What about interest u/s 35FF in case of refund of pre-deposit made from Cenvat credit account?
SHVETAL B. PARIKH writes in:
In last two DDT there is very good deliberation regarding payment of pre-deposit (@7.5% / 10%) by debit from Cenvat credit account. Under new Section 35FF, interest is to be given by department on refund of such pre-deposit from the date of payment till the date of refund. If pre-deposit has been made from Cenvat credit account, refund of the same is to be given by way of credit in that account (i.e. no cash refund). But, whether interest u/s 35FF is also required to be given by way of credit in Cenvat credit account? If so, Cenvat Credit Rules, 2004, needs suitable amendment. What will be the fate of such refund of pre-deposit and interest in Cenvat credit account, if the assessee has closed down his business or he has no use of Cenvat credit at the time of getting refund of pre-deposit with interest?
A consultant answers:
I am of the view that in case of pre-deposit made from CENVAT account, the interest has to be paid by Government in cash - The assessee needs to be compensated for the debit which was not required to be made in the first place, in case of a favourable final order. He is forced to debit because of a wrong case booked against him by the department - So, the Department is responsible for paying interest.
Shouldn't the Board clarify some of the doubts it created in the Budget 2014? But they seem to be busy with postings, promotions and Cadre Review - and with about 25 vacancies of technical officers, when will they clarify these issues. Better litigation take over?