The Delhi High Court has held that deposit made under protest and a pre-deposit are different from each other.
BACKGROUND
According to the petitioners, interest is liable to run from the date when the refund is determined and would not be dependent on any application or other positive step being taken by an assessee. This contention is controverted with the Central Excise Department2 asserting that in light of the plain language of Section 11B read along with Section 11BB of the 1944 Act, the moving of an application is a prerequisite for computation of the date from which interest would be payable on a refund. It is this principal question which falls for determination.
the Additional Commissioner confirmed the duty demand of Rs. 45,31,574 under Section 11A of the 1944 Act and held the petitioners liable to pay the same along with interest thereon in accordance with Section 11AB of the 1944 Act. Further directions were framed for confiscation of cash amounting to Rs. 44,96,000 and the imposition of monetary penalties amounting to Rs. 45,31,574/-. The amount of Rs. 20,00,000 which had been deposited by the petitioners during the pendency of the SCN proceedings was also appropriated against the demands which stood crystallized.
Aggrieved by the aforesaid order, the petitioner preferred an appeal. That appeal came to be allowed in toto by the Appellate Authority in terms of its judgment dated 31 December 2008. The Department is stated to have preferred an appeal against that decision before the Customs, Excise and Service Tax Appellate Tribunal5 which ultimately came to be dismissed on 27 September 2016. Admittedly, while an interim order operated on that appeal, the same came to be discharged once the appeal was dismissed by the CESTAT.
RULING
The court held that A levy of interest on refund must undoubtedly follow where it is found that the amount has been unjustifiably retained or remitted with undue delay. The respondents cannot be permitted to retain moneys which are otherwise not due or are otherwise liable to be returned.
The distinction between Sections 11B and 35FF is also evident when one bears in mind the language employed in the latter and which stipulates that interest would commence from the date when the amount deposited by the appellant under Section 35F is required to be refunded consequent to an order passed by the Appellate Authority. Section 35FF thus indicates that interest would commence from the date of the order of the Appellate Authority as distinct from the making of an application which is prescribed to be the starting point insofar as Section 11BB of the 1944 Act is concerned.
Case Title: M/S Goldy Engineering Works V/S Commissioner Of Central Excise & Anr.
Citation: W.P.(C) 4332/2022