The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT), Ahmedabad Bench held that the interest of only refundable duty is admissible under Section 11BB and not of penalty and fine.
Mr. Vivek Bapat, the Counsel for the appellant argued that the appellant, Bundy India Limited was entitled to refund of penalty but the claim of refund was rejected by the original adjudicating authority. They challenged the order of the original adjudicating authority before the Commissioner (Appeals), who set aside the said order rejecting the refund claim and remanded the matter.
He argued that while remanding the matter, the Commissioner (Appeals) had directed refund of penalty along with interest. He argued that in the remand proceedings the adjudicating authority sanctioned the refund and interest to the appellant.
The Revenue challenged the sanctioned order before the Commissioner (Appeals) in respect of the interest sanctioned. The Commissioner (appeals) set aside the order of the original Adjudicating Authority again.
On the other hand the Department argued that section 11BB pertains only to refund of interest on duty and not refund of interest on penalty. He further argued that the remand order of the Commissioner (Appeals) did not direct refund of interest along with penalty.
The department urged that the matter regarding the issue of protective show cause notice is not relevant in the present proceedings as to whether revenue is able to recover or not independent issue.
The coram of a Technical Member, Raju while dismissing the appeal held that interest of refund on penalty is not admissible under Section 11BB. As a result, the Tribunal found that the appellant is entitled to any refund of interest on the penalty amount under Section 11BB.
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