The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that merely because Section 35F restricts the pre-deposit amount as Rs.10 crore, does not mean that Assessee, Yamaha Motor will not be entitled for interest on refund of pre-deposit amount under Section 35FF even if it paid the pre-deposit amount more than Rs.10 crore.
The Bench of P.K. Choudhary (Judicial Member) has observed that when the Department accepted the pre-deposit amount exceeding Rs.10 crore at the time of filing of appeal without any objection and kept such amount with it till the disposal of appeal, Department cannot now deny interest upon refund of pre-deposit amount by contending that the pre-deposit amount exceeds Rs.10 crore.
The appellant/assessee, India Yamaha Motor is in the business of manufacturing motorcycles, scooters, parts and accessories thereof, falling under Chapter 87 of the erstwhile Central Excise Tariff Act. The Appellant filed an appeal before the Commissioner, CGST (Appeals) Noida and the Appellant made a pre-deposit for filing of appeal.
The appeal of the Appellant was allowed. In terms of direction in the Order-in- Appeal dated 08.05.2019, the Appellant filed an application for refund of the amount pre-deposited. The Assistant Commissioner, Central GST allowed the refund of the amount pre-deposited, however he has not granted statutory interest on the amount so refunded in terms of Section 35FF of the Central Excise Act, 1944.
The appellant being aggrieved with the part of the Order by which the statutory interest on refund was not granted, the Appellant preferred an appeal before the Commissioner (Appeals) CGST, Noida.
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The commissioner held that the Appellant is directed to approach the Adjudicating Authority since the issue of interest was not dealt with by the Adjudicating Authority.
The appellant contended that the amount pre-deposited has already been refunded to the appellant, therefore, in terms of Section 35FF interest on refund of amount pre-deposited is mandatorily to be paid. The obligation of refund of pre-deposit is not distinct and separate from the obligation of interest on refund under Section 35FF of the Excise Act.
As per Section 35FF when the Appellant is refunded the amount of pre-deposit earlier paid in terms of Section 35F consequent upon the order from the Appellate Authority, interest shall also be paid to the Appellant from the date of payment of pre-deposit amount till the refund of such amount.
The tribunal found that payment of interest along with refund under Section 35FF of the Excise Act, is not dependent on whether the same has been claimed by the Assessee or not. The same is axiomatic. In case, refund is paid to the Appellant consequent upon specific order for consequential relief from the Appellate Authority, the concerned Authority is under a statutory obligation to pay interest from the date of payment of pre-deposit amount till the refund of such amount. Reason being, Section 35FF uses the expression “there shall be paid to the Appellant interest”, thereby indicating that payment of interest is not discretionary but mandatory under the provision. Therefore, payment of interest is statutory and axiomatic.
The tribunal while allowing the appeal held that interest has to be paid to the Appellant as per Section 35FF of the Central Excise Act, 1944.
Case Details
Case Title: M/s India Yamaha Motor Pvt. Ltd. Versus Commissioner of Central Goods & Services Tax, Greater Noida
Citation: Excise Appeal No.70103 of 2021
Decision Date: 02/09/2024
