Order date – 15 December 2022

Facts –

• The Appellant, M/s. HEG Limited is engaged in the manufacture of graphite electrodes falling under Tariff Item No. 8545 11 00 of the First Schedule to the Central Excise Tariff Act, 1985. 
• Show cause notices were issued to the appellant proposing to deny CENVAT credit and demanding an amount totaling to Rs.2,03,24,058/- was confirmed with interest and equal penalty. The appellant deposited the duty demand and interest totaling to Rs.3,23,09,687/-. Later on appeal filed by the appellant the entire amount was sanctioned in favour of the appellant but the claim for interest on the deposit of was rejected. 

Issue –

• Whether the appellant is entitled to interest under section 35FF of the Excise Act on the delayed refund of amount?

Order –

• The Tribunal observed that the claim of the appellant was under section 35F of the Excise Act and not under section 11B of the Excise Act. Mere mention of a wrong provision in the letter submitted by the appellant will not work to the prejudice of the appellant if in law the refund claimed by the appellant can be traced to section 35F of the Excise Act. Interest was, therefore, required to be paid to the appellant under the provisions of section 35FF of the Excise Act and not under section 11BB of the Excise Act. 
• It was observed that after the above decision of the Bombay High Court the Central Board of Excise and Customs issued a Circular dated 2 January, 2002 in connection with the return of deposit made under section 35F of the Excise Act or section 129E of the Customs Act, 1962.
• The aforesaid Circular was followed by a Circular dated 8 December, 2004. This Circular also relates to return of deposit made in terms of section 35F of the Excise Act or section 129E of the Customs Act, 1962. The Board took a strict view regarding non return of pre-deposits and directed that pre-deposits shall be returned within three months of the decision of the Appeal in favour of the assessee. It further directed that all Commissioners should ensure implementation of the instructions through a suitable monitoring mechanism.
• It is, therefore, apparent from the decisions of the Supreme Court, the High Courts and the Tribunal and the two Circulars issued by the Central Board of Excise and Customs dated 2 January, 2002 and 8 December, 2004 that any amount deposited as a pre-deposit for maintaining the Appeal has to be refunded with interest and the provisions of section 11B of the Excise Act will not be applicable.
• Thus, in view of the provisions of section 35FF of the Excise Act it has to be held that since the amount deposited by the appellant under section 35F of the Excise Act was not refunded to the appellant within three months from the date of communication of the order of the Tribunal, the appellant would be entitled to interest after the expiry of three months from the date of the order of the Tribunal till the date of refund of such amount at the rate of six percent per annum.
• The appeal is allowed.