2021 (8) TMI 1131 - AT - Central Excise

Interest on delayed refund - the amount of which the refund is sought, was paid under protest - relevant time - refund from the date of deposit till its realization or not - HELD THAT - The facts of the case are not in dispute that the appellant paid the amount during the period 2008-09 and 2009-10 under protest wherein the Revenue is of the view that the appellant is liable to pay the duty on zinc ash and zinc skimming. Later on, the levy was held unconstitutional. It was the understanding of the appellant that they are liable to pay duty, that s why they paid the duty under protest. In these circumstances, the amount deposited under protest is not to take the benefit of time limit, but liability of duty as alleged - Further, if Revenue is of the view that this amount could not be collected at that stage, the Revenue was free to refund the said amount but the respondent enjoyed the amount without any authority of law. The ld. AR failed to show that in case the amount deposited under protest is governed under Section 11AB of the Act for claims of interest. The appellant is entitled for interest on delayed refund from the date of deposit till its realization @12% p.a. - Appeal allowed.

Summary

Issues involved:
Claim for interest on refund from date of deposit till realization.

Analysis:
The appellant, a manufacturer of various ingots using scrap as raw material, faced a dispute with the Revenue regarding the liability to pay duty on certain products. The appellant paid an amount under protest during 2008-09 and 2009-10 to avoid interest liability. Subsequently, based on a circular by CBEC, it was determined that no duty was payable on certain products. The appellant filed a refund claim in 2016, which was sanctioned in 2019 without interest from the date of deposit. The appellant contended they were entitled to interest on the delayed refund.

The appellant relied on various court decisions to support their claim for interest, while the Revenue argued that the duty was paid under protest and the issue was sub-judice. The Revenue contended that the duty demand deposited under protest became due due to a circular, and any claim for refund due to misinterpretation must be made within the prescribed period under the Central Excise Act. The Revenue cited several case laws to support their argument.

After hearing both parties, the Tribunal noted that the appellant paid the duty under protest believing it to be liable, and the subsequent refund was delayed without interest. The Tribunal held that the appellant was entitled to interest on the delayed refund from the date of deposit till realization at the rate of 12% per annum. The Tribunal set aside the impugned order and allowed the appeal.

The Tribunal referenced decisions by the Allahabad High Court, Gujarat High Court, and Madras High Court, which supported the principle that any amount deposited under protest during adjudication proceedings should be refunded with interest, as the Revenue has no authority to retain such amounts. Based on this principle, the Tribunal concluded in favor of the appellant's entitlement to interest on the delayed refund.