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TMI Blog2009 (11) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... the refund claim and the cheque for refund amount was issued on 13-7-04. Though the refund sanctioned was Rs. 1,05,73,237/-, the amount paid to the respondent was Rs. 18,38,918/- as out of the refund of Rs. 1,05,73,237/-, the confirmed demands (duty, interest and penalty) of Rs. 2,26,095/-, Rs. 43,07,393/- and Rs. 42,00,801/- were adjusted. Thus total amount of Rs. 87,34,289/- was deducted. However, at that time, the respondent's appeals against the orders confirming the duty, interest and penalty of Rs. 2,26,095/-, Rs. 43,07,393/- and Rs. 42,00,801/- were pending before Commissioner (Appeals) and subsequently the Commissioner (Appeals) vide order-in-appeal No. 293/CE/Appl/KNP/2003 dated 31-12-2003, 277/CE/Appl/ KNP/2004 dated 24-5-2004 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount adjusted from the assessee's refund claim earlier, as afore-stated, became refundable. While refunding this amount, the department refused to pay interest on the same, on the ground that the amount that was appropriated against the party's refund claim also represented penalty and interest on which no interest is payable as per Section 11BB of Central Excise Act, 1944 and also in the light of Section 11B of Central Excise Act, 1944. The Commissioner (Appeals) has wrongly held in the subject Order-in-Appeal that interest has to be paid on such amount because once the order imposing penalty and interest was vacated, the amount adjusted became duty only. Therefore, the Commissioner (Appeals)'s view is not acceptable because the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il date of actual payment. The liability to pay interest is not tagged with decision to pay interest but in case it is ultimately found to be payable liability is with effect from expiry of three months of the date of receipt of application required to be made under Section 11B(1)." Shri Bajaj pleaded that the entire amount of refund sanctioned by the Assistant Commissioner should have been paid to the respondent on 13-7-04 and if at that time the Department chose to adjust a major portion of the refund claim against some demands, which subsequently were set aside, at the time of payment of the balance amount the respondent becomes eligible for interest. 4. I have carefully considered the submissions from both the sides and perused the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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