Order date – 22 August 2022

Facts – 

• The appellant, M/s Shri Nakoda Ispat Ltd., was issued a show cause notice on 07 July 2008, demand of Central Excise duty of Rs. 1,25,99,362/- along with interest and equal penalty was confirmed on 17 December 2008.
• Subsequently, this order was challenged before Hon’ble Chhatisgarh High Court in which they modified the stay order to deposit 50% of the adjudged duty on 07th December 2009.
•  Thereafter, the appellant deposited amount of Rs. 62,99,682/- on 3rd March 2010, as confirmed by Hon’ble Supreme Court.
• The appellant claimed refund of the amount of pre-deposit by filing application on 25th January 2021 together with appropriate interest. The Adjudicating Authority granted refund of the amount of pre-deposit but did not accept the claim for payment of interest.
• Appellant preferred an appeal in which they allowed interest under Section 35FF, observing that interest is payable under Section 35FF, as it existed prior to 6th August 2022.
• Being aggrieved the appellant filed an appeal on the ground that Section 35FF was amended by way of substitution w.e.f. 6th August 2014 to provide for grant of interest from the date of deposit till the date of refund, at the specified rate.

Issue – 

• Whether the appellant is entitled to payment of interest from the date of deposit till the date of refund?

Order – 

• The Tribunal relied on Supreme Court’s case Sandvik Asia Ltd. and decision of Division Bench of this Tribunal in Parle Agro Limited in which it was held that interest under Section 35FF shall be payable from the date of deposit (even if deposited during investigation/audit) till the date of refund. Further, it has been directed that rate of interest shall be payable @ 12% p.a.
• Therefore, the Tribunal held that appellant shall be entitled to interest under Section 35 FF @ of 12% p.a. from the date of deposit till the date of grant of refund.
• Appeal allowed.