2021 (4) TMI 1076 - AT - Central Excise

Denial of interest on the penalty refunded - section 11BB of CEA - HELD THAT - Hon ble Apex Court in the case of COMMISSIONER OF CUS. (PORT) , KOLKATA VERSUS CORONATION SPINNING INDIA 2015 (8) TMI 442 - SC ORDER has clearly held that interest of only refundable duty is admissible under Section 11BB had not that of penalty and fine - the appellants are not entitled to any refund of interest on penalty amount under Section 11BB. As regard, the appellant s contention that the revenue cannot recover the same, as no demand show cause notice has been issued. I find that the said issue cannot be decided in the present proceedings. Appeal dismissed.

Summary

Issues:
Denial of interest on penalty refund.

Analysis:
The appeal was filed against the denial of interest on the penalty refunded to the appellant. The appellant contended that they were entitled to the refund of the penalty, which was rejected by the original adjudicating authority. The Commissioner (Appeals) set aside the order rejecting the refund claim and remanded the matter. The Commissioner (Appeals) directed the refund of penalty along with interest in the remand order dated 03.07.2017. The adjudicating authority sanctioned the refund and interest to the appellant, but the Revenue challenged the interest sanctioned. The Tribunal heard arguments from both sides.

The Authorized Representative argued that Section 11BB pertains only to the refund of interest on duty, not on penalty. Referring to a decision of the Hon'ble Apex Court, it was contended that interest on penalty is not admissible under Section 11BB. The remand order of the Commissioner (Appeals) was interpreted as not directing the refund of interest along with penalty. The issue of a protective show cause notice was deemed irrelevant in the present proceedings.

The Tribunal considered the submissions and referred to the decision of the Hon'ble Apex Court regarding the admissibility of interest on penalty under Section 11BB. The observations in the remand order were analyzed, noting that the directive for refund of interest on penalty was not found. The Tribunal concluded that the appellants were not entitled to any refund of interest on the penalty amount under Section 11BB. The issue of revenue's recovery without a demand show cause notice was deemed not determinable in the present proceedings. Consequently, the appeal was dismissed.

In summary, the judgment clarified that interest on penalty is not admissible under Section 11BB, as per the decision of the Hon'ble Apex Court. The Tribunal found that the remand order did not direct the refund of interest on penalty, leading to the dismissal of the appeal. The issue of revenue's recovery without a demand show cause notice was considered irrelevant for the present proceedings.