2006 (12) TMI 25 - AT - Central Excise

Refund Appellants were deposited the demand made by the Deputy Commissioner but after tribunal decision he has eligible for refund back and he demanded for interest thereon Adjudicating authority decided that interest realize only on amount of demand

Summary

Issues:
1. Whether the conversion of hot rolled patta/patti into cold rolled patta/patti amounts to manufacture?
2. Whether the appellants are entitled to a refund of duty paid?
3. Whether interest is payable on the refund amount?

Analysis:
1. The appellants were engaged in the conversion of hot rolled patta/patti into cold rolled patta/patti, which was contested as amounting to manufacture. A demand of Rs. 50,084/- was raised against them, leading to a confirmation of the demand by the Deputy Commissioner along with a penalty and interest on the duty. The Tribunal, however, held that the process undertaken by the appellants did not amount to manufacture and thus, they were not liable to duty.

2. The appellants sought a refund of the duty paid, which amounted to Rs. 50,084/-. They had paid Rs. 21,990/- before the issue of the show cause notice and Rs. 28,094/- as a pre-deposit during the pendency of their appeal. The refund was sanctioned, but the claim for interest on the refund amount was rejected on the basis that the duty was not paid under protest.

3. The appellants argued that the payment made should be considered as payment under protest, citing relevant precedents. The Tribunal considered the submissions and found that only Rs. 50,084/- was towards payment of duty, while the balance was for confiscation and penalty. Interest was held to be payable only on the duty amount, as it was contested from the original stage up to the Tribunal level. Therefore, interest was allowed on the duty amount paid, in accordance with Sec. 11BB of the Central Excise Act, while the claim for interest on the balance amount of refund was rejected. The appeal was partly allowed in favor of the appellants.