CESTAT Allows Interest On Refunded Amount Deposited During Investigation

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed interest on the amount refunded, which was deposited during the investigation.

The bench of Anil Choudhary (Judicial Member) has observed that interest on refund of amounts deposited during an investigation or deposited during the pendency of an appeal is allowable under Section 35EE of the Act and has to be paid from the date of deposit till the date of refund.

The appellant has raised the issue of the grant of proper interest on the amount refunded, which was deposited during the investigation.

The search was conducted on the business premises of the appellant. The appellant deposited Rs. 75,00,000 at the behest of the department during the course of the investigation. Again, Rs. 25,00,000 was deposited by the appellant at the behest of the department during the course of the investigation.

A show-cause notice was issued to the appellant demanding the duty along with interest and an equal penalty. The show cause notice was adjudicated, by which the duty demand was confirmed along with interest, and an equal amount of penalty was also imposed. The adjudicating authority ordered appropriate payment of Rs. 65,84,270/- out of Rs. 1,000,000 that was deposited by the appellant during the course of the investigation, and the rest of the amount was ordered for the refund to the appellant.

The refund application for the remaining amount of Rs. 3415730 was filed by the appellant. The refund was sanctioned, but no interest was given to the sanctioned amount.

The tribunal set aside the order appealed against and remanded all the appeals—both appellant and department appeals—to the original authority for fresh adjudication.

The commissioner has dropped the whole duty demand but imposed the redemption fine. The commissioner also imposed a penalty amounting to Rs. 6,50,000 under Rule 25 and a penalty on the director of the company. The commissioner directed to appropriate the amounts from the amount deposited during the course of the investigation, i.e., in 2010. The commissioner directed the refund of the remaining amount.

The appellant filed a refund application for the remaining amount.

The tribunal allowed the appeal and held that the appellant is entitled to interest on the refundable amount from the date of deposit until the date of refund, which is February 5, 2021, at the rate of 12% per annum.

Case Title: M/s Leading Point Powertronics Pvt Ltd Versus Commissioner, Central Excise & CGST- Delhi South

Citation: Excise Appeal No. 51277 of 2022 (SM)

Date: 01.03.2023

Counsel For Appellant: Priyanka Goel

Counsel For Respondent: Gopi Raman

Click Here To Read The Order