2022 (6) TMI 378 - AT - Central Excise

Refund claim of amount deposited during investigation - case of appellant is that the amount was deposited at the time of investigation and the same does not have character of duty - rejection of refund claim on the ground of time bar under Section 11B of the Central Excise Act, 1944 - HELD THAT - The amount of Rs.10 lakhs was deposited by the appellant during the pendency of investigation and proceedings, is not duty, fine or penalty, but is to be treated as revenue deposit and the provisions of refund of duty as per Section 11B shall not be applicable to the same. It is held that, the appellant is entitled to refund with interest under Section 35 FF, for which no limitation is applicable. The revenue department cannot retain such amount of Rs. 10 lakhs (in the nature of pre-deposit). Therefore, the original authority is directed to refund Rs. 10 lakhs to the appellant alongwith interest of 12% on the same for the period starting from the date of deposit, till the date of refund. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund of amount deposited during investigation.
2. Characterization of the deposited amount.
3. Applicability of Section 11B of the Central Excise Act, 1944.
4. Entitlement to interest on the deposited amount.
5. Rejection of refund on the ground of time bar.
6. Treatment of the deposited amount as 'revenue deposit.'

Analysis:
Issue 1: The appellant sought a refund of Rs. 10 lakhs deposited during an investigation after their appeal was allowed by the Tribunal.

Issue 2: The appellant argued that the deposited amount did not constitute duty and thus should not be subject to the limitations of Section 11B of the Central Excise Act, 1944.

Issue 3: The Deputy Commissioner rejected the refund claim citing Section 11B, which was upheld in the Order-in-Appeal dated 10.12.2021.

Issue 4: The appellant contended that they were entitled to interest on the deposited amount after three months of the Tribunal's final order, citing relevant case laws.

Issue 5: The appellant argued that the refund could not be denied on the grounds of time bar, even if the deposit was not made 'under protest.'

Issue 6: The Tribunal held that the deposited amount was not duty, fine, or penalty but a 'revenue deposit,' entitling the appellant to a refund with interest under Section 35 FF, without any limitation period.

The Tribunal directed the original authority to refund Rs. 10 lakhs to the appellant along with 12% interest from the date of deposit till the date of refund, allowing the appeal and emphasizing that the revenue department cannot retain the amount in the nature of a pre-deposit.