CESTAT rules Payment made under Protest is Excise Duty u/s 11B, Not Deposit [Read Order]

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) determined that such payments fall under Section 11B of the Central Excise Act, 1944, as duty payments, not deposits.

The tribunal issued a ruling clarifying the classification of a payment made under protest in a case involving M/s. Triumph International (India) Pvt. Ltd ( TIPL ).

During an audit, TIPL faced an additional Central Excise duty demand. The company contested this demand and made the payment under protest. Later, TIPL filed a refund claim, arguing that the payment should be considered a deposit under Section 11B of the Central Excise law. This classification would have entitled them to a higher interest rate on the claimed refund.

TIPL, represented by Rajaram, argued that the payment made under protest was a "deposit" and not a duty payment. They contended that interest should be calculated from the date of deposit at a rate of 12% under Section 11B.

M. Ambe, representing the Department, argued that the payment was a duty payment arising from a valid audit objection. They asserted that the refund claim is governed by Section 11B, and interest should be payable at the prescribed rate under Section 11BB, which is typically lower than 12%.

The two member bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that several Supreme Court judgements, including Mafatlal Industries Ltd., have established Section 11B of the Act as the exclusive remedy for claiming refunds of Central Excise duty, except in cases of unconstitutional levies.

The Tribunal clarified that payments made after an audit objection and subsequent Order-in-Appeal (OIA) are considered duty payments under the Act and not deposits.

Consequently, the appeal was disposed of, stating that TIPL would only be eligible for interest at the effective rate as per the notification issued under Section 11BB of the Central Excise Act, 1944, and not at any higher rate.

To Read the full text of the Order CLICK HERE 

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