be payable along with the interest. Learned Counsel has further impressed upon that the interest shall be awarded to the appellant at the rate of 12% from the date of deposit till the date of refund. With these submissions, the order under challenge is prayed to be set aside and appeal is prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.12.2020 but without interest. The said findings have been confirmed also with respect to the denial of the interest. I peruse from the order under challenge that the Commissioner (Appeals) has relied upon the changes/amendment that has been incorporated in Section 35 and Section 35FF of the Finance Act and has denied the interest holding that the amount in question was paid before said amendment came into existence. 9. To adjudicate the correctness of those findings, Section 35F and 35FF, pre and post amendment is reproduced as below: Section 35F in the Central Excise Act, 1944 35F. Deposit, pending appeal of duty demanded or penalty levied. - Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the [Commissioner (Appeals)] or the Appellate Tribunal is of opinion that the deposit of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. Explanation. For the purposes of this section duty demanded shall include, (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004 Section 35FF in the Central Excise Act, 1944 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- 243. Interest on delayed refunds- (1) if the Income tax officer does not grant refund- (a) In any case where the total income of the assessee does not consist solely of income from interest on securities or dividend, within three months from the end of the month in which the total income is determined under this Act, and (b) In any other case, within three months from the end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at (twelve) per cent per annum on the amount directed to be refunded from the date immediately following the expiry of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that 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 Rs.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, serio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at the rate specified in the Act, varying from 12% to 15% which would be on the high side. Though, we hold that the Department is solely responsible for the delayed payment, we feel that the interest of justice would be amply met if we order payment of simple interest @ 9% p.a. from the date it became payable till the date it is actually paid. Even though the appellant is entitled to interest prior to 31.03.1986, learned counsel for the appellant fairly restricted his claim towards interest from 31.03.1986 to 27.03.1998 on which date a sum of Rs.40,84,906/- was refunded. 50. The 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 Rs.40,84,906 (rounded of to Rs.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to pay interest to the petitioner at 12% from the date of expiry of three months from 18-11- 2002, to the amount of refund already made, within a month from the date of receipt of a copy of this judgment, after adjusting any interest paid. 20. Further, the same view was taken in the case Ghaziabad Ship Breakers Pvt.Ltd.-2010 (260) ELT 274 (Tri.Ahmd.), wherein this Tribunal observed as under:- 5. I have considered the submissions made by both the sides. I notice that appellants deposited amount in September, October and in November 2004, as per the directions of the department. In September 2004, the Honble 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 attain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bombay High Court in Suvidhe Ltd. vs Union of India reported as [1996 (82) ELT 177] was challenged. The Bombay High Court has observed that in case of deposits which were not in the form of duty, provisions of 11B of Customs Act will have no applicability. The deposits made under Section 35FF since is not the payment of duty, Section 11B will not be applicable. 12. Coming to the plea of the rate of interest, no doubt the department has relied upon a notification of 2014 and as per the Section 35FF also, the rate of interest has to be more than 5% but less than 36%, however, subject to a re-notification. The above decision of Hon ble Apex Court in M/s. Finacord Chemicals (P) Ltd. (supra) which is subsequent to the said notification. Applying the said matrix, I hold the appellant entitled for interest at the rate of 12%. The decision of Hon ble High Court is found not applicable to the given set of circumstances. The provision involved in the said decision is the Section 129 EE of the Customs Act. In view of the decision of M/s. Finacord Chemicals (P) Ltd. (supra) and all above decisions as discussed above as well as department s own circular dated 16.09.2014, the appellant is hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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