The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi Bench, has dismissed an appeal, upholding the order that sanctioned interest at 6% per annum on a refunded amount deposited during investigation, rejecting the appellant’s plea for a 12% rate.
The order was delivered by Dr. Rachna Gupta (Judicial Member) has observed that interest on delayed refund of amount deposited under Section 35F and that the period in question is prior 06.08.2014, the interest can be awarded at the rate of 6% per annum only.
The appellant, M/s. Seher had earlier deposited Rs. 30,54,449 under protest in March 2012 during an ongoing investigation. Subsequent show-cause notices raised a service tax demand of ₹1.19 crore, which was later set aside by the Tribunal in 2022. Following this relief, M/s. Seher sought a refund of the amount along with interest at 12%, citing judicial precedents.
While the refund was sanctioned in May 2024, the adjudicating authority restricted the interest rate to 6%, invoking Section 11BB of the Central Excise Act, 1944 and *Notification No. 67/2003-CX dated 12.09.2003.
The appellant argued that the amount paid under protest during investigation was akin to a pre-deposit, attracting Section 35FF, not Section 11B of the Act. Judicial precedents, including Sandvik Asia Ltd. v. CIT (2006) 196 ELT 257 (SC), supported interest at 12% on such refunds. The Commissioner (Appeals) erred in applying Section 11BB, which governs refund of duty, not deposits under protest.
The Department’s representative, Rohit Issar, relied on the CBEC Circular No. 984/08/2014-CX and the Supreme Court ruling in Mafatlal Industries Ltd. v. Union of India (1997) 89 ELT 247 (SC),* contending that the sanctioned 6% interest was in line with the statutory notification.
After reviewing the records, the Tribunal observed that payments made “under protest” during investigation are considered pre-deposits. The governing provision for interest on such refunds is Section 35FF, which allows interest “not below 5% and not exceeding 36% per annum,” as fixed by government notification. As per Notification No. 24/2014-CE dated 12.08.2014, the fixed rate is 6% per annum.
The Tribunal clarified that Sandvik Asia was distinguishable, as the 12% interest there was compensatory, owing to a 17-year delay — a situation not applicable in the present case.
Holding that the lower authority rightly applied the statutory rate, the Bench concluded, “the adjudicating authority below has rightly sanctioned interest at 6% per annum. I find no infirmity in the order under challenge. The appeal is dismissed.”
Case Details
Case Title: M/s. Seher Versus Commissioner of Central Excise & CGST-Delhi East
Case No.: Service Tax Appeal No. 50572of 2025
Date: 17.10.2025
Counsel For Appellant: S.C. Kamra, Advocate
Counsel For Respondent: Rohit Issar, Authorized Representative
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