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Excise Act | Meghalaya High Court Upholds Order Granting Interest To Assessee On Refund Of Deposit Made 'Under Protest' During Investigation

Basit Amin Makhdoomi

27 July 2023 3:18 PM GMT

    • Excise Act | Meghalaya High Court Upholds Order Granting Interest To Assessee On Refund Of Deposit Made Under Protest During Investigation

    The Meghalaya High Court on Wednesday upheld the order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) granting interest on the delayed refund of a deposit made by the assessee under protest, during investigation for allegedly claiming excess cenvat credit.Bench of Chief Justice Sanjib Banerjee and Justice W. Diengdoh observed that Section 11B of the Central Excise...

    The Meghalaya High Court on Wednesday upheld the order passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) granting interest on the delayed refund of a deposit made by the assessee under protest, during investigation for allegedly claiming excess cenvat credit.

    Bench of Chief Justice Sanjib Banerjee and Justice W. Diengdoh observed that Section 11B of the Central Excise Act, 1944 which bars payment of interest for refund of duty or interest will not be attracted to this case since the deposit was made even before a show-cause notice or any demand was issued.

    The Department claimed that since the initial deposit had been made in anticipation of a claim for excess cenvat credit availed of, such deposit must be understood to have been made on account of duty and, accordingly, the bar under Section 11B of the Act would apply.
    However, the Court held,
    "According to the Tribunal, the deposit was made at a time when no quantified claim had been made on the assessee. On such basis, the Tribunal found that the deposit had not been made on account of any duty or interest which would attract the implied bar under Section 11B of the Act. It was a possible view taken on the set of facts that presented themselves before the Tribunal and, in this appellate jurisdiction, such interpretation does not call for any interference."

    The case involved an investigation by the Department against the assessee, who allegedly claimed excess cenvat credit. The assessee promptly deposited a sum of Rs. 94 lakh under protest even before any show-cause notice or demand was issued. Following this, the Tribunal found that the demand for excess cenvat credit was good for about Rs.16 lakh and held that the Department owed the assessee approximately Rs. 78 lakh from the initial deposit.

    Since the Department refused to pay any interest as the CESTAT had not provided for any interest in the appellate order, the assessee again knocked at the doors of the Appellate Tribunal to claim interest on refund. The Tribunal had held the assessee is entitled to interest at 12% rate.

    Case Title: The Principal Commissioner of Central vs. M/s Green Valliey Goods and Service Tax Industries Pvt Ltd

    Citation: 2023 LiveLaw (Meg) 28

    Click Here To Read/Download Judgment


    Tags
    Justice Sanjib BanerjeeJustice W Diengdoh#RefundSection 11B of the Central Excise Act
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