Order date – 27 September 2022

Facts – 

• The Appellant, M/s Jai Bhawani Concast Pvt Ltd., was engaged in manufacture of SS Ingots. During the course of investigation, the appellant deposited Rs. 5,76,425/- and Rs. 50,000/- on 30th January 2003 were deposited towards estimated duty on the alleged shortage of finished goods and raw materials.
• Thereafter, show cause was issued on 13th September 2006 and the proposed demand of Rs. 49,83,391/- was confirmed towards central excise duty, and further Cenvat credit was disallowed for Rs. 64,244/- along with equal penalty plus interest. 
• Thereafter, the appellant requested for granting of refund of the amount deposited during investigation, as well as the pre-deposit made pursuant to stay order, of Rs. 8 lakhs on 6th February 2009, by their request letter dated 6th July 2020. The Adjudicating Authority was pleased to allow refund of the principal amount of Rs. 8.5 lakhs however, denied the claim of interest. 
• Being aggrieved, the appellant assessee preferred appeal before the Commissioner (Appeals) for grant of interest.
• Revenue also preferred appeal before the Commissioner (Appeals), on the ground that Rs. 8 lakhs were deposited on 6th February 2009, in compliance to stay order, whereas Rs. 50,000 was deposited voluntarily on 30th January 2003, during investigation in respect of goods allegedly removed without invoices. Therefore, the claim for refund of Rs. 50,000 should have been made within one year from the relevant date as per Section 11 B of the Act. 
• Further, Revenue also alleged that the claim of refund of the whole amount of 8.5 lakhs be held to be hit by limitation.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the court below have erred in reducing the amount of refund, which was in the nature of predeposit, and further whether interest have been rightly disallowed under Section 35FF of the Act?

Order – 

• The Tribunal relied in the case of Hon'ble Madras High Court in the case of CCE vs Pricol Ltd - 2015 in which it was held that any amount deposited during investigation has to be treated as pre-deposit and the same is neither hit by limitation nor by the clause of unjust enrichment for the purpose of refund.
• Therefore it was held that the learned Commissioner have erred in holding that the amount of Rs. 50,000/- is hit by limitation and unjust enrichment, and further interest is not payable under section 35FF.
• The appellant is entitled to interest on the full amount of Rs. 8.5 lakhs from the date of deposit till the date of refund @ of 12% per annum under the provisions of Section 35FF of the Act.
• Appeal allowed.