2026-VIL-1873-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Interest on refund of amount deposited during investigation and pre-deposit - Rate of interest under Section 35FF of Central Excise Act, 1944 - Reference to Larger Bench - Appellant deposited amounts during investigation and made a pre-deposit under Section 35F in appeal before the Tribunal, which allowed the appeal with consequential relief. The Adjudicating Authority sanctioned refund of the pre-deposit with interest at 6 percent under Section 35FF read with the notification, and the FAA rejected the claim for interest at 12 percent from the date of deposit. Appellant contended that the amount was a deposit under protest and not duty, and prayed for reference to a Larger Bench in view of divergent views - Whether the Appellant is entitled to interest at 12 percent from the date of deposit on the refund of amounts deposited during investigation and as pre-deposit - HELD - A coordinate Bench has held that interest under Section 35FF is statutory and mandatory. The High Court has held that where the statute creates the right to interest and prescribes the rate, the entitlement cannot travel beyond the statute, and the notified rate of 6 percent cannot be enhanced in the absence of challenge to the provision or the notification. Though the issue is squarely covered against the Appellant by the decision of the High Court, another Bench of the Tribunal has taken note of divergent views and referred questions to the President for a Larger Bench. These relate to refund of voluntary and involuntary deposits, applicability of Section 11B and the general law of limitation, interest under Section 11BB, the date from which interest is payable, the rate of interest, and the power of the Tribunal to apply equity beyond the statute - The questions framed are referred to the President for constitution of a Larger Bench, to be tagged along with the earlier reference on the same questions of law
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